Rental Property Investor · Huntington Beach · Member since 2021 · 116 posts · 40 votes
So I was just told by a lender from OneMortgage that I can take up to 90% LTV for a HELOC if my property appraises for at least 930k. I live in Huntington Beach, CA. I am looking to use the 190k the lender said I could take out to invest in short term rentals. Any recommendations about HELOC or STR rentals? I am new and I am liking the airbnb route to invest in real estate
So I was just told by a lender from OneMortgage that I can take up to 90% LTV for a HELOC if my property appraises for at least 930k. I live in Huntington Beach, CA. I am looking to use the 190k the lender said I could take out to invest in short term rentals. Any recommendations about HELOC or STR rentals? I am new and I am liking the airbnb route to invest in real estate
Thanks!
Congrats on that equity. We have a nice HELOC that we have usedultiple times for several of our investments in Colorado. I like them better than cash-out refis because you only pay interest whenyou use them, and as soon as you pay them off, you pay nothing.
In terms of STRs ... first, I'd think about your goals. Is this a pure short-term rental investment or is it also a place you want to visit for vacation? We have a lot of investors who buy a second home here in Denver or Colorado Springs or the foothills around both to mostly Airbnb and then stay in it every few months when visiting. The returns here are great, but there might be some sligtly better returns if your goal is to make this a pure investment vacation rental. So again, I'd first think about what this purchase is for.
Once you know that, then find an agent that knows the STR markets in those areas and start a conversation. Most importantly will be knowing the Airbnb laws and regulations as cities are increasingly cracking down on STRs. You want to buy where you have some regulatory certainty. Like here in Colorado, many of the ski towns are placing restrictions on Airbnb, and most cities like Denver and Colorado Springs prohibit STRs in investment properties, but there are cities in the Denver metro (but not the actual city of Denver) that allow for this, as well as many unincorporated County areas where you find mountain homes.
So I was just told by a lender from OneMortgage that I can take up to 90% LTV for a HELOC if my property appraises for at least 930k. I live in Huntington Beach, CA. I am looking to use the 190k the lender said I could take out to invest in short term rentals. Any recommendations about HELOC or STR rentals? I am new and I am liking the airbnb route to invest in real estate
Thanks!
Congrats on that equity. We have a nice HELOC that we have usedultiple times for several of our investments in Colorado. I like them better than cash-out refis because you only pay interest whenyou use them, and as soon as you pay them off, you pay nothing.
In terms of STRs ... first, I'd think about your goals. Is this a pure short-term rental investment or is it also a place you want to visit for vacation? We have a lot of investors who buy a second home here in Denver or Colorado Springs or the foothills around both to mostly Airbnb and then stay in it every few months when visiting. The returns here are great, but there might be some sligtly better returns if your goal is to make this a pure investment vacation rental. So again, I'd first think about what this purchase is for.
Once you know that, then find an agent that knows the STR markets in those areas and start a conversation. Most importantly will be knowing the Airbnb laws and regulations as cities are increasingly cracking down on STRs. You want to buy where you have some regulatory certainty. Like here in Colorado, many of the ski towns are placing restrictions on Airbnb, and most cities like Denver and Colorado Springs prohibit STRs in investment properties, but there are cities in the Denver metro (but not the actual city of Denver) that allow for this, as well as many unincorporated County areas where you find mountain homes.
That's exactly what I did. I got a HELOC on my house in Denver and used that money to buy my first STR Beach front condo in Myrtle Beach, SC. It was a great way to go for us. Also, in this competitive market, having cash in hand helps close the deal. I always wanted a beach front condo, and now I have 2. Find the market you want to invest in, learn the in's and out's of the STR market, run the numbers, jump in and have fun!
@Eric Garcia, the HELOC did help with with condo 2. I used it for the down payment and financed the rest with a private money lender that will loan on "condotels". That's why I love real estate investing, there are many ways to help get a deal done and meet your goals. Bigger pockets has definitely helped me with that. Now I get to help other people achieve their goals.
@Sean Starkey reserve $40k of the $190k for renovations to the property. A lot of people make the mistake thinking that if you list it guests will come easily, but the top STRs know how to stand out from the crowd. With $150k down you can afford most markets, but the key is to find one that will produce at least a 15% cash on cash return for your $190k investment ($28.5k/yr in cash flow). Happy to share some more thoughts if you'd like, so feel free to DM me. Good luck!