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in Lakewood, CA
Lakewood investors choosing between DSCR and hard money loans face a real trade-off. DSCR loans let you qualify on rental income. Hard money moves fast but costs more upfront.
Both work for investment properties in Los Angeles County. The choice depends on your timeline, cash reserves, and how much rental income you can document.
DSCR loans qualify you on the property's rental income, not your personal W-2s. This opens doors for real estate investors who don't have traditional employment income. The lender looks at the property's cash flow to decide if you can carry the loan.
You'll need solid documentation of the property's rental history. Bank statements, lease agreements, and tax returns all matter. Most DSCR lenders want at least 6-12 months of rental history on the property.
Hard money lenders care about the property's value and your exit strategy, not your income. They fund based on the after-repair value or current market value. Closing happens in days, not weeks.
The trade-off is cost. Hard money rates run 8-12% and points eat 2-4% of the loan. You'll need 10-15% down and a clear plan to refinance or sell within 12-24 months.
DSCR qualifies on rental income; hard money qualifies on collateral. If you have documented rental history, DSCR gives you a 30-year loan at a lower rate. Hard money is for speed and flexibility when you don't have time for traditional underwriting.
DSCR requires 6-12 months of rental documentation. Hard money requires a clear exit plan and accepts higher loan-to-value ratios. The cost difference is dramatic: DSCR runs 1-2% higher than conventional, while hard money costs 8-12% plus points.
Pick DSCR if you own rental properties with documented income history. You're holding the property long-term and want a fixed 30-year loan. The lower rate and longer amortization mean predictable cash flow.
Choose hard money if you're flipping, need to close in two weeks, or don't have rental history yet. You're refinancing into DSCR or conventional within 12-24 months. The speed and flexibility justify the higher cost.
Yes. DSCR loans qualify you on the property's rental income alone. You'll need 6-12 months of documented rent history, bank statements, and lease agreements. Personal income doesn't drive the decision.
Hard money typically closes in 7-14 days. The lender funds based on property value and your exit plan. No income verification or appraisal delays slow the process down.
DSCR runs 1-2% above conventional rates. Hard money runs 8-12% plus 2-4% in points. Both are bridge or long-term options with different cost structures.
No. DSCR loans typically require 15-25% down depending on the property and your credit. Hard money usually asks for 10-15% down. Both are higher than conventional because rental income is less stable than W-2 employment.
Hard money is a bridge, not permanent. You'll refinance into DSCR or conventional within 12-24 months. The high rate and short term make it expensive long-term. Plan your exit before you borrow.