Want to AirB'B my house and build my home behind. How to Finance?

4 Replies

Hello, all. First post here after lurking for quite a bit.

I own a home in east Austin, TX that has appreciated greatly. I would like to build a storage container home at the back of my land and rent out the older home as a short term rental. I owe roughly 110K on a 147k investment, have 10 years left on my 15 year mortgage. The property is now work 300k+ and while I will be getting some money from a meager inheritance, I would love to build without using any of my own money and have the income pay off any of my mortgage/build costs.

I am curious if anyone has done anything like this, or if they might have an idea on the best way to start setting this up. There seem to be so many ways to skin this particular cat. I was thinking of a HELOC at first but maybe there is a better way?

Thanks for reading and please let me know if you have any insights!

Heloc might be best. While Airbnb is great, it is like applying for a loan while on self employed (airbnb) or w2 income (regular long term tenants). Airbnb might show income but fluctuating vs fixed income when doing regular tenant, as far as the lend r is concerned. If it is that much equity, you can do cash out refi or heloc.

Originally posted by @Marcus Rice :

Hello, all. First post here after lurking for quite a bit.

I own a home in east Austin, TX that has appreciated greatly. I would like to build a storage container home at the back of my land and rent out the older home as a short term rental. I owe roughly 110K on a 147k investment, have 10 years left on my 15 year mortgage. The property is now work 300k+ and while I will be getting some money from a meager inheritance, I would love to build without using any of my own money and have the income pay off any of my mortgage/build costs.

I am curious if anyone has done anything like this, or if they might have an idea on the best way to start setting this up. There seem to be so many ways to skin this particular cat. I was thinking of a HELOC at first but maybe there is a better way?

Thanks for reading and please let me know if you have any insights!

There are a couple of ways but the HELOC is probably the easiest option but you're in texas so most banks are only going to allow you to obtain up to 80% LTV on your primary home since its state law that limits this unlike other states.

But 80% of 300k is 240k total loan amounts (about 93k give your current outstanding).

There are community banks that can lend you up to 75-80% of the after improved value assuming the zoning on your parcel allows for the addition of this second storage unit home, in law unit, or second home on the property.

The construction loan is more planning intensive and the funds come out in phases or "draws," in different flavors. Sometimes the funds from construction loans come out as advances and you can take those funds and start construction, but often times they come out as reimbursements which means you have to fund the first phase upfront with your own cash and wait till the bank inspects and reimburses you. This method requires you to have a lot more cash since you gotta be out of pocket with cash before you get your money back to recycle and proceed to phase 2.

The HELOC route is the because once you establish the line of credit you can pull it or use it at will, but the downside is the HELOC is only based off the current fair market value (FMV) of your property today so you cannot borrow against the after improved value (less access to future equity).

Albert Bui, Lender in CA (#345453), WA (#345453), TX (#345453), and TN (#345453)
949-514-5106

I can complete the design/build of the project and possibly help with the funding/financing. Call, text, or PM 

We have looked into metal building homes, pole barn homes (Mortons Buildings) and financing can be tough due to lack of comps. I would imagine that a container house will very similar. If you can't get it done with a heloc ($93k) then I would probably look into something more conventional so that you can get a loan on improved value with the second home on the property. 

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