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in Placentia, CA
Placentia investors have two powerful financing options for rental properties and fix-and-flip projects. DSCR loans and hard money loans serve different purposes in your investment strategy.
Both are non-QM loans that don't rely on traditional income verification. Understanding their differences helps you choose the right tool for your specific real estate goals in Orange County.
DSCR loans qualify investors based on rental property income rather than personal income. The property's cash flow determines your borrowing power, not your tax returns or W-2s.
These loans work best for buy-and-hold investors seeking long-term rental income. You get traditional loan terms with 30-year fixed options and competitive interest rates.
Hard money loans are short-term, asset-based financing primarily used for acquisitions and renovations. Lenders focus on the property's current and after-repair value rather than your income.
These loans close quickly, often within days, making them perfect for competitive situations. Terms typically range from 6 to 24 months with higher interest rates reflecting the short duration.
The main difference lies in loan duration and purpose. DSCR loans offer long-term financing for stabilized rentals, while hard money provides quick capital for acquisitions and rehabs.
Rates vary by borrower profile and market conditions. DSCR loans typically have lower rates but require properties with existing rental income. Hard money costs more but works for properties needing renovation.
Approval speed differs significantly. DSCR loans take 2-3 weeks to close, while hard money can fund in days. Your timeline and exit strategy determine which option makes sense.
Choose DSCR loans when buying turnkey rental properties or refinancing performing rentals in Placentia. These loans maximize cash flow with lower monthly payments and stable long-term rates.
Hard money suits fix-and-flip projects, properties needing major repairs, or competitive bidding situations. The speed and flexibility justify higher costs when you plan a quick exit.
Many investors use both strategically. Start with hard money to acquire and renovate, then refinance into a DSCR loan for long-term hold. This approach optimizes both phases of your investment.
DSCR loans require existing rental income, so they don't work for properties needing major renovation. Use hard money for rehabs, then refinance to DSCR for long-term holding.
Hard money loans close much faster, often within 5-10 days. DSCR loans typically take 2-3 weeks. Speed depends on your specific situation and documentation readiness.
DSCR loans generally require 620+ credit scores. Hard money lenders are more flexible with credit since they focus primarily on property value and equity position.
DSCR loans typically require 20-25% down for investment properties. Hard money lenders usually want 25-35% down, depending on the project and borrower experience.
Yes, both are non-QM loans that don't require tax returns or W-2s. DSCR uses property income, while hard money focuses on the asset's value and your equity.