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in Lancaster, CA
Lancaster's investor market runs on two distinct financing engines. DSCR loans fund long-term rental holds using property income. Hard money backs quick flips and gut rehabs with asset-based approval.
Most investors use both at different deal stages. DSCR works when rental cash flow covers the mortgage. Hard money steps in when you need fast closings or the property needs major work before it can rent.
DSCR loans qualify you based on what the property earns, not your tax returns. Lenders calculate rent divided by mortgage payment. You need a ratio of 1.0 or higher — meaning rent covers the full payment.
These work for buy-and-hold investors building rental portfolios. Rates run 1-2% above conventional loans. Terms go up to 30 years fixed with 20-25% down. No income docs, no employer calls, no DTI calculations.
Hard money lenders fund based on property value and exit strategy. They don't care about your income or the current condition. You get approved on after-repair value and your track record flipping properties.
Loans close in 5-10 days with minimal paperwork. Rates run 9-13% with 2-4 points upfront. Terms max out at 12-24 months. These are bridge loans — you refinance or sell before the balloon payment hits.
Hard money costs 3x what DSCR costs but closes 10x faster. A DSCR loan at 7.5% over 30 years builds equity slowly. Hard money at 11% for 12 months eats profit unless you flip fast or refinance out.
DSCR requires rent-ready properties with stable tenants. Hard money funds vacant houses, major rehabs, and properties banks won't touch. Timeline drives the choice — DSCR takes 3-4 weeks to close while hard money funds in days.
Use DSCR when you're buying a rental that's already habitable. The property needs to generate enough rent to cover the mortgage from day one. Works for turnkey purchases, inherited tenants, or light cosmetic updates.
Hard money fits fix-and-flip projects, auction purchases, or anything requiring major renovation. You need a clear exit — either refinancing to DSCR once renovations finish, or selling within 12 months. The higher cost only works if your profit margins justify it.
Not for major work. DSCR lenders need current rent or market rent projections on habitable properties. Heavy rehabs require hard money first, then refinance to DSCR.
DSCR typically requires 660+ credit with strong rental income. Hard money lenders focus less on credit, often approving scores in the 600s if the deal makes sense.
DSCR loans need 20-25% down. Hard money usually requires 25-35% down or equity, depending on the property's after-repair value and your experience.
Yes, this is common strategy. Investors use hard money for acquisition and rehab, then refinance to DSCR once the property is rent-ready and stabilized.
DSCR works for Lancaster's established rental areas. Hard money fits distressed properties common in parts of the market. Your timeline and property condition decide.