Variation on BRRRR for Vacation rentals?
Hello BP,
The Dream: Buy a vacation cabin, use it once or so a month, rent it out the rest of the time, make the cabin pay for itself.
The Problem: The the problem with the BRRRR method (Buy, Renovate, Rent, Refinance, Repeat) is that the banks won't take vacation rentals into account for the refinance part. The bank needs a year lease to consider the income to be additional to my income before they will refinance. (or so I think from my research)
The Idea: Do the vacation rental thing with the management company for a year or two... then offer to Lease/rent the cabin to the management company (or anyone else) with a year lease. Then, I would have a year lease to show the bank for refi purposes.
I've started looking into it and there is a thriving market in the area I want to find a cabin. I think I can break even on cash flow at the absolute worst case. Financing will likely require me to pull a HELOC on my residence to come up with the down payment.
I found a property management company that is very reasonable (10% of rent) and has lots of connections for cleaning, handymen, etc.
So.... would we call it BRVLRVR??? Or perhaps I could go straight to the Lease, BRLRR and turn it to a vacation rental anytime after that 1st year?
Buy
Rehab
Vacation Rental
Lease
Refinance
Vacation Rental
Repeat
Thanks for any discussion on this idea!
Bob