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South Pasadena's stable renter demographics and limited housing inventory create consistent rental demand. Properties here hold value through market cycles, which lenders notice when pricing investor loans.
The city's Craftsman homes and vintage multi-family buildings attract long-term tenants willing to pay premium rents. That rental strength gives investors more financing options than in speculative markets.
Single-family rentals near South Pasadena High and small multi-units near the Gold Line stations generate reliable cash flow. These property types qualify for the widest range of investor loan programs.
Most investor loans require 15-25% down depending on property count and rental strength. First-time investors typically need 20% down, while experienced owners with multiple properties sometimes qualify at 15%.
DSCR loans approve based on rental income, not your W-2 or tax returns. If the property generates 1.0x to 1.25x its monthly debt payment in rent, you qualify regardless of personal income.
Credit requirements start at 620 for basic programs, 680 for better rates. Recent foreclosures or short sales add 3-7 years to your waiting period depending on the lender and loan structure.
Investor loans live in the non-QM space, which means rates run 1-2.5% higher than owner-occupied mortgages. You're paying for underwriting flexibility and the ability to finance multiple properties simultaneously.
Portfolio lenders dominate this space because they hold these loans instead of selling them. That gives them freedom to approve deals conventional lenders reject, but it also means rates vary wildly between lenders.
Some lenders cap you at four financed properties, others allow ten or more. If you're scaling a rental portfolio, choosing the right lender now prevents hitting artificial limits in two years.
Most investors in South Pasadena use DSCR loans because the rental income here justifies the debt service. A two-bedroom near Mission Street renting for $3,200 easily covers a $450,000 loan payment at current rates.
Hard money makes sense for value-add plays like converting a single-family into a permitted duplex. You close in 10 days, do the work, then refinance into a DSCR loan once the units are rented.
Bridge loans work when you need to buy before selling another property. They're expensive at 8-12% but let you move fast in South Pasadena's competitive market where good rentals get multiple offers.
I see investors leave money on the table by defaulting to their bank's investor program without shopping rates. Five lenders might give you five different rates on the same property with identical approval odds.
DSCR loans approve on rental income alone, no tax returns needed. Hard money approves on property value and ignores income entirely but costs 9-12% with points upfront.
Bridge loans give you 6-12 months to sort out permanent financing. Interest-only payments keep costs manageable while you're between properties or waiting for construction to complete.
Conventional investor loans cap at ten properties and require full income documentation. If you're already maxed out or self-employed with complex returns, non-QM investor products are your only path forward.
South Pasadena's strict owner-occupancy culture means investor buyers face real competition from families. Lenders want to see you can close fast, which often means higher down payments or proof of funds.
The city's rental ordinances and tenant protections add complexity lenders consider. You'll need to show you understand local landlord requirements, especially for pre-1978 properties with lead paint disclosure rules.
Properties near the Gold Line stations command premium rents from commuters, which strengthens your DSCR ratio. Lenders recognize this when underwriting because transit access reduces vacancy risk.
Small multi-family buildings are rare here and typically need renovation. Expect lenders to hold back 10-20% of the loan until repairs are complete, which affects your cash flow planning.
Yes, if the property is vacant or below-market rent, lenders use an appraisal with a rent schedule showing market rates. You'll need the property to hit the required DSCR ratio based on those projected numbers.
Non-QM lenders typically allow 5-10 financed properties, some go higher. Conventional loans cap at ten total, which is why investors switch to portfolio lenders as they scale.
Most lenders require 6 months of reserves per property, including your primary residence. That's 6 months of PITIA for each property, not 6 months of your total portfolio payment.
DSCR loans require rental income, so they won't work for flips. Use hard money for the purchase and renovation, then sell or refinance into a rental loan if you decide to keep it.
You'll still qualify with 620-679 credit, but expect rates 0.5-1.5% higher and potentially larger down payment requirements. Strong DSCR ratios help but don't fully offset credit pricing.
Taxes get reassessed at purchase price, which can double your monthly tax payment. Lenders use the new tax amount in the DSCR calculation, not the seller's old Prop 13 rate.
Investor Loans in South Pasadena