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in South San Francisco, CA
South San Francisco investors face a choice: DSCR loans for long-term rental holds or hard money for quick flips and rehabs. Both skip traditional income verification, but they serve different strategies.
DSCR works when you want to hold property and collect rent. Hard money fits when you need fast cash to buy, fix, and sell. Your timeline and exit plan determine which makes sense.
DSCR loans qualify you based on the property's rental income divided by the monthly debt payment. Lenders want a ratio of 1.0 or higher — meaning rent covers the mortgage. You can close in 2-3 weeks with 20-25% down.
These are 30-year fixed loans, just like conventional mortgages. Rates run 1-2% higher than traditional loans, but you skip tax returns and pay stubs entirely. The property income is all that matters.
Hard money lenders focus on the property's after-repair value, not your income or credit. You can close in 5-10 days, making them ideal for competitive South San Francisco markets where cash offers win. Rates typically run 9-12%.
These are short-term loans — usually 6 to 24 months. You pay interest-only monthly, then refinance or sell to pay off the balance. Down payments range from 10-30% depending on experience and project scope.
Rate and term separate these products. DSCR gives you 30 years at 7-9%. Hard money gives you 12 months at 10-12%. DSCR makes sense when monthly cash flow matters. Hard money works when speed and exit timing matter more than rate.
Qualifying also differs. DSCR lenders pull credit and want 620+ scores. They verify the property appraises and rent covers debt. Hard money cares about equity and exit strategy — credit scores under 600 still get approved if the deal works.
Use DSCR when you plan to rent the property long-term. It's built for buy-and-hold investors who want fixed payments and predictable cash flow. The lower rate saves you thousands over time if you're keeping the property for years.
Use hard money when you're flipping or rehabbing. The higher rate doesn't matter if you're selling in six months. Fast closing lets you compete with cash buyers, and you're not stuck with a 30-year mortgage on a property you plan to flip.
DSCR works for rentals, not flips. Lenders underwrite based on rental income, so the property needs a tenant. Use hard money for rehab projects you plan to sell.
DSCR lenders want 620 minimum, though 680+ gets better rates. Hard money often approves 580 scores if the deal has enough equity and a clear exit.
Hard money closes in 5-10 days. DSCR takes 2-3 weeks. Speed matters when competing against cash offers on multi-unit properties near biotech corridors.
Yes, and many investors do. Close fast with hard money, finish the rehab, get a tenant in place, then refinance to DSCR for lower payments.
Both work for 2-4 units and larger buildings. DSCR caps around 8 units with most lenders. Hard money goes higher if the project makes sense.