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in Redondo Beach, CA
Redondo Beach rental properties command premium rents, but getting the right financing separates profitable deals from missed opportunities. DSCR loans and hard money serve different investor playbooks.
Most Redondo Beach investors see these as competing options. They're not. DSCR works for buy-and-hold with stable rental income. Hard money funds quick flips or heavy renovations before refinancing out.
DSCR loans ignore your W-2 income and tax returns. Lenders approve you based on the property's rental income divided by the mortgage payment. A DSCR of 1.0 or higher typically qualifies in Redondo Beach, where strong rents help most properties clear that bar.
You get 30-year fixed terms with rates 1-2% above conventional mortgages. Down payments start at 20% for single-family rentals. The loan treats your property like a business—if the rent covers the note, you're approved regardless of personal income.
These loans close in 3-4 weeks. No employment verification, no tax return analysis, no explaining business write-offs. You just need 12 months of reserves and proof the property generates qualifying rent based on an appraisal or lease agreement.
Hard money lenders fund based on after-repair value, not current condition. They'll lend 65-75% of what the Redondo Beach property will be worth after renovations. These loans close in 7-14 days because underwriting focuses on the asset, not the borrower.
Expect 9-12% interest rates with 2-4 points upfront. Terms run 6-24 months—this is bridge financing, not permanent debt. Most Redondo Beach fix-and-flip investors refinance into DSCR loans or sell before the hard money term ends.
Down payments run 25-35% of purchase price. Credit scores matter less than deal structure and exit strategy. Lenders want to see your renovation budget, timeline, and how you'll pay them off when the term expires.
Rate spread tells the story: DSCR runs 7-9%, hard money hits 9-12%. That 3% gap costs real money on a $1.5M Redondo Beach property—about $3,750 monthly. Hard money makes sense when speed or property condition blocks other options.
DSCR requires stabilized rental income. Hard money funds properties that can't rent yet—teardowns, major rehabs, properties needing code compliance work. If tenants can move in within 30 days, use DSCR. If you need 6 months of construction, hard money bridges the gap.
Approval speed differs by 2-3 weeks. DSCR takes 3-4 weeks with full appraisals and rent analysis. Hard money closes in under 2 weeks because lenders skip the rental income verification. That speed premium costs 3-4% in rate and points.
Choose DSCR when buying stabilized Redondo Beach rentals. The property already has tenants or can rent immediately. You want 30-year fixed debt and lower payments. Your timeline allows 3-4 weeks to close.
Pick hard money for distressed properties, major renovations, or time-sensitive deals. You're flipping or planning to refinance within 12-18 months. Speed matters more than rate. The property can't qualify for DSCR in current condition.
Most sophisticated Redondo Beach investors use both: hard money to acquire and renovate, then refinance into DSCR for long-term rental income. That strategy captures the speed of hard money and the economics of DSCR.
We see this pattern repeatedly—investors overpay with hard money when DSCR would work, or miss deals waiting for DSCR when hard money could capture them. Match the loan to the property's current state and your 12-month plan.
Yes, most Redondo Beach investors do exactly this. Once renovations finish and you have rental income, DSCR refinancing replaces expensive hard money with lower permanent rates.
Hard money funds vacant properties. DSCR requires rental income proof, so vacant properties only qualify after you secure tenants and can document the lease.
Neither loan type verifies W-2 income or tax returns. DSCR qualifies on property rent, hard money on asset value and exit strategy.
DSCR typically requires 20-25% down. Hard money demands 25-35% because they're funding based on future value, increasing their risk during renovation.
Yes, but hard money economics hurt more on smaller deals. The 2-4 point origination fee hits harder on a $400k property than $2M.