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in Daly City, CA
Real estate investors in Daly City have two powerful financing options that don't require traditional income verification. DSCR loans and hard money loans both serve investors, but they work in fundamentally different ways.
DSCR loans focus on a property's rental income to qualify borrowers for longer-term financing. Hard money loans use the property's value as collateral for quick, short-term funding. Understanding which loan matches your investment timeline makes all the difference.
San Mateo County's competitive market demands smart financing choices. Whether you're buying a rental property in Westlake or renovating a fixer in Serramonte, the right loan type can maximize your investment potential.
DSCR loans qualify investors based on a property's rental income rather than personal W-2 earnings or tax returns. Lenders calculate the debt service coverage ratio by dividing monthly rental income by the monthly mortgage payment.
These loans typically offer 30-year fixed terms with rates similar to conventional mortgages. Most lenders require a DSCR of at least 1.0, meaning the property generates enough rent to cover the mortgage payment.
DSCR financing works well for buy-and-hold investors who plan to keep properties long-term. You can close within 2-3 weeks and build a rental portfolio without maxing out your personal debt-to-income ratio.
Hard money loans use the property itself as primary collateral, allowing investors to close deals in days rather than weeks. These asset-based loans focus on the property's current or after-repair value instead of borrower financials.
Terms typically run 6-24 months with higher interest rates than traditional financing. Rates vary by borrower profile and market conditions. Lenders often fund up to 70-80% of the property's value.
Fix-and-flip investors and those needing speed rely on hard money to acquire properties quickly. The short-term structure matches projects where you'll refinance or sell within a year or two.
Timeline separates these two options most clearly. DSCR loans take 2-3 weeks to close with lower rates for long-term holds. Hard money closes in 3-7 days with higher rates designed for short-term projects.
Cost structure differs significantly between these loan types. DSCR loans charge rates closer to conventional mortgages with standard closing costs. Hard money carries higher rates plus points, but the speed often justifies the expense for time-sensitive deals.
Qualification criteria point in opposite directions. DSCR lenders want properties that generate positive cash flow from day one. Hard money lenders care about the property's value and your exit strategy, not monthly rent rolls.
Choose DSCR loans when you're buying a property that's already rented or rent-ready in Daly City. This option makes sense for investors building long-term portfolios who want to lock in favorable rates for 30 years.
Pick hard money when speed matters more than cost. If you're competing for a property in San Mateo County's fast market or need to start renovations immediately, hard money gives you the flexibility to move quickly.
Many savvy investors use both loan types strategically. Start with hard money to acquire and renovate a Daly City property, then refinance into a DSCR loan once it's stabilized and generating rental income. This approach combines speed with long-term affordability.
Yes, but it's expensive for long-term holds. Most investors use hard money for acquisitions, then refinance into a DSCR loan within 6-12 months to lower their rate and payment.
Hard money is typically easier since it focuses on property value rather than income. DSCR loans require the property to generate sufficient rental income to cover the mortgage payment.
DSCR lenders often accept first-time investors if the numbers work. Hard money lenders may require a clear exit strategy but typically care more about the deal than your experience level.
Most DSCR lenders require properties in rent-ready condition. For fixer properties, start with hard money to complete renovations, then refinance into a DSCR loan.
DSCR loans typically require 20-25% down. Hard money lenders often want 25-30% down or equity in the property to protect their position.