suggestions on Financing STR

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suggestions on Financing STR

Brian Bubel
New to Real Estate · Cookeville, TN · Member since 2026 · 11 posts · 8 votes

need advise. 

i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
2mo
Quote from @Andrew Steffens:

Yes, you can. Should you? It depends. Can you sustain bad months or a downturn in the STR market? If no, you can end up losing not only your investment property but also your personal house.

We have a client that is facing this situation. Took out a big HE loan for a downpayment on a $900K cabin in 2021.  Been losing money most months since, and it's worth probably $700K at best.  

The old adage applies here..."You don't know who's got their swim trunks on until the tide goes out."

Those are financial mistakes that you just cannot afford to make, unless you are very wealthy in the first place.  Then again, if you were that wealthy, you wouldn't be trying to get to your personal home's equity.

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  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2mo

    It will work but I wouldn't.  

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    0Reply
  • Christopher Tile
    Accountant · Long Island, NY · Member since 2021 · 182 posts · 144 votes
    2mo
    Quote from @Brian Bubel:

    need advise. 

    i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?

    This is a question that is entirely personal. There is no clear-cut answer without knowing your entire financial profile, available sources of funds, and prospective investment property. 

    Will it help you purchase the property? Sure. 

    Is it the right decision? I hope nobody answers that confidently here.

    1Reply
    • John UnderwoodPro Member
      Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
      2mo
      Quote from @Christopher Tile:
      Quote from @Brian Bubel:

      need advise. 

      i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?

      This is a question that is entirely personal. There is no clear-cut answer without knowing your entire financial profile, available sources of funds, and prospective investment property. 

      Will it help you purchase the property? Sure. 

      Is it the right decision? I hope nobody answers that confidently here.


       Brain is correct in that it depends on your personal situation and finances.

      2Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2mo
    Quote from @Brian Bubel:

    need advise. 

    i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?

    That's what I did and it worked great, then I paid off the HELOQ.
    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    2mo

    Yes, you can. Should you? It depends. Can you sustain bad months or a downturn in the STR market? If no, you can end up losing not only your investment property but also your personal house.

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    0Reply
    • Collin HaysBusiness Member
      Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
      2mo
      Quote from @Andrew Steffens:

      Yes, you can. Should you? It depends. Can you sustain bad months or a downturn in the STR market? If no, you can end up losing not only your investment property but also your personal house.

      We have a client that is facing this situation. Took out a big HE loan for a downpayment on a $900K cabin in 2021.  Been losing money most months since, and it's worth probably $700K at best.  

      The old adage applies here..."You don't know who's got their swim trunks on until the tide goes out."

      Those are financial mistakes that you just cannot afford to make, unless you are very wealthy in the first place.  Then again, if you were that wealthy, you wouldn't be trying to get to your personal home's equity.

      [email protected]806-672-7102
      SMOKY MOUNTAIN FALLS INC.51 Review
      WebsiteView Page
      3Reply
    • V.G JasonPro Member
      Investor · Member since 2022 · 3k+ posts · 3k+ votes
      2mo
      Quote from @Collin Hays:
      Quote from @Andrew Steffens:

      Yes, you can. Should you? It depends. Can you sustain bad months or a downturn in the STR market? If no, you can end up losing not only your investment property but also your personal house.

      We have a client that is facing this situation. Took out a big HE loan for a downpayment on a $900K cabin in 2021.  Been losing money most months since, and it's worth probably $700K at best.  

      The old adage applies here..."You don't know who's got their swim trunks on until the tide goes out."

      Those are financial mistakes that you just cannot afford to make, unless you are very wealthy in the first place.  Then again, if you were that wealthy, you wouldn't be trying to get to your personal home's equity.


       If the heloc is your only way in, then the answer is confidently no. Despite others saying don't be confident in the answer. 

      2Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    2mo

    Not enough info to comment.

    1Reply
  • Brian Bubel
    OP
    New to Real Estate · Cookeville, TN · Member since 2026 · 11 posts · 8 votes
    2mo

    I appreciate all the feedback. I was really thinking I would get more serious around the Jan feb time. I am still online always looking and been doing a lot of reading of books as I have for the past year or so

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2mo

    Lots of responses here @Brian Bubel. Lots of good info.

    You didn't provide a ton of info on your situation. If you have a good W2 and make decent money, it is feasible. Can you afford the monthly expenses if you have no guests?

    If not, then it is a bad idea. 

    Have you done the numbers on places? How much are you looking to spend? Where are you looking? Have you done any STR stuff before?

    More info can help.

    0Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    2mo

    A good friend who was a successful RE broker and investor told me years ago that leverage is an amazing tool but don't ever tie up your actual home to an investment. 

