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in Atwater, CA
Both DSCR and hard money loans skip traditional income verification, but they solve different investor problems. One finances long-term rental holds while the other funds quick flips and rehabs.
Atwater investors need the right tool for the job. Choose wrong and you'll overpay on rates or miss your exit timeline. Here's how these two asset-based loans actually work in practice.
DSCR loans qualify you based on rental income alone. Lenders calculate the property's monthly rent divided by the total monthly debt service. Most want a ratio above 1.0, meaning rent covers the full payment.
These are conventional-length mortgages, typically 30 years with fixed or adjustable rates. You'll need 20-25% down and credit above 620. Rates run 1-2% higher than owner-occupied loans but far below hard money territory.
DSCR works for buy-and-hold investors building rental portfolios. You get stable long-term financing without showing tax returns or pay stubs. Properties must be tenant-ready or already occupied.
Hard money loans are short-term asset-based financing, usually 6-24 months. Lenders care about the property's after-repair value, not your income or the current rent. Approval happens in days, not weeks.
Expect rates between 8-15% plus 2-5 points upfront. These aren't cheap, but speed and flexibility justify the cost for the right deals. Credit standards are loose—some lenders approve scores in the 500s.
This is bridge financing for flips, major rehabs, or properties needing work before they qualify for conventional loans. You refinance out or sell before the balloon payment hits. Miss that exit and costs pile up fast.
Timeline separates these loans more than anything. DSCR gives you 30 years to pay. Hard money gives you 12-18 months to execute and exit. One finances stable income properties. The other finances transformation projects.
Cost structure flips between them. DSCR charges market-adjacent rates with normal closing costs. Hard money hits you with double-digit rates plus heavy points upfront—but closes in a week when you need to move fast.
Property condition matters differently. DSCR requires rent-ready properties that appraise clean. Hard money funds distressed properties banks won't touch, valuing the future state instead of current condition.
Pick DSCR when you're buying a rental property to hold long-term. The rent needs to cover your payment from day one. You want conventional terms without showing your tax returns or dealing with DTI calculations.
Pick hard money when you're flipping or rehabbing in Atwater. You need fast closes to compete with cash buyers. The property needs work before any conventional lender will touch it. You have a clear 6-12 month exit plan through sale or refinance.
Don't use hard money for buy-and-hold deals—you'll burn cash on high rates. Don't use DSCR for major rehabs—lenders won't fund properties needing substantial work. Match the loan term to your actual hold period.
Yes, that's a common strategy. Finish rehab, stabilize tenants, then refinance into long-term DSCR financing. This gives you fast acquisition funding with a path to sustainable rates.
Hard money has looser credit and income requirements. DSCR needs better credit and properties that already cash flow. Hard money approves faster but costs significantly more.
Yes. DSCR works great for 2-4 unit rentals with stable tenants. Hard money funds apartment building acquisitions and conversions when you need speed.
You'll pay extension fees, typically 1-2 points per quarter. Some lenders force refinance or foreclosure at maturity. Build timeline cushion into your projections.
Yes, if conventional lenders won't close fast enough. Use hard money to acquire, then refinance within 6 months into DSCR once you've seasoned ownership and documented rent.