I understand they have a little bit higher interest rate, but what are the risks of DSCR loans?

You could buy a distressed deal, add some value (as a team), and refinance when interest rates are more favorable. 

The reason is, you must continue the interest clock on each year's taxes to up to the present, at whatever the interest rate was at the time of the auction.

Potentially lower down needed of 15% with better rate and 6% cap in IPC’s

The trade-off is higher interest rates and points.

Our area has a good selection of hard money lenders, and every now and then, you might find an owner willing to carry the loan, often at attractive rates.

For the $525K property, with the low mortgage rate(you will probably never get a such low rate), it might make sense to hold onto it for now, especially if you can still sell it as a primary residence within the next three years and avoid capital gains taxes.

2. don't use an appreciation rate.

If you own this as a rental then there is not homestead exemption and you'll pay much higher tax rate than a resident/owner occupant in SC. 

Your interest rates are low. 8.5% is around the "market rate" for owner finance buyers right now...30-yr, fully-amortizing2.