Two Deals, Two Deadlines, Two Loan Choices
- Alex: Found a bank-owned triplex needing a full gut. Seller wanted cash in 7 days.
Tool he used: Hard Money—fast funding, rehab money rolled in, pricey but quick. - Brianna: Spotted a light-cosmetic duplex one street over. Seller happy with a 30-day close.
Tool she used: DSCR Loan—approved on the property’s rent, 30-year payment from Day 1, no tax returns.
Same neighborhood, but the timeline and exit strategy dictated the best loan.
Quick Definitions
| Loan Type | What It Is (Plain English) |
|---|---|
| Hard Money | Short-term, high-interest bridge loan that funds fast and pays for rehab. |
| DSCR Loan | Long-term mortgage approved on the property’s cash flow (Debt-Service Coverage Ratio), not your W-2. |
Speed & Paperwork
| Feature | Hard Money | DSCR Loan |
|---|---|---|
| Close Time | 3–10 days | 2–4 weeks |
| Docs Needed | Basic ID, purchase contract | Appraisal + rent schedule |
| Repairs Funded | ✔️ Yes | ❌ No |
| Credit / Income Check | Light or none | Credit 620–680+, no income docs |
Cost & Terms
| Hard Money | DSCR Loan | |
|---|---|---|
| Rate / Points | 10–13 % + 1–3 pts | Conventional + ≈1–2 % |
| Term | 6–18 months | 30-year fixed or ARM |
| Down Payment / LTV | 10–20 % down (rehab financed) | 20–25 % down (no rehab) |
| Exit Strategy | Flip or refi | Hold long-term |
When to Use Which
Pick Hard Money if…
- You must close in days, not weeks.
- You need rehab funds rolled in.
- You’ll refi or sell within 12 months.
Pick a DSCR Loan if…
- The house is rent-ready or light cosmetic.
- You want a 30-year payment from Day 1.
- You’re building a long-term rental portfolio under an LLC.
How Alex & Brianna Came Out
| Investor | Result |
|---|---|
| Alex | Closed in 7 days, spent 5 months rehabbing, refinanced into a DSCR loan, pocketed $40 k flip profit. |
| Brianna | Closed in 28 days, rented immediately, now nets $550/month on a 30-year DSCR note—no refi or extra fees. |
Both wins—because each matched the loan to the deal’s timeline.
Key Takeaway
Use Hard Money for speed and heavy rehabs.
Use DSCR Loans for rentals that already (or soon will) cash-flow.
Get this right, and the financing becomes a growth lever, not a headache.
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Let’s get your next deal funded—the smart way.
– Ken Guzman, Mortgage Advisor NMLS1287517