Compare
These two products get compared constantly and they solve opposite problems. Hard money buys speed on a property that is not yet financeable. DSCR provides permanent financing on one that is. Most investors who use them well use both, in sequence.
Side by side
| Hard money / bridge | DSCR | |
|---|---|---|
| Purpose | Acquire and renovate | Hold long term |
| Term | 6–24 months | 30 or 40 years |
| Rate | 9.5–13% | 6.5–8.5% |
| Points | 1.5–3 | 0–2 |
| Payment | Interest only on drawn balance | Amortizing or interest-only |
| Sized against | Loan-to-cost and ARV | Rent ÷ PITIA, and LTV |
| Property condition | Distressed is the point | Must be habitable, C4 or better |
| Rent required | No | Yes, or a market rent conclusion |
| Close time | 5–10 days | 10–21 days |
| Funds renovation | Yes, via draws | No |
The choice is usually made for you
Ask one question: is the property habitable and rentable today?
If an appraiser would rate it C4 or better and it either has a tenant or would attract one this month, DSCR is available and it is the cheaper capital. Take it.
If it is gutted, vacant with failed systems, missing a kitchen, or otherwise rated C5 or C6, no DSCR lender will fund it at any price. That is not a negotiation — habitability is a hard condition. The property needs bridge or rehab capital to reach a financeable state, and then a DSCR refinance.
What hard money actually costs
On a $250,000 bridge at 11% for eight months with two points: about $18,300 in interest, $5,000 in origination, plus inspection fees on each draw. Call it $24,000 to $26,000 of financing cost on an eight-month project.
That figure is not a reason to avoid the product. It is a reason to include it in your all-in cost before you evaluate the deal. A rehab that produces $90,000 of value creation absorbs $25,000 of carry comfortably. One that produces $35,000 does not, and the model that omitted the carry made it look like it did.
Using them in sequence
- Bridge acquires and funds the rehab85–90% of cost, interest-only on the drawn balance, 12-month term with room to spare.
- Property is stabilized and leasedA signed lease at or above market rent is the strongest document in the refinance file.
- DSCR refinances at the new valueTypically 75% LTV, paying off the bridge and returning your capital.
The reason to arrange both with the same team is step three. A bridge lender with no view on the takeout will happily fund an acquisition whose refinance does not clear. We size the DSCR exit before the bridge funds, so the short-term note has somewhere to go. Model the full cycle on the BRRRR calculator.
The scenario where hard money wins outright
Auction purchases, portfolio takedowns, and any situation where a seller is discounting for certainty. A five-day close on a property listed at $310,000 that you acquire at $278,000 has generated $32,000 of value that no rate difference approaches. Speed is the product you are buying, and it is sometimes worth more than the money costs.
One conversation, both loans
Send the deal and tell us the plan. We will price the entry and the exit together.
Get a term sheet Rehab programRate and cost ranges are illustrative of common market practice, vary widely by lender and borrower, and change frequently. Not a loan commitment.