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in South El Monte, CA
South El Monte investors face a clear choice: rental income financing or quick flip capital. DSCR loans work for buy-and-hold properties generating monthly rent. Hard money loans fund fast acquisitions and rehabs with short timelines.
Both skip traditional W-2 income verification. Your property strategy determines which makes sense. DSCR builds long-term rental portfolios while hard money executes quick value-add plays.
DSCR loans qualify you based on rental income divided by mortgage payment. Lenders want a ratio of 1.0 or higher, meaning rent covers the full payment. Rates run 1-2% above conventional, and you hold these loans like traditional mortgages.
You can close in 2-3 weeks with just bank statements and a lease agreement. No tax returns, no employment letters, no income documentation. The property finances itself through cash flow, not your day job earnings.
Hard money loans fund based on property value, not income or credit score. Lenders advance 65-75% of purchase price or after-repair value. You pay 9-14% rates for 6-24 month terms, with points upfront ranging from 2-5%.
These close in 5-10 days when you need fast capital. Investors use them to acquire distressed properties, fund rehabs, or bridge to permanent financing. Exit via sale, refinance, or conversion to DSCR once renovations finish.
DSCR loans cost less and last longer. You get conventional-adjacent rates for 15-30 years. Hard money costs 3-4X more but closes in days instead of weeks. DSCR requires rental income verification while hard money only cares about equity position.
Down payments differ significantly. DSCR asks for 20-25% on investment properties. Hard money wants 25-35% but approves deals traditional lenders reject. DSCR penalties mirror conventional loans while hard money charges prepayment fees and extension costs.
Choose DSCR when buying rental properties you plan to hold. It works for stabilized buildings with existing tenants or properties hitting the market rent-ready. You need patience for 2-3 week closings but gain sustainable financing costs.
Pick hard money for distressed acquisitions, auction purchases, or heavy rehab projects. Use it when speed matters more than rate, or when the property can't qualify for DSCR yet. Plan your exit before signing—these loans demand quick action, not long holds.
Yes, most investors do exactly this after completing renovations. Once the property generates rental income and stabilizes, DSCR financing replaces expensive hard money with sustainable rates.
Hard money wins on speed with 5-10 day closings. DSCR loans take 2-3 weeks due to rental income verification and appraisal requirements.
DSCR loans accept new investors with strong rental income ratios. Hard money lenders vary—some require prior flips while others focus only on deal equity and exit strategy.
DSCR lenders want 640-680 minimum credit scores. Hard money cares less about credit, sometimes approving scores below 600 if equity position is strong.
Absolutely. Many investors use hard money to acquire and renovate, then refinance into DSCR for long-term rental holds. This strategy combines speed with sustainable financing.