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in Monrovia, CA
Monrovia investors typically need financing that ignores W-2 income and focuses on the deal itself. DSCR loans and hard money loans both do this, but they serve completely different investment strategies.
DSCR loans finance rental properties you plan to hold long-term. Hard money loans fund quick flips or properties needing major rehab before they can qualify for traditional financing.
DSCR loans qualify you based on rent instead of your tax returns. If the property generates enough rent to cover the mortgage payment by at least 1.0x (some lenders require 1.25x), you can get approved regardless of what your 1040 shows.
These are 30-year mortgages with rates typically 1-2% higher than conventional loans. You need 20-25% down, decent credit (usually 640+), and the property must be rentable at closing.
Most Monrovia investors use DSCR loans for single-family rentals, small multifamily buildings, or out-of-state properties where their California tax returns would complicate approval.
Hard money loans are short-term financing based almost entirely on the property's value, not your financials. Terms run 6-24 months with rates between 9-14% plus 2-4 points upfront.
Lenders focus on after-repair value and your exit strategy. They want to know how you'll pay them back—either through a refinance into permanent financing or a sale after renovations.
These loans close fast, often in 7-14 days. That speed matters when you're competing for distressed properties in Monrovia where sellers want quick cash closings.
The rate gap is massive. DSCR loans currently run 7-9% with minimal upfront costs. Hard money starts at 9% but often hits 12-14% plus several points, meaning your first-year effective rate can exceed 16%.
Approval criteria flip completely. DSCR lenders need solid rent comps and a 1.0+ debt coverage ratio. Hard money lenders ignore the current rent and focus entirely on the property's resale value after repairs.
Timeline and purpose differ fundamentally. DSCR loans are permanent 30-year financing for properties you'll rent immediately. Hard money bridges you through renovations until you can refinance or sell, usually within 12 months.
Use DSCR loans when buying a Monrovia rental that's already habitable and will generate rent from day one. This works for turnkey properties, light cosmetic updates, or buy-and-hold strategies where you want permanent low-cost financing.
Use hard money when the property needs major work before it can be rented or when you're flipping. Also use it when speed matters more than cost—like beating 10 other cash offers on a probate sale.
Many Monrovia investors use both in sequence: hard money to acquire and renovate a distressed property, then refinance into a DSCR loan once it's rent-ready and you want to hold it long-term.
Only if it's already rentable. DSCR lenders require the property to generate rent immediately, so major rehab projects won't qualify until renovations are complete.
Hard money typically closes in 7-14 days. DSCR loans take 21-30 days since they require appraisals, rent comps, and full title work.
DSCR loans cost less upfront—usually 1-2% total. Hard money charges 2-4 points plus fees, often totaling 5-7% of the loan amount.
Yes. Both ignore your personal income location. DSCR and hard money lenders focus entirely on the Monrovia property itself.
Absolutely. This is the standard path for fix-and-hold investors—hard money funds the purchase and rehab, then DSCR refinances it for long-term holding.