Loading
in San Bruno, CA
San Bruno investors have two powerful financing options when traditional mortgages don't fit. DSCR loans use property income to qualify, while hard money loans fund deals based on asset value. Both serve real estate investors, but they work in very different ways.
Your timeline and strategy determine which option makes sense. DSCR loans work for rental property purchases with longer holding periods. Hard money loans excel for quick acquisitions and fix-and-flip projects throughout San Mateo County.
DSCR loans qualify you based on rental income the property generates. Lenders calculate the debt service coverage ratio by dividing monthly rent by the mortgage payment. A ratio above 1.0 means the property generates enough income to cover its own debt.
These loans typically offer 30-year terms with rates higher than conventional mortgages but lower than hard money. You can purchase or refinance investment properties without providing tax returns or W-2s. San Bruno investors use DSCR loans for long-term rental strategies.
Down payments usually range from 20-25% of the purchase price. Closing takes 30-45 days, similar to traditional mortgages. The property itself must appraise and show rental income potential based on market rents.
Hard money loans fund quickly based on property value, not income or credit. Private lenders focus on the asset and your exit strategy. These short-term loans typically last 6-24 months, making them perfect for fix-and-flip projects in San Bruno.
Rates run significantly higher than DSCR loans, often 8-15% depending on the deal. Points at closing add 2-5% to upfront costs. Speed is the main advantage—you can close in days rather than weeks when competing for San Mateo County properties.
Loan-to-value ratios typically max out at 65-75% of purchase price or after-repair value. You need a clear exit strategy, whether selling the renovated property or refinancing into permanent financing. Hard money works when timing matters more than cost.
The cost difference stands out immediately. DSCR loans charge rates a few points above conventional mortgages. Hard money loans cost significantly more but deliver funds in a fraction of the time. Your holding period determines which cost structure makes sense.
DSCR loans require properties that already generate or will generate rental income. Hard money lenders care about property value and your renovation plan. If you're buying a rental property to hold, DSCR makes sense. If you're flipping a distressed property, hard money fits better.
Timeline expectations differ dramatically. DSCR loans follow traditional mortgage timelines with 30-45 day closings. Hard money can fund in 3-7 days when you need to close quickly on a San Bruno investment opportunity. Speed costs money in real estate financing.
Choose DSCR loans when acquiring rental properties you plan to hold long-term. The lower rates and 30-year terms make monthly payments manageable while building equity. San Bruno investors buying turnkey rentals or properties needing minor updates benefit from DSCR financing.
Hard money makes sense for fix-and-flip projects or properties needing major renovation. When you're competing with cash buyers in San Mateo County, hard money gives you cash-equivalent speed. Use it when your profit timeline is months, not years.
Some investors use both strategically. Start with hard money to acquire and renovate, then refinance into a DSCR loan for long-term holding. This approach combines the speed of hard money with the stability of DSCR financing. Your business plan drives the decision.
Yes, both work for first-time investors. DSCR loans require the property to generate sufficient rental income. Hard money lenders focus on the deal itself and your exit strategy rather than investment experience.
DSCR loans typically require properties in rentable condition since they're based on income generation. Hard money lenders fund distressed properties because they evaluate the after-repair value and your renovation plan.
DSCR loans usually require 20-25% down. Hard money lenders typically fund 65-75% of purchase price or after-repair value, meaning you need 25-35% down plus renovation costs. Rates vary by borrower profile and market conditions.
Absolutely. Many San Bruno investors use this strategy. Complete your renovation with hard money, then refinance into a DSCR loan for long-term holding. This gives you speed upfront and stability long-term.
Hard money loans excel for properties needing significant work. They fund based on after-repair value and close quickly. DSCR loans work best for properties already generating or ready to generate rental income without major renovation.