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in Seal Beach, CA
Seal Beach investors have two powerful financing options for rental properties. DSCR loans and hard money loans serve different needs and timelines.
Both are non-QM loans that don't focus on personal income. Understanding their differences helps you choose the best fit for your investment strategy.
Your choice depends on your project timeline and goals. Long-term rentals favor one option while fix-and-flip projects favor another.
DSCR loans qualify investors based on rental property income rather than personal income. The property's cash flow determines approval, not your tax returns or W-2s.
These loans work best for long-term rental investments. Terms typically span 15 to 30 years with fixed or adjustable rates.
Rates vary by borrower profile and market conditions. Most lenders require the property to generate enough rent to cover the mortgage payment.
Hard money loans are short-term, asset-based financing for real estate investors. These loans focus on the property's value rather than borrower income or credit.
Primarily used for property acquisition and renovation projects. Terms usually range from 6 to 24 months with interest-only payments.
Rates vary by borrower profile and market conditions. Approval happens quickly, often within days, making them perfect for competitive purchases.
The main difference is loan duration and purpose. DSCR loans provide long-term financing while hard money offers short-term capital.
DSCR loans typically have lower rates and longer terms. Hard money loans cost more but fund faster and require less documentation.
DSCR loans need properties generating rental income. Hard money loans work for properties needing major rehab that can't produce immediate rent.
Closing timelines differ significantly between the two. DSCR loans take 3-4 weeks while hard money can close in under a week.
Choose DSCR loans for turnkey rentals or properties needing minor updates. These work when you plan to hold the property long-term and need sustainable financing.
Hard money fits fix-and-flip projects or properties requiring major renovation. Use it when speed matters or the property can't generate immediate rental income.
Many Seal Beach investors use both strategically. They buy and renovate with hard money, then refinance into a DSCR loan for long-term holding.
Your investment timeline determines the best choice. Short-term projects need hard money while buy-and-hold strategies favor DSCR loans.
Yes, many investors start with hard money for purchase and renovation, then refinance into a DSCR loan for long-term rental income.
DSCR loans typically offer lower rates than hard money. Rates vary by borrower profile and market conditions for both options.
Neither loan focuses on personal income. DSCR loans use rental income while hard money loans rely on property value and equity.
Hard money loans often close in 5-10 days. DSCR loans typically take 3-4 weeks due to more extensive underwriting requirements.
Hard money loans are designed for fix-and-flip projects. They fund quickly and work for properties that can't generate immediate rental income.