New Investor, DSCR Loans, Hard Money Loans, Multi-Family

[Michael Ochoa]

Hello everyone!
This is my first post here, I am super new to real estate investing and I'm excited to begin my real estate journey. Over the past few months, I've been diving deep into learning everything I can online—especially about DSCR loans and multifamily properties.

However, I feel like I've hit a bit of a wall. I know long-term rentals are the path I want to pursue, and I'm aiming to use DSCR loans to start closing deals and build wealth toward financial freedom. But now I'm unsure what the next step should be.

Should I be reaching out to a realtor? How do hard money loans fit into DSCR-based deals? Should I use a hard money loan to pay for the down payment, and go to another lender for a DSCR loan at the same time? How can I do the math to pay them both back? And is there anything else I should be focusing on or learning at this stage?

Thanks in advance—I appreciate any guidance!

[Steve Daddeo]

Hi Michael - Welcome to the journey. Great to see your enthusiasm and the research you’ve already done!

As for using a hard money loan to cover the down payment on a DSCR loan, I'd strongly advise against it. That kind of approach typically over-leverages the property, putting you in a risky financial position. If anything doesn't go exactly according to plan (vacancy, repairs, delays, etc.), you could quickly find yourself underwater.

Instead, I’d focus on one of two paths:

A) Save up the 20% down payment yourself. It may take time, but it puts you in a much stronger position, reduces your risk, and sets a solid foundation for your investing future.

B) Find a partner who can bring the down payment, while you bring the time and effort ("sweat equity"). You can handle the deal sourcing, management, and day-to-day work while your partner funds the project. It’s a great way to get started and build experience with less capital out of pocket.

You’re on the right track by educating yourself.  Stay cautious about strategies that involve stacking multiple layers of debt right out of the gate. Feel free to reach out if you want to talk more about partnerships or running the numbers.