Rookie Looking for Creative Financing Receptiveness in Market
Erie, PA · Member since 2026 · 5 posts · 0 votes
Rookie Looking for Creative Financing Receptiveness in Market
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votesDouglas, the creative-financing ideas are feasible, but I'd separate "can I structure it?" from "does the STR still work once the financing and operating risk are layered in?"
Seller financing can be a good fit if the seller values steady income, wants to defer receiving all the cash upfront, or has a property that has been sitting. A DSCR loan can also work for an STR, but the lender's treatment of projected rental income, reserves, appraisal, and property type can vary quite a bit.
I’d be more careful with anything involving a lease-to-own or eventual mortgage assignment. Many loans aren’t freely assumable or assignable, and you don’t want a structure that unintentionally creates a due-on-sale issue. I’d have a real estate attorney review that before relying on it.
Being 10 hours away also changes the underwriting. For a beach STR, I'd include full management, cleaning, utilities, maintenance, insurance, flood/wind exposure, furnishing replacement, vacancy, and local STR rules from day one. Creative financing can lower the cash needed upfront, but it doesn't fix weak operating economics.
From the tax side, once the property is placed in service as an STR, depreciation begins. Depending on average guest stay and your material participation, the losses may potentially be treated differently from a normal long-term rental. Cost segregation can also become meaningful, but I'd want the deal to work before relying on the tax benefit.
For the team, I'd prioritize a local STR-focused agent, lender, property manager, insurance broker, inspector, attorney, and CPA before getting too far into negotiations.
Feel free to DM me, I'd be happy to send over a few STR tax resources that might help as you evaluate the deal.
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13 Replies
- Investor · Pacific Northwest · Member since 2026 · 511 posts · 286 votes1w
You’re on the right track, but I’d separate creative from financeable. A DSCR lender will usually still want meaningful borrower equity and clean lien priority, so seller carry only works if that lender allows subordinate financing. Lease-option/assignment structures can work too, but they get complicated quickly on a vacation rental.
At 10 hours away, the bigger risk is operations, not distance. Underwrite one actual property with realistic occupancy, management, insurance, taxes, maintenance, and local STR rules. Then build the team around the deal: STR-savvy lender/broker, local agent, property manager, insurance, and closing attorney.
This is exactly the kind of property + operator problem we’re building around. Happy to compare notes if useful.
- Erie, PA · Member since 2026 · 5 posts · 0 votes1w
I appreciate the insight provided here. I had a hypothetical played out in my mind of how this would conceivably work but I don’t know if deal structures like this actually work or if it would be too buyer friendly.
My hypothetical seller finance to DSCR loan would be 5-7 years of seller finance with all proceeds (revenue less costs) from the STR going into an interest bearing escrow where at the conclusion of the seller finance the escrowed funds are the down payment for financing (the 30% down) for the full purchase amount. The escrowed amount operates as (1) proof of funds available; (2) as a deposit if default occurs; and (3) to establish DSCR suitability
The lease-to-own avenue would be similar in structure as the seller financed option except the lease would continue until a predetermined amount of proceeds are paid to the “seller” by way of the lease in excess of debt and coverage of all other costs and then an eventual assignment of mortgage where buyer pays all costs for the assignment. The general idea here is that the seller is not maintaining or managing the property, cash flowing the same, and eventually is relieved of the debt obligations. The idea as well is that the lease-to-own would be structured on paper in a way that would avoid any kind of due-on-transfer payment.
I recognize the need to get a team built around this, and I see that as the realistic hardest part of all of this. I am more so trying to figure out if my financing idea makes sense before I try to build a team that may otherwise never be used. I hope that makes sense.
- 1wDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 149 posts · 36 votes
You're thinking creatively, @Douglas SullivanI would start with the property economics before the financing structure. Seller financing, a lease option, or a DSCR loan can work, but none eliminates the need for reserves, and DSCR lenders usually require meaningful equity. Be careful with any plan involving a future mortgage assignment or assumption—the existing loan documents and lender approval matter.
For a beach short-term rental, underwrite conservatively for seasonality, local rental rules, management fees, cleaning, utilities, storm and flood insurance, maintenance, and hurricane reserves. Being 10 hours away is manageable, but only with a strong local operator and reliable systems.
I would build the team before making offers: a local investor-friendly agent, short-term-rental property manager, lender or broker familiar with DSCR and portfolio loans, real estate attorney, insurance broker, inspector, CPA, and dependable contractor or handyman. Ask each person for recent deals, references, and actual expense data. Creative financing can improve a strong deal, but it will not rescue a weak one. Best of luck!
- Erie, PA · Member since 2026 · 5 posts · 0 votes1w
I'm definitely at the white board ideas phase of seeing whether I have a viable solution to my financing issue or if it would make sense to BRRRR my way to the capital to make the moves I want to in real estate.
I need to find a way to network and build a team that can work where I want to invest. I intended to break that into a separate inquiry instead of rolling it into this.
- 5dAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Douglas, the creative-financing ideas are feasible, but I'd separate "can I structure it?" from "does the STR still work once the financing and operating risk are layered in?"
Seller financing can be a good fit if the seller values steady income, wants to defer receiving all the cash upfront, or has a property that has been sitting. A DSCR loan can also work for an STR, but the lender's treatment of projected rental income, reserves, appraisal, and property type can vary quite a bit.
