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in Benicia, CA
Both DSCR and hard money loans skip traditional income verification, but they serve different purposes for Benicia investors. DSCR loans work for rental properties that cash flow. Hard money loans fund quick acquisitions and rehabs.
The choice comes down to your timeline and property condition. DSCR loans take 3-4 weeks and require rent-ready properties. Hard money closes in days but costs significantly more.
DSCR loans qualify you based on the property's rental income divided by its monthly debt payment. Lenders want a ratio of at least 1.0, meaning rent covers the mortgage. Most require 1.25 to approve the loan.
These work for Benicia investors buying turnkey rentals or stabilized properties with tenants in place. Rates start around 7% with 20-25% down. Terms run 30 years, and you can close in 3-4 weeks without tax returns or W-2s.
Hard money lenders fund deals based on the property's current or after-repair value. They don't care about your income or the rental numbers. These loans close fast because underwriting focuses purely on the asset and exit strategy.
Benicia investors use hard money to grab properties at auction, flip distressed homes, or bridge to refinance. Rates run 9-14% with 2-5 points upfront. Terms last 6-24 months, and lenders typically fund 65-75% of purchase or ARV.
The rate gap hits your budget hard. DSCR loans around 7% cost $665 per month per $100K borrowed. Hard money at 12% costs $1,000 per month. That spread matters on a $500K Benicia duplex.
Property condition determines which loan works. DSCR requires rent-ready properties with current market rents. Hard money funds properties in any condition, including gut rehabs. Timeline also splits them: hard money for speed, DSCR for long-term holds.
Choose DSCR when buying a Benicia rental that's already generating income or needs only cosmetic work. The lower rate and long-term financing make sense if you're holding for cash flow. You'll need time to close and a property that appraises with tenants.
Pick hard money when speed matters or the property needs major work. Winning a foreclosure auction, beating competing offers, or funding a flip all justify the higher cost. Plan your exit before you close: sell, refinance to DSCR, or pay off from another source.
Yes, most investors use hard money to buy and renovate, then refinance to DSCR once the property is rent-ready. You'll need 6-12 months of rental history for the best DSCR terms.
DSCR loans typically require 660+ credit and review your full profile. Hard money lenders focus on the deal and accept lower scores, often 600 or below with more equity.
Both fund 2-4 unit properties. DSCR works better for stabilized multifamily. Hard money suits value-add multifamily deals where you're renovating units and raising rents.
DSCR at 7% costs roughly $2,660/month. Hard money at 12% for one year costs $4,000/month plus $8,000-$20,000 in upfront points. That's $33,000+ more for a 12-month hard money hold.
Only as bridge financing. Hard money's high cost and short term make it unsustainable for buy-and-hold. Use it to acquire, then refinance to DSCR or conventional within 12-18 months.