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in Etna, CA
Etna's rural rental market attracts investors chasing cash flow and fixer opportunities. Both DSCR and hard money loans work here, but they serve completely different purposes.
DSCR financing suits buy-and-hold investors with performing rentals. Hard money targets fix-and-flip plays or properties that need major work before traditional financing kicks in.
DSCR loans qualify you based on rental income, not W-2 paystubs. If the property generates enough rent to cover the mortgage payment by at least 1.0x, most lenders approve you regardless of personal income documentation.
Terms run 30 years with rates typically 1-2% above conventional loans. You need 20-25% down and the property must be rentable at closing—no major rehab projects qualify.
This works well for Etna investors buying turnkey rentals or stabilized properties. If you own multiple rentals and don't want to show tax returns, DSCR keeps underwriting simple.
Hard money loans approve based on the property's after-repair value, not your income or credit. Lenders care about equity—typically funding 65-75% of ARV including purchase and rehab costs.
Terms run 6-24 months with rates between 8-12%. Points cost 2-4% upfront. Speed matters here—approvals happen in days, funding in under two weeks.
Etna's older housing stock makes hard money useful for gut rehabs or properties conventional lenders won't touch. You pay premium rates for flexibility and fast closings, then refinance or sell when work finishes.
Timeline separates these products. DSCR takes 30-45 days to close and finances properties you plan to hold for years. Hard money closes in 7-14 days for projects you'll exit in under two years.
Cost structure flips too. DSCR rates run 6-8% with minimal points—affordable for long holds. Hard money hits 8-12% plus 2-4 points upfront, pricing that only makes sense for short flips.
Property condition matters most. DSCR requires rentable properties at closing—functional kitchens, working systems, habitable spaces. Hard money finances teardowns and gut jobs that wouldn't pass any other underwriting.
Choose DSCR if you're buying a rental property that already generates income or needs only cosmetic work. The lower rate and long term make holding profitable when rent covers your payment.
Pick hard money when you're flipping or the property needs major repairs before any conventional lender touches it. You'll pay more but close fast and finance renovation costs directly into the loan.
Many Etna investors use both strategically—hard money for the acquisition and rehab phase, then refinance into DSCR once the property rents and stabilizes. That sequence minimizes both time and cost.
Only minor cosmetic work. The property must be rentable at closing with all major systems functional—DSCR lenders won't fund gut rehabs or properties with structural issues.
Most hard money lenders close in 7-14 days once you provide property details and a scope of work. Some fund in as few as 5 days for straightforward deals.
No. First-time landlords qualify if the rental income covers the mortgage payment by the lender's required ratio, typically 1.0x to 1.25x depending on credit score.
DSCR typically requires 620-660 minimum. Hard money lenders care less about credit—many approve scores in the 500s since they focus on property equity and exit strategy.
Yes. That's a common strategy—use hard money for acquisition and rehab, then refinance into lower-rate DSCR once the property rents and appraises at the improved value.
Both work, but hard money adapts better to unique rural properties that fall outside conventional guidelines. DSCR works fine once you prove rental demand through comparable leases.