Rental Property Investor · California, PA · Member since 2016 · 72 posts · 8 votes
We are looking to buy a vacation home in Orlando near Disney. The problem that we are having is figuring out how to finance these types of properties. The most recent property that we found is in need of some work as well as requiring the purchase of furniture.
We are looking to buy a vacation home in Orlando near Disney. The problem that we are having is figuring out how to finance these types of properties. The most recent property that we found is in need of some work as well as requiring the purchase of furniture.
What is the best way to finance vacation rentals?
Some lenders will do short term rental properties, but many will not.
Portfolio lenders will be a good source, but many of them will not. Here's what you need to do:
Find a good mortgage broker that has done these in the past.
Be prepared to put at least 20% down
Your rate will not be a Fannie Mae rate.
Have a pro-forma for the short term rental ready to go
The lender will have to find an appraiser that will use short term rentals as comps (VERY important)
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
7y
I believe the only difference is since this is a rental it will require a larger downpayment. Also you will not be able to use any rental income from a future VRBO to qualify for the loan. A longterm rental with a signed lease you could use 75% of the rent to qualify for the loan.
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
7y
@John Underwood is right. Although you don’t need a signed lease to use the 75% rent value. It can be projected. And can be projected even if you plan to short term rent it along as you’re using an investment loan (20% down) and not a second home loan (as little as 10% down)
We are looking to buy a vacation home in Orlando near Disney. The problem that we are having is figuring out how to finance these types of properties. The most recent property that we found is in need of some work as well as requiring the purchase of furniture.
What is the best way to finance vacation rentals?
Some lenders will do short term rental properties, but many will not.
Portfolio lenders will be a good source, but many of them will not. Here's what you need to do:
Find a good mortgage broker that has done these in the past.
Be prepared to put at least 20% down
Your rate will not be a Fannie Mae rate.
Have a pro-forma for the short term rental ready to go
The lender will have to find an appraiser that will use short term rentals as comps (VERY important)
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
Do y'all buy as an LLC or under your own name? If you're not using an LLC, are you not concerned about any worst case lawsuits? Not too likely but if you're gonna own these things for many yrs, a devastating lawsuit from a guest could happen at some point and that lawsuit can wipe out your personal savings, personal home, 401k, etc if you don't hold the investment property in an LLC