Long term financing for Vacation Rental Properties ?

[Karen Margrave]

Do you know of anyone that does long term financing for Vacation Rental properties? Our properties in southern California, San Clemente ,will make great VR properties, and I want to get information for potential buyers. 

Also, if the property is new and doesn't have an established rental record, will it be possible to finance as VR? 

Any help from those with experience in VR is appreciated. 

Conventional financing, private financing, crowdfunding, permanent financing

[Maura Paler]

Hi Karen, 

This is a great question...we have a bit of experience with it, but it was torture getting the loans. 

We own 3 and are about (fingers crossed!) to close on our 4th VR. All have conventional financing, 2 are 30 yr, this new one is 15. 

Our first property we paid cash. The second property was our first loan, purchased as a second home, we financed the purchase then financed the construction loan. 

The third house (second loan) was an investment loan with TD bank, they did ask for projected VR income but there was ZERO supporting comps in the area, they did scrutinize the yearly reported income from our first two as well as our supporting income. They also took into account (I think - it's hard to tell!) that my business for 10 years has been VR (I rent others homes in addition to my own). 

The fourth house (third loan) we also went with TD, they seemed to get the VR business and rates were good. 

My biggest complaint with banks is that there is a LACK OF COMMUNICATION. So the bank mgr will tell you one thing, the loan processor another, the loan processors boss yet another (this person has always been our most reliable resource) and of course the underwriters seem to make up new rules as they go along. So finding out what qualifications are needed to get a VR investment loan is difficult - and holds up deals - and is very frustrating. We are competing with cash buyers (retired folks buying up these homes) so a solid financer (is that a word?) would be great. 

Any insight into a better way to go about obtaining Vacation Rental Loans would be much appreciated. We would like to purchase another but need to recover from this last bank process first!