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in Redwood City, CA
Redwood City investors face a choice: long-term rental financing or quick bridge capital. DSCR loans fund buy-and-hold properties based on rent. Hard money closes fast for fix-and-flip projects.
Both skip traditional income verification. Both work for investors who don't qualify through W-2 documentation. The right choice depends on your timeline and exit strategy.
DSCR loans qualify you based on what the property earns, not what you earn. If rent covers the mortgage payment by 1.0x to 1.25x, you're approved. Terms run 30 years with rates typically 1-2% above conventional.
You'll need 20-25% down and decent credit, usually 640 minimum. Closing takes 30-45 days. This works for investors building rental portfolios in San Mateo County's stable neighborhoods.
Hard money lenders fund based on property value, not your financials. They'll loan 65-75% of the after-repair value. Rates run 9-12% with 2-4 points upfront. Terms last 6-24 months.
You can close in 7-14 days with minimal documentation. Credit matters less than deal structure and exit plan. This is bridge capital for flips or projects needing fast funding before permanent financing.
Timeline separates these products. DSCR takes a month to close but costs half the rate. Hard money closes in days but you're paying double-digit rates and expecting to refinance or sell within a year.
Down payment structures differ too. DSCR needs 20-25% of purchase price. Hard money funds based on ARV, so you might get rehab costs covered. That makes hard money work for properties needing significant repairs.
Choose DSCR if you're buying a rental property that's rent-ready or needs light cosmetic work. The 30-year term and lower rate make sense when you plan to hold for cash flow. You need rental comps showing strong income.
Pick hard money when speed matters or the property needs serious rehab. You're planning a 6-12 month flip or buying at auction. The high cost is temporary while you execute your project and exit to permanent financing or a sale.
Only for light cosmetic work. DSCR lenders need current rent comps, so major rehabs requiring permits don't qualify until the property is rent-ready and appraised.
Most hard money lenders accept 600+ credit, some go lower. The property and your exit plan matter more than your score for this asset-based lending.
Yes, that's a common strategy. Complete the rehab, establish rent, then refinance into a 30-year DSCR loan. You'll need six months of payment history on the hard money loan.
Expect 1-2% higher than conventional rates. You're paying for the flexibility of qualifying without W-2 income. Rates vary by borrower profile and market conditions.
Typically 65-75% of after-repair value. On a property worth $1.5M fixed up, you might get $1M to $1.125M, covering purchase and rehab costs combined.