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in Sebastopol, CA
Sebastopol's rental market draws investors eyeing wine country properties and vacation rentals. Both DSCR and hard money loans bypass traditional income verification, but they serve completely different investment timelines.
DSCR loans work for buy-and-hold investors who want long-term financing on cash-flowing properties. Hard money fits fix-and-flip projects or quick acquisitions where speed trumps cost.
DSCR loans qualify you based on the property's rental income, not your tax returns. If the rent covers the mortgage payment with room to spare, you can get approved regardless of your personal income or job status.
These are 30-year fixed or adjustable loans with rates typically 1-2% above conventional. You need 20-25% down and a DSCR of at least 1.0, meaning rent equals or exceeds the monthly payment including taxes and insurance.
DSCR loans close in 21-30 days and work well for Sebastopol's vacation rental market. They're built for investors who plan to hold properties long-term and want predictable monthly payments.
Hard money loans fund based on the property's after-repair value, not your financials. Lenders care about the deal itself: purchase price, renovation budget, and projected sale price.
These are short-term loans, typically 6-24 months, with rates from 8-15% and points ranging from 2-5% of the loan amount. You'll need 20-30% down or equity, and the property secures the loan.
Hard money closes in 7-14 days, sometimes faster. That speed lets you compete with cash buyers on distressed Sebastopol properties or jump on time-sensitive deals that can't wait for traditional financing.
The rate gap is significant. DSCR loans run 7-9% while hard money hits 10-15%, and hard money adds points that DSCR loans typically don't charge.
DSCR loans need the property to cash flow from day one. Hard money doesn't care about current condition or rental potential, only the after-repair value you can prove.
Timeline separates them most clearly. DSCR loans are long-term holds with 30-year amortization. Hard money expects you out in under two years, either through refinance or sale.
Choose DSCR if you're buying a turnkey rental or vacation property in Sebastopol that generates immediate income. It's also right if you want stable monthly payments and plan to hold for years.
Pick hard money if you're flipping a fixer property, need to close in days, or bought something that won't qualify for traditional financing yet. Also use it when opportunity cost of waiting outweighs the higher rate.
Some investors use both strategically: hard money for the purchase and renovation, then refinance into a DSCR loan once the property is rent-ready. That approach captures speed upfront and long-term affordability after stabilization.
DSCR lenders typically want rent-ready properties. If it needs major repairs, hard money is the better fit until renovations are complete.
Hard money is faster and more flexible on borrower credit. DSCR requires stronger credit scores, typically 660+, but doesn't scrutinize income.
DSCR loans accept short-term rental income if documented properly. Hard money doesn't care about rental plans, only property value and your exit strategy.
DSCR loans usually require 660-680 minimum. Hard money lenders may go as low as 600 if the deal and equity position are strong enough.
Yes, that's a common strategy. Finish renovations on hard money, get tenants placed, then refinance into a DSCR loan for long-term financing.