Norfolk, VA · Member since 2019 · 13 posts · 3 votes
My husband and I just recently finished our enlistments in the Navy and are going to school using the GI Bill. We are using our BAH that we receive to save up enough money to invest in our first property in 2022. We currently run a small Airbnb in our home but recently we have heard that we are operating illegally because of the crazy regulations in Virginia. We were planning to move to Florida once we graduate- but now we’re getting cold feet because of all the STVR’s regulations going up in every city- some even banning Airbnb all together! Should we not allow this “set back” to make us hesitant? Also- tips on buying first investment property (looking for apartment or small single family home to purchase) what type of loan would be best for this? We won’t have a lease either so how can we get a loan for a short term rental? Any guidance would be greatly appreciated!
Thanks to you and your husband for your service!! Without the sacrifices you all make, we wouldn't be able to do what we do.
If I had VA eligibility in my pocket, I would hold it for a truly great property. Buy your first house with an FHA loan. Get a 4 unit if it's available. Then do it again in a year. Use the Fannie Mae equivalent for 4 units with low down payment and live in that one. You can do it the next year with VA or buy the be all to end all house with the VA eligibility and then get another property with units using conventional financing.
Thanks for your service! I am retired Navy (submarines).
Don't let this scare you away from the VRBO market. You just need to pick a market where there is not any current regulations and hopefully none on the horizon.
I would stay away from apartments and condos. You are more likely to have neighbors complain or have existing HOA regulations that prevent VRBO's.
Look for areas and properties that have a draw to make people want to come to the area and property.
Research your numbers and make sure you can cash flow.
The loan will be a investment property loan. Typically 20% down. You might find an owner willing to carry back a 2nd mortgage for some or all of the down payment. It never hurts to ask.
"You just need to pick a market where there is not any current regulations and hopefully none on the horizon."
I would add to this, places that are near or next to highly regulated areas. So if Colorado Springs bans it, I would not want to be next to Colorado Springs. That stuff has a habit of spreading
I'm sure you could buy a property with a VA loan and live in it for 2 years or what ever the minimum requirement is and then convert it to a VRBO property.
Govt financed houses cannot just be converted to str. You sign to that effect. Someone waved a contrived example recently supposedmy allowing in some case, but you need to be careful or they might call your loan.
I'm sure you could buy a property with a VA loan and live in it for 2 years or what ever the minimum requirement is and then convert it to a VRBO property.
Thanks to you and your husband for your service!! Without the sacrifices you all make, we wouldn't be able to do what we do.
If I had VA eligibility in my pocket, I would hold it for a truly great property. Buy your first house with an FHA loan. Get a 4 unit if it's available. Then do it again in a year. Use the Fannie Mae equivalent for 4 units with low down payment and live in that one. You can do it the next year with VA or buy the be all to end all house with the VA eligibility and then get another property with units using conventional financing.
We waited a until some 30 properties before we used our VA mortgages. We figured that we would do things the "difficult" way first, and as Stephanie said, we saved one VA for our "forever" home...and then two years later, for our next "forever" home. Lol.
As an aside, we had owner financing on our first short term rental. I’m making an offer on another property with potential owner financing for the next short term rental. Our last (and current) station was in FL, so pm me about that...
@Stephanie P. Thank you! The great thing about the VA loan is we can use it as many times as we want up to a certain dollar amount but I see what you're saying. We were thinking of doing a duplex but we don't want to live in either part of the duplex. We were not planning on using our VA for STR, we will have enough saved for a down payment for the investment property. Thank you for the great advice
@Ken Latchers Oh okay! Thank you for the great info! I love to learn- In researching I came upon this website! My husband and I just did a Interest Rate Reduction Refinancing Loan or IRRRL to our home this year! How cool- gotta love loopholes!
Two banks I’ve heard recently that specialize in loans on short term rentals. Quicken Loans and Visio Lending.
More and more income based loan products are coming on line instead of asset based.
I would look for communities where there is a very established short term rental ecosystem. The competition is a challenge but the community will be less hostile to short term rentals.
There are also loans called 2nd home loans. If the property is outside of the state you currently reside, you can use a 2nd home loan. As little as 10% down.
@Neil Henderson So, how do I go about finding areas with very established short term rental ecosystem? & also thank you for the tips for possible loans :)
Check out this guys STR thread @Clint Harris Clint Harris on this forum. Maybe you have already seen it?
It's the most informative info I have seen and it's coming from a guy that is willing to share anything to help others. It has opened my eyes and educated me in a big hurry about STR's.
Hey @Alexis King - you can finance an STR with a conventional loan or a second home loan (if you agree to the stipulations in the second home rider) as long as your finances can carry the debt. Condos can be a little different, but single family residences are pretty straightforward.
As for finding an established STR ecosystem - where I invest, Gatlinburg/Pigeon Forge/Sevierville TN by the Smoky Mountain National Park, is definitely one of the best. It's been an area thriving on tourism and vacation rentals for decades, the regulations are friendly, and the local economy depends almost entirely on tourism. Vacation rentals have been a key part of that economy since the 60s and 70s, and there's year-round demand. Also, in Tennessee there's no state income tax, low property tax, and property prices are still very affordable! Win/win/win. Always happy to talk about that market.
I would look for markets that already regulate STR rather than gamble on those that don't. Those that don't can just as easily outlaw them. Those that regulate are addicted to the incremental tax revenue generated by the STR revenue and will rarely move to outlaw it.