I’d be more careful with anything involving a lease-to-own or eventual mortgage assignment. Many loans aren’t freely assumable or assignable, and you don’t want a structure that unintentionally creates a due-on-sale issue. I’d have a real estate attorney review that before relying on it.
Being 10 hours away also changes the underwriting. For a beach STR, I'd include full management, cleaning, utilities, maintenance, insurance, flood/wind exposure, furnishing replacement, vacancy, and local STR rules from day one. Creative financing can lower the cash needed upfront, but it doesn't fix weak operating economics.
From the tax side, once the property is placed in service as an STR, depreciation begins. Depending on average guest stay and your material participation, the losses may potentially be treated differently from a normal long-term rental. Cost segregation can also become meaningful, but I'd want the deal to work before relying on the tax benefit.
For the team, I'd prioritize a local STR-focused agent, lender, property manager, insurance broker, inspector, attorney, and CPA before getting too far into negotiations.
Feel free to DM me, I'd be happy to send over a few STR tax resources that might help as you evaluate the deal.
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As long as you understand you're in for a LOT of work to find a motivated seller - with a problem you can solve.
Logical Property Management4.9450 Reviews- Erie, PA · Member since 2026 · 5 posts · 0 votes5d
@Drew Sygit I realize immediately seller financing or creative financing comes with a smaller selling population out of the gate. I essentially need to find the perfect situation to make it work.
I really appreciate you giving some thought to my inquiry for feedback!
- 5dNicholas FloydBusiness MemberNY · Member since 2026 · 166 posts · 55 votes
I’d look at the deal first and the financing second. With a beach STR, I’d pay close attention to seasonality, insurance/flood costs, local short-term rental rules, property management, and whether the numbers still work during slower months.
Seller financing or a DSCR loan can both make sense depending on the property and the seller. Creative structures can reduce the upfront cash needed, but I’d still keep enough reserves so the deal isn’t overleveraged.
Since you’re 10 hours away, I’d also start building a local team early, agent, property manager, lender, insurance agent, contractor/handyman, and CPA.
I work in the business funding space as well, so depending on your credit profile and LLC structure, business credit or other business financing can sometimes help with things like furnishing, renovations, or working capital without putting all of the pressure on the property financing itself. The key is making sure the numbers support whatever debt you take on.
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes5d
Why there? Do you own other properties you could leverage? STRs are more challenging in today’s market for multiple reasons in most areas. If you want to run STRs as a business I would either move there or find a niche close to home. If you are hoping to find a beach property that you don’t have any skin in the game as a consumable item for enjoyment I think it will be a long shot to find something decent with an owner willing to essentially allow you to arbitrage.
- Erie, PA · Member since 2026 · 5 posts · 0 votes5d
@Jules Aton The specific area is arbitrary. I am viewing this as an investment and business opportunity. There is a component of looking to be able to at some point utilize the property personally, but in a way that imputes tax consequences or infringes on earning opportunities for team members.
Put differently, the goal is to be able to cash flow off of this property and also use the property in a limited capacity that does not impact business operations (whether that is for improvements, maintenance, upgrades, etc, or a long weekend with family).
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes5d
Check out the STR section here. You will find good information as you are formulating your strategy. STRs aren't the cash cows they were made out to be in recent years.
- Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 300 posts · 112 votes4d
Quote from @Douglas Sullivan:
I am interested in getting a beach house that is short term rented. My goal is to do some form of creative financing whether it be seller financed with a DSCR loan, or try to do a lease to own with an eventual mortgage assignment, or some other form of creative manuvre that avoids the steep down payment while also offering a fair compensation to the seller.
I am about 10 hours away from the area as well, for what it's worth and how that impacts this analysis
How feasible are these ideas? How do people finance short term rentals like a beach house? Am I on the right track?
Follow up, if I am on the right track, where are good starting points for building a team? I realize being in town and networking will be the most productive moves.
@Douglas Sullivan, I’ve worked with investors who were trying to make a deal work with seller financing or another creative structure, and what usually matters most is whether the setup actually solves something for the seller too. The deals tend to go a lot smoother when both sides clearly understand what they are getting, instead of trying to force a structure just to reduce the buyer’s cash upfront.
Your idea is worth exploring, but I would want the agreement to be very clear about who owns what, who is responsible for the property during the term, what happens if the STR income is lower than expected, and what happens if the future financing does not come together the way everyone hoped. Those are the areas where I've seen a creative deal become stressful later if they were not worked through early.
I’d be glad to stay connected, @Douglas Sullivan. I like that you’re thinking through the structure before getting too far into a property because that is usually the best time to figure out what really makes sense.
- CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes3d
@Douglas Sullivan , hi. You’re on the right track, but I’d underwrite the property first and solve the financing second.
For a beach STR, I'd focus heavily on realistic occupancy, seasonality, management costs, insurance, taxes, repairs, and local STR rules before relying on creative financing. A low down payment doesn't help if the property is thin on cash flow.
Being 10 hours away also makes the team critical: lender, local agent, property manager, CPA, insurance broker, and real estate attorney. Build the numbers around the actual operating model, then choose the financing structure that fits it.
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