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in Torrance, CA
Both DSCR and hard money loans skip traditional income verification. They work well for Torrance investors who need flexible financing. The difference is timeline and purpose.
DSCR loans are rental hold strategies with longer terms. Hard money is for quick flips and rehabs. Your exit plan determines which one fits.
DSCR loans qualify you based on rent, not your tax returns. The property's rental income must cover the mortgage payment by a certain ratio, usually 1.0 or higher. You get 30-year fixed terms like conventional loans.
Rates run 1-3% higher than agency products. You can lock long-term rental cash flow in Torrance neighborhoods near good schools or the beach. This works for landlords building portfolios, not flippers.
Hard money lenders fund based on the property's value, not your credit score or income. You get cash fast, often in days. These are short-term loans, usually 6-24 months, with higher rates and points.
Expect rates around 8-15% and origination fees of 2-5 points. Hard money makes sense when you need to close quickly on a Torrance fixer or compete with cash buyers. You refinance or sell before the term ends.
Local decision guide
Use this comparison to weigh DSCR Loans and Hard Money Loans through local payment fit, eligibility, documentation, and timing before choosing a path in Torrance.
Both DSCR and hard money loans skip traditional income verification. They work well for Torrance investors who need flexible financing. The difference is timeline and purpose.
DSCR loans are rental hold strategies with longer terms. Hard money is for quick flips and rehabs. Your exit plan determines which one fits.
DSCR loans qualify you based on rent, not your tax returns. The property's rental income must cover the mortgage payment by a certain ratio, usually 1.0 or higher. You get 30-year fixed terms like conventional loans.
Timeline separates these two. DSCR is long-term financing you hold for years. Hard money is bridge capital you pay off fast. DSCR requires the property to cash flow from day one. Hard money only cares about after-repair value.
Cost structure differs too. DSCR has lower rates but stricter rental income rules. Hard money costs more but approves deals DSCR won't touch, like major rehabs or properties needing tenant eviction before they rent.
Choose DSCR if you're buying a Torrance rental that's already tenant-ready or needs minor cosmetic work. You want steady cash flow and plan to hold long-term. The property must generate enough rent to qualify.
Pick hard money when speed matters or the property needs heavy rehab. You're flipping a South Bay fixer or need to close in a week to beat other buyers. You'll refinance to DSCR or conventional once repairs are done, or sell outright.
Yes, most Torrance investors do this. You use hard money to buy and fix, then refinance to DSCR once the property rents and appraises higher.
Hard money wins on speed, often closing in 3-7 days. DSCR takes 3-4 weeks because lenders need rent comps and full appraisals.
Correct. Neither works for primary residences. Both are designed for investment properties you rent out or flip.
DSCR usually requires 640 minimum. Hard money lenders care less about credit, sometimes approving scores in the 500s if equity is strong.
Absolutely. Use hard money for flip projects and DSCR for stable rental holds. Many investors run both strategies simultaneously.