    0Reply
  • Brian Bubel
    OP
    New to Real Estate · Cookeville, TN · Member since 2026 · 11 posts · 8 votes
    2mo

    Micheal Baum I make 60k a year a great credit score. I have 8% credit utilization. I am looking in the Panama City Fl area. Looking with a budget of 200k max. So would be a one bedroom with bunk room. I have stayed in Panama City about a dozen times so I know the area pretty well. And I do have some money in the stock market in hopes the stock will rise in the next year. And I am not looking to hit a home run. If I had a ROI of 5000k the first year I would more then satisfied just wanting to make enough to cover expenses while I get my feet wet. I have a regular full time job

    0Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    2mo

    Please be careful and ensure that market supports your investment. Your W2 doesn’t leave you a lot of wiggle room.

    0Reply
  • Vijay FriedmanBusiness Member
    Miami, FL · Member since 2026 · 766 posts · 122 votes
    2mo
    Quote from @Brian Bubel:

    need advise. 

    i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?

    @Brian Bubel
    Using a HELOC for the down payment is a strategy many investors use to get started, but it's important to understand how the added payment affects your overall cash flow and reserves. Once you have a property in mind, compare a few financing options to see which structure gives you the best long-term numbers. Good luck on your first STR!

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    1Reply
  • Adam TafelBusiness Member
    Real Estate Agent · St. Paul, MN · Member since 2017 · 569 posts · 393 votes
    2mo

    Underwrite the deal as a LTR, hopefully it will break even if you need to switch up the strategy. STRs can be tough to estimate revenue - make sure you have a healthy margin to cover the extra debt service. Most importantly -purchase as good of a deal as possible! Maybe this goes without saying, but you’ll likely make more money when you sell relative to your purchase price compared to cashflow, so your buy-in price matters a ton. Good luck!

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    1Reply
  • Angela Venger
    Member since 2026 · 47 posts · 21 votes
    2mo

    It is a good way, but you need to make sure that the STR you buy will pay for itself and will pay for your HELOC loan after all the expenses. Also, I'm not sure how much you are planning to spend, and you need to make sure you leave enough money to furnish it to add amenities besides the down payment, the closing cost, and insurance.

    0Reply
  • Riki Hasty
    Lender · Tampa FL · Member since 2026 · 5 posts · 1 vote
    2mo

    I have worked with many investors who have chosen to use a HELOC on another property to gather enough funds for down payment and closing costs. This can be a great strategy if you can make the numbers work. I've seen too many new investors forget to factor the monthly HELOC payment into their numbers and only pay attention to the cash flow the investment property will generate. Once you add the HELOC payment, it will often times eat away any cash flow you may generate.

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    2mo
    Quote from @Brian Bubel:

    need advise. 

    i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?


    The part that stood out to me was when you mentioned you're not trying to hit a home run. You're just hoping the property covers its expenses while you learn. That changes how I read your post.

    A lot of people jump into short-term rentals expecting the first one to replace their income. It doesn't sound like that's your mindset at all. You're treating it more like paying tuition to learn the business, which is a much different approach.

    The one thing I'd keep coming back to is that you're tying your primary home's equity to a market that's had some big swings over the last few years. That doesn't automatically make it a bad decision, but it does raise the bar on how confident you'd want to be in the numbers before moving forward.

    I'm curious—if the property only broke even for the first year instead of making $5,000, would you still consider it a successful first investment because of what you learned?

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    0Reply
    • Brian Bubel
      OP
      New to Real Estate · Cookeville, TN · Member since 2026 · 11 posts · 8 votes
      2mo
      Quote from @Robert Ellis:
      Quote from @Brian Bubel:

      need advise. 

      i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?


      The part that stood out to me was when you mentioned you're not trying to hit a home run. You're just hoping the property covers its expenses while you learn. That changes how I read your post.

      A lot of people jump into short-term rentals expecting the first one to replace their income. It doesn't sound like that's your mindset at all. You're treating it more like paying tuition to learn the business, which is a much different approach.

      The one thing I'd keep coming back to is that you're tying your primary home's equity to a market that's had some big swings over the last few years. That doesn't automatically make it a bad decision, but it does raise the bar on how confident you'd want to be in the numbers before moving forward.

      I'm curious—if the property only broke even for the first year instead of making $5,000, would you still consider it a successful first investment because of what you learned?


      0Reply
    • Brian Bubel
      OP
      New to Real Estate · Cookeville, TN · Member since 2026 · 11 posts · 8 votes
      2mo
      Quote from @Brian Bubel:
      Quote from @Robert Ellis:
      Quote from @Brian Bubel:

      need advise. 

      i have take out a HELOC on my primary home. the intent is to use this money for down payment on a STR. I am wondering if this is a good way to get my foot in the door for STR rentals. I know there are better ways but would this way work?


      The part that stood out to me was when you mentioned you're not trying to hit a home run. You're just hoping the property covers its expenses while you learn. That changes how I read your post.

      A lot of people jump into short-term rentals expecting the first one to replace their income. It doesn't sound like that's your mindset at all. You're treating it more like paying tuition to learn the business, which is a much different approach.

      The one thing I'd keep coming back to is that you're tying your primary home's equity to a market that's had some big swings over the last few years. That doesn't automatically make it a bad decision, but it does raise the bar on how confident you'd want to be in the numbers before moving forward.

