Question 1

Can I use a DSCR loan for a fix-and-flip in San Luis Obispo?

Accepted Answer

No, DSCR loans require the property to generate rental income from day one. Hard money is built for flips with short timelines.

Question 2

Which loan has lower closing costs?

Accepted Answer

DSCR has lower total costs. Hard money charges 2-4 points upfront plus higher rates, which adds up fast even on short terms.

Question 3

Do both loans require appraisals?

Accepted Answer

Yes. DSCR appraises current value and market rent. Hard money appraises current value and after-repair value to determine loan amount.

Question 4

Can I refinance hard money into a DSCR loan?

Accepted Answer

Yes, that's a common exit strategy. Finish the rehab, get a tenant in place, then refinance into long-term DSCR financing.

Question 5

Which loan is easier to qualify for?

Accepted Answer

Hard money has fewer qualification hurdles but costs more. DSCR needs better credit and proven rental income but offers lower rates.

DSCR vs Hard Money Loans in San Luis Obispo: Which Investor Loan Fits Your Deal?