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in Auburn, CA
Auburn investors face a clear choice between DSCR and hard money loans. Both skip personal income verification, but they serve completely different investment strategies.
DSCR loans work for buy-and-hold rental properties with stable cash flow. Hard money fits fix-and-flip projects or properties that need major work before they can qualify for traditional financing.
DSCR loans qualify you based on the property's rental income, not your tax returns. The rent must cover 100-125% of the mortgage payment (DSCR of 1.00-1.25 depending on the lender).
You get 30-year fixed terms with rates typically 1-2% above conventional mortgages. Most lenders require 20-25% down and a 660+ credit score, though some accept 620.
These loans close in 3-4 weeks and work for single-family homes, condos, and small multifamily properties. You can own the property in an LLC, which most traditional loans don't allow.
Hard money loans fund based on the property's after-repair value, not current condition. Lenders care about the exit strategy and how you'll repay them in 6-24 months.
Expect rates of 9-14% with 2-5 points upfront. Most hard money lenders fund 65-75% of the purchase price plus 100% of rehab costs in draws as work completes.
Credit standards are loose—some lenders approve borrowers with 580 scores or recent foreclosures. The property is the real collateral, not your financial profile.
The rate gap is huge. DSCR loans run 7-8% while hard money hits 10-14%. But hard money closes in 7-10 days versus 3-4 weeks for DSCR.
DSCR requires a performing property that can rent immediately. Hard money doesn't care if the property is uninhabitable—that's the point. You're buying time and speed to execute a flip.
Exit strategies differ completely. DSCR borrowers hold long-term and refinance when rates drop. Hard money borrowers sell the renovated property or refinance into DSCR or conventional within a year.
Choose DSCR if you're buying a rental property in decent condition that can generate income within 30 days. Auburn's single-family rental market can support this strategy if you buy below median price points.
Hard money makes sense for distressed properties, tight timelines, or when you're competing against cash offers. It's also the only option if the property can't pass appraisal in current condition.
Some Auburn investors use both: hard money for acquisition and renovation, then refinance into DSCR for long-term hold. This strategy costs more upfront but builds a rental portfolio faster than waiting for turnkey properties.
No. DSCR loans require the property to generate rental income immediately. Use hard money for properties that need renovation before they can rent.
DSCR loans cost less upfront—standard closing costs with no points. Hard money charges 2-5 points plus higher interest, but you're paying for speed and flexibility.
Yes. Both DSCR and hard money lenders allow you to hold title in an LLC, which helps separate personal and investment liabilities.
Most hard money lenders offer 6-month extensions for a fee. Plan your exit before you close—sell or refinance into permanent financing within the original term.
Some lenders offer both products and make the transition easier. Ask upfront if they have a refi path from hard money to DSCR.