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in Pasadena, CA
Pasadena investors often face a choice: finance with DSCR or go the hard money route. Both skip personal income verification, but they serve completely different investment strategies.
DSCR loans work for rental holds with proven cash flow. Hard money fits quick flips and renovations where speed matters more than rate. Your timeline and exit plan determine which one makes sense.
DSCR loans qualify based on rental income divided by mortgage payment. If the property generates enough rent to cover the debt, you get approved — no tax returns or paystubs required.
You typically get 30-year fixed terms with rates 1-2% above conventional. Most lenders want a 1.0+ debt service coverage ratio, meaning rent equals or exceeds the full PITIA payment.
Down payments start at 20-25% for long-term rentals. The property itself proves qualification through an appraisal and rent analysis, not your personal finances.
Hard money loans fund in days, not weeks. Lenders approve based on the property's after-repair value and your equity position — credit and income barely factor in.
Terms run 6-24 months with rates between 8-15%. You pay points upfront, usually 2-5% of the loan amount, to close fast and sidestep traditional underwriting.
These loans expect a clear exit: refinance to permanent financing or sell the property. No one carries hard money long-term — the rate and short duration force you to execute quickly.
Rate spread tells the whole story. DSCR loans run 7-9% with 30-year amortization. Hard money hits 10-15% with balloon payments due in under two years.
DSCR lenders underwrite for 2-3 weeks and want seasoned rental income or strong rent comps. Hard money closes in a week but costs 3-5 points upfront plus higher monthly payments.
You hold DSCR loans for years as permanent financing. Hard money is bridge capital — use it to buy and renovate, then refinance out within 12-18 months or sell.
Choose DSCR if you're buying a turnkey rental or a property that needs minor cosmetic work. The lower rate and long-term structure fit buy-and-hold strategies in Pasadena's strong rental market.
Go hard money when speed wins the deal or the property needs major renovation. You can't get DSCR on a gutted craftsman — hard money funds those purchases and rehabs before you refinance to permanent debt.
Many Pasadena investors use both: hard money to acquire and renovate, then DSCR to refinance and hold. That two-step approach captures value-add deals without overpaying for capital long-term.
Not usually. DSCR lenders fund rent-ready properties or those needing only minor cosmetic updates. Major renovations require hard money first, then refinance to DSCR.
Most hard money lenders close in 5-10 business days if you have clear title and basic documentation. Some do 72-hour closings for an extra point.
No. Hard money approves on property value and your equity position. They don't care about current income or future rent — just ARV and exit strategy.
DSCR lenders want 660-680 minimum. Hard money will go down to 600 or even lower if you bring enough equity and have a solid deal.
Yes. That's the standard play for value-add investors. Buy and renovate with hard money, then refinance to DSCR once the property is rent-ready and stabilized.
Hard money costs far more if you hold it past 12 months. DSCR has higher total interest paid over 30 years, but monthly cost is much lower than hard money.