Should I use a hard money loan or DSCR loan for my first rental?

[Mohammed Milord]

Hi everyone,

I'm new to real estate investing. I would like to invest out-of-state on small multifamily properties. The issue is that I think I might have a high DTI due to my student loans. I don't really have any cash on hand for a down payment so Ideally, I would like to invest with no money down if possible. That's why I think a hard money lender would be a good avenue to start my real estate investment journey, seeing as hard money could cover the full purchase price and repair of the rental property. However, I've also heard that a DSCR loan is another alternative. My question is, which loan do you think is better considering my financial situation???

[Michael Dumler]

@Mohammed Milord, probably not the advice you want to hear, but I would recommend paying off your student debt before investing in real estate. To invest with no money down essentially means that you're going to have to acquire a deal significantly below market value. That's not to say it's entirely impossible, but with current market conditions, it's challenging. If you do happen to come across a home run deal, I'd also highly recommend parenting with someone who has experience with rehabs and working with hard money lenders. Hope this helps!