Loading
in Santa Monica, CA
Santa Monica investors face a choice between DSCR loans for rental income and hard money for quick flips. Both skip personal income verification, but they serve completely different strategies.
DSCR loans work for buy-and-hold landlords who want stable terms. Hard money fits bridge scenarios—you're renovating fast or need to close in days, not weeks.
DSCR loans qualify based on rental income alone. If your property generates enough rent to cover the mortgage payment by 20-25%, you're approved without tax returns.
Terms mirror conventional mortgages: 30-year fixed rates, lower down payments (20-25%), and competitive pricing. You're not paying a premium for skipping income docs.
Santa Monica rental properties often cash flow well enough to hit DSCR requirements. Ocean Park and Sunset Park units typically clear the 1.25 ratio threshold easily.
Hard money lenders fund based on property value, not income or credit. You get cash fast—often in 7-10 days—but you pay heavily for speed.
Rates run 9-14% with 2-4 points upfront. Terms max out at 12-24 months because these loans aren't meant to be held long-term.
Santa Monica fix-and-flip projects use hard money when the deal requires instant action. You're buying at auction or beating cash offers with a 5-day close.
Rate spread tells the story: DSCR loans cost 7-9%, hard money runs 9-14%. DSCR requires 20-25% down, hard money wants 25-35% equity cushion.
Timeline separates them further. DSCR closes in 15-30 days like any mortgage. Hard money funds in under two weeks, sometimes five days if you push.
Exit strategy determines which loan works. DSCR borrowers refinance or hold forever. Hard money borrowers flip the property or refinance into DSCR within a year.
Choose DSCR if you're buying a rental and plan to hold it. Santa Monica's strong rental market makes cash flow easy to prove, and you'll save thousands in interest over time.
Pick hard money when speed trumps cost. You're flipping a property, need to close fast to win a deal, or the property doesn't cash flow yet because it needs work.
Most Santa Monica investors use both at different times. Hard money gets you in the door fast, then you refinance to DSCR once renovations boost the rental income.
Yes, most investors do this after renovations are done. You'll need the property to cash flow and meet DSCR requirements, typically a 1.25 ratio.
DSCR loans cost less upfront—standard fees only. Hard money charges 2-4 points plus fees, adding $20,000-$40,000 on a million-dollar loan.
Yes, both are investment property loans only. DSCR requires current or projected rental income; hard money doesn't care about occupancy.
Hard money wins on speed—7 days versus 15-30 for DSCR. But DSCR still closes faster than most conventional loans.
You can, but it's expensive. Use hard money only if you need fast acquisition, then refinance to DSCR within 6-12 months.