Rental / DSCR in Santa Barbara

By a wide margin: Santa Maria and Lompoc run close to double the gross yield of the City of Santa Barbara. As of July 2026, Zillow data puts Santa Maria at 4.60% gross yield (annual rent divided by value) and Lompoc at 4.50%, against 2.50% in the City of Santa Barbara and 3.3% to 3.4% in Goleta and Carpinteria. Those are gross figures with no expense data behind them, not cap rates, but they show the basis split that decides which submarket a DSCR loan actually pencils in. Run your own number with the DSCR calculator before you make an offer. Subject to underwriting.

Not on a covered unit right now, and that is a legal fact, not a conservative assumption. The City of Santa Barbara's Ordinance No. 2026-6206, in effect since February 26, 2026, freezes rent on covered multi-unit buildings with a certificate of occupancy issued on or before February 1, 1995, at the amount in effect on December 16, 2025, through December 31, 2026 or a permanent ordinance, whichever comes first. Single-family homes, most condominiums, and anything built after that 1995 date are exempt, and new tenancies after December 16, 2025 set their own rent. A permanent ordinance capping increases at the lesser of 60% of CPI or 3% is in draft with a targeted January 2027 start, but whether it has been adopted is not yet confirmed. A DSCR pro forma that assumes a rent increase on a covered pre-1995 building is not conservative, it is unlawful. Talk to your attorney before you buy one.

Model it, do not assume last year's lease-up repeats. Isla Vista, unincorporated Santa Barbara County next to UC Santa Barbara, is about 98.1% renter-occupied, so nearly the entire rental base is student tenancy. The university is also delivering roughly 3,900 new beds between the San Benito and East Campus housing projects to settle 2024 litigation over unmet housing commitments, with East Campus still working through Coastal Commission review as of late 2025. That much new supply landing beside a town this size is a real demand test for existing rental stock. There is no confirmed opening date or enrollment figure to size the impact precisely, so stress-test your rent assumption rather than underwrite to the current lease-up pace.

Short-term rentals are considered case by case, and in this county the permit question comes before the income question. Santa Barbara County runs five different short-term rental regimes inside one county line. In the City of Santa Barbara, a short-term rental is treated as a hotel use, is strictly prohibited in single-unit zones, and an accessory dwelling unit anywhere on the parcel bars short-term rental of the whole property, not just the ADU. Unincorporated inland areas allow only owner-present homestays; the unincorporated coastal zone remains unregulated because the Coastal Commission rejected the county's proposed short-term rental ban in 2018; Goleta licenses short-term rentals but has advanced, not yet confirmed adopted, rules that would bar LLC ownership and add a waiting period after purchase; Carpinteria issues a limited number of licenses inside a designated overlay district. A short-term rental pro forma is not the same thing as a DSCR pro forma, so get the permit and zoning confirmed for the specific parcel before you assume nightly income carries the loan.

Not on day one. Under the City of Santa Barbara's Just Cause Evictions Ordinance, a new owner of a building with five or more rental units must wait one full year from the acquisition date before serving any no-fault notice for demolition or substantial remodel, and a substantial-remodel displacement also requires an independent licensed construction expert's report showing the work cannot be done with tenants in place. That is an interest-reserve fact for your DSCR hold, not a footnote: size your carry for a year of in-place tenancy before any repositioning income shows up. Talk to your attorney about how the ordinance applies to your specific building.

More than the rate spread suggests, because every purchase resets to price. Under Prop 13, a Santa Barbara County purchase is reassessed to the sale price and then capped at 2% annual growth, and the county's total ad valorem rate for fiscal year 2025-26 runs from about 1.03% in Montecito to about 1.18% in the City of Guadalupe. On a $1,848,325 City of Santa Barbara purchase that bills about $19,482 a year at the median city rate; the same money buys a $668,983 Santa Maria property billed at about $7,443 a year. Run the reassessed number off your own purchase price, not the seller's bill, before you finalize your DSCR. Talk to your CPA about your specific parcel.

A DSCR (debt service coverage ratio) loan qualifies on the property's rental income instead of your personal income, so there are no W-2s or tax returns required. We compare the rent, from a signed lease or the appraiser's market-rent estimate, against the monthly payment. A DSCR of 1.00 means the rent covers the payment, and we lend with a DSCR as low as 0.75.

Our rental program starts around 5.50% interest-only, with 30-year fixed and 5/7/10-year ARM options, for a single property or a whole portfolio. The lowest pricing goes to strong credit, lower leverage, and a DSCR above 1.20; your quote depends on the file and is subject to underwriting.

We finance up to 80% loan-to-value on a purchase, with rate-and-term and cash-out refinances available, on loan amounts from $100K to $3M. Cash-out leverage is typically a little lower than purchase. The property's cash flow and your credit set your final leverage.

We start at 640, and the best pricing goes to strong credit. Because the loan qualifies on the asset, your score affects your rate and leverage more than whether you are approved.

Yes, short-term rentals are considered. We can underwrite using market or projected rents, and the property still needs to meet our DSCR. Tell us how the property is operated so we can structure it correctly.

Long-term rental loans usually carry a prepayment penalty, commonly a step-down such as 5/4/3/2/1. We offer flexible prepay structures, including buying down to a shorter penalty for a slightly higher rate, and we will lay out the options on your term sheet.