      I'm curious—if the property only broke even for the first year instead of making $5,000, would you still consider it a successful first investment because of what you learned?


       Robert Ellis:

      My final dream would be to own 3 STR with two of them paid off by the time I am 65. I am 44 now so that gives me 20 years. Now if I can do better then that I am all for it but I don't want unrealistic goals. And maybe this one is unrealistic and I just don't know it. The heloc that I was planning on using has not been meet with positive feed back however I have done a lot of reading and researching and still have more to learn. Who knows it might not ever happen


      0Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    2mo

    Hey Brian,

    Using a HELOC for the down payment can absolutely work, and plenty of investors have done it to get started. The bigger question is whether the numbers still make sense after factoring in the HELOC payment, your new mortgage, insurance, taxes, and potential vacancies.

    With STRs in particular, I'd be extra conservative. Income can fluctuate with seasonality and local regulations, so make sure the property still cash flows even if bookings aren't as strong as you expect.

    If the deal pencils out under realistic assumptions and you have enough reserves for unexpected expenses, a HELOC can be a useful tool. Just avoid stretching yourself too thin on your first deal.

    Best of luck, and feel free to reach out. My DMs are always open!

    0Reply
  • Brittney McIntire
    Lender · Los Angeles, CA · Member since 2022 · 36 posts · 14 votes
    2mo

    For my short term rental I financed the purchase and rehab however had to max out credit cards to get it furnished. I don't have an answer for there being a better way. I think we all have to find a way that works for us. All I can advise is to do good research before purchasing. Make sure it is a solid market that will cash flow well. The reason my STR has been great is because my market solid. Occupancy is consistent month to month and the demand is high. I was confident in my STR's performance so I was more comfortable using credit cards I knew I would be able to pay back.

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    3w

    Using a HELOC on your primary home for the down payment works fine as a way in, plenty of investors start exactly this way. On the tax side, the key thing is tracing, keep those HELOC funds in their own account and move them directly to the STR purchase, don't let them mix with personal spending along the way. That's what keeps the interest deductible against the STR income once it's placed in service, if the trail gets muddy, you risk losing that deduction even though the funds genuinely went toward the property.

    One thing to plan for from day one given it's an STR, if you're aiming to use the STR loophole to offset other income, self-manage and track your hours toward material participation early, average guest stay under 7 days and enough documented involvement, that's what determines whether this becomes an active tax strategy or just a standard passive rental with depreciation. Also worth getting a cost segregation study done once it's placed in service, that's usually where the bigger tax benefit shows up on an STR, especially combined with bonus depreciation in year one.

    Happy to connect!

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  • Ray WilliamsBusiness Member
    Lender · Denver, CO · Member since 2017 · 148 posts · 68 votes
    3w

    Brian, the HELOC as a down payment source can work, but there is a financing mechanics piece worth understanding before you shop lenders. If you finance the STR purchase as a conventional second home or investment property loan, the underwriter counts your new HELOC payment as a monthly liability against your personal debt to income ratio, and on a 60k salary that added payment can eat into how much house you actually qualify for pretty fast. A DSCR loan works differently since it qualifies primarily off the property's projected rental income covering its own payment rather than your personal income or DTI, so the HELOC payment matters less for qualifying purposes on that loan, though the lender will still want to see it as a source of funds. From there, there is also a version of a DSCR that uses actual STR income or AirDnA rev for qualifications if the DSCR path if flawed. Given your numbers and a Panama City target, it is worth getting quotes on both a conventional investment loan and a DSCR loan side by side since which one qualifies you for more, or qualifies you at all, depends heavily on how that HELOC payment gets treated. We are licensed in FL, I invest in and originate these for a living and that DSCR angle catches more first time STR buyers than the down payment amount itself does.

    0Reply
  • Matthew Tregoning
    Real Estate Consultant · Melbourne, FL · Member since 2019 · 185 posts · 107 votes
    3w

    Technically it can work. The more important question is whether one weak season could put both the rental and your home under pressure.

    As a Florida Realtor and STR operator, I would underwrite the property with conservative revenue, include the HELOC payment and keep enough reserves to carry every expense with zero bookings for several months. If the deal only survives on optimistic STR income, using home equity makes a thin deal more dangerous, not better.

    0Reply
  • Melissa HaworthBusiness Member
    Real Estate Agent · The Emerald Coast · Member since 2017 · 254 posts · 99 votes
    5d

    A HELOC can work for an STR down payment, but I'd be careful about making sure the numbers support both loans. You're essentially using your primary residence to help finance an investment property, so there's additional risk if rental income falls short of expectations. I'd run the numbers using conservative occupancy and revenue projections, factoring in the HELOC payment, mortgage, insurance, taxes, management fees, and maintenance. I'd also make sure you have enough reserves to cover slower months or unexpected expenses.

    I'd also talk with a lender before moving forward to confirm how the HELOC affects your qualification and whether there are other financing options worth comparing. The goal is to make sure the investment still makes sense during a slow season, not just when bookings are strong!

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