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in Tracy, CA
Tracy's rental market draws investors chasing cash flow from steady tenant demand. Choosing between DSCR and hard money loans comes down to whether you're buying stabilized income property or flipping a distressed house.
DSCR loans work for properties already rented or rent-ready. Hard money loans fund quick acquisitions and rehabs. Both skip traditional W-2 income verification, but they serve completely different investment strategies.
DSCR loans qualify you based on rental income, not your job. Lenders calculate the property's monthly rent divided by the monthly mortgage payment. If that ratio hits 1.0 or higher, the deal works.
You get 30-year fixed terms with rates typically 1-2 points above conventional mortgages. Most lenders require 20-25% down and accept LLCs as borrowers. No tax returns, no employment letters, no DTI calculations.
These loans close in 3-4 weeks. They're built for investors holding properties long-term who want predictable payments and can show the property generates enough rent to cover the mortgage.
Hard money loans fund based on the property's after-repair value, not current condition. Lenders advance 70-80% of ARV, giving you capital for both purchase and rehab. These close in 7-14 days when you need to beat cash offers.
Expect rates of 9-12% with 2-3 points in origination fees. Terms run 6-24 months because lenders assume you're flipping or refinancing out quickly. Credit scores matter less than your exit strategy and experience.
Tracy's inventory of older homes near I-205 attracts flippers. Hard money gives you speed and flexibility conventional loans can't match when properties need serious work before they'll appraise or rent.
Cost separates these loans immediately. DSCR rates run 7-9% over 30 years. Hard money hits 9-12% over 6-18 months plus hefty origination points. Your monthly payment on hard money might be interest-only, but you're refinancing or selling fast.
DSCR loans require a performing asset. The property must be rent-ready or already leased. Hard money funds properties in any condition, including uninhabitable teardowns. If it needs work before tenants move in, hard money is your only non-QM option.
Approval criteria flip completely. DSCR lenders want rental comps showing market rent covers the mortgage. Hard money lenders want a solid ARV appraisal and your plan to add value. One focuses on income, the other on equity creation.
Choose DSCR when you're buying a Tracy rental that's already generating income or ready to rent immediately. If your goal is monthly cash flow and you're holding long-term, the lower rate and fixed term beat hard money every time.
Pick hard money when you're flipping a distressed property or need to close in under two weeks. That Tracy foreclosure near West Valley Mall won't wait for a 30-day DSCR loan. Speed and property condition dictate this choice, not your preference.
Only if it's rent-ready after minor cosmetic work. Most DSCR lenders require properties to be habitable and ready to lease immediately after closing.
Yes, but less than conventional lenders. Most hard money lenders accept scores as low as 580-600 if your deal and experience are strong.
Absolutely. Many investors use hard money for acquisition and rehab, then refinance into a DSCR loan once the property is rented and stabilized.
DSCR loans typically have lower total costs. Hard money charges 2-3 points upfront plus higher rates, while DSCR runs closer to conventional loan fees.
Yes. Both DSCR and hard money lenders routinely lend to LLCs, making them ideal for investors who want liability protection.