I just purchased a lot in a popular vacation area. I intend to build a home that will be rented out to offset the costs of ownership.
I can find construction to permanent loans on second homes easily. I can find financing for investment properties easily too. But I can't find financing for CONSTRUCTION of an investment property. They want to send me to the commercial loan department where the rates are awful, closing costs are high, and the requirements much more robust.
What if I just get a second-home construction to permanent loan, wait 12-16 months for it to be built, spend another 90-120 days furnishing it, and then refinance into a traditional 30 year fixed as an investment property? Are there any tax implications or mortgage barriers to building a home under the "second home" plan and then converting it to an investment property shortly after its finished?
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
2y
Hi Kyle,
There are options out there for constructions loans for investment properties, although they typically require experience. Since the second home plan is only intended for second homes, you wouldn't be able to obtain the second home loan if you are intending to use it as a rental. Happy to show you what's out there for constructions loans.
There are options out there for constructions loans for investment properties, although they typically require experience. Since the second home plan is only intended for second homes, you wouldn't be able to obtain the second home loan if you are intending to use it as a rental. Happy to show you what's out there for constructions loans.
So it is not possible to start with a second home loan and refinance into an investment property loan?
12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
2y
Definitely can do non owner oc investment property build with 100% of the construction covered since you already own the land . After the property is built you'd either sell or refinance