California rentals can pencil out with a DSCR loan, but statewide rent caps and city short-term rental rules change the numbers, so check both before you buy.
What is different in California
- Statewide rent caps (AB 1482) limit yearly increases for many buildings over 15 years old, with exemptions, including many single-family homes owned by individuals that give the required notice.
- Cities such as Los Angeles, San Francisco and Oakland add their own rent control and eviction rules on older buildings.
- Short-term rentals are regulated city by city: Los Angeles generally limits them to your primary residence with registration, and San Diego licenses and caps whole-home rentals.
- Prop 13 resets the property tax to the price you pay, which sets the tax figure in the DSCR calculation.
- DSCR loans let you close in an LLC; the LLC pays California’s annual franchise tax.
Questions
Can I get a DSCR loan in California?
Yes. DSCR lenders lend statewide; what varies by city is whether short-term rental income can count, since many cities limit short-term rentals.
Does rent control affect a DSCR loan?
Lenders use market rent or the lease, so rent caps don’t change the formula, but they limit how fast below-market rents can rise, which matters for buildings with long-term tenants. See also: DSCR investor loans.
Can I Airbnb a California property I buy with a DSCR loan?
Only where the city allows it. In Los Angeles, short-term rentals are generally limited to your own primary home, so a DSCR loan on an Airbnb plan there rarely works.
Related
- DSCR investor loans
- DSCR vs hard money loans
- Condotel & short-term rental loans
- DSCR calculator
- Short-term rental DSCR calculator
Investment property loans in other states: Arizona, Florida, Ohio. All of California: mortgage loans in California.
