All Forum Posts by: Renee Chase

@Renee Chase I've been going to Maggie Valley since I was about 12. :) My family has a cabin there and it's one of my favorite places on earth. If only it was also my favorite place to invest! The ROI is definitely better on the TN side, but I haven't seen a view here that rivals those in Maggie!

@Renee Chase we spoke a little earlier today, and I was not able to come up with much - but I may have an idea now - sometimes it happens later LOL.  Fannie Mae/Freddie Mac will not allow projected rental income (or existing rental income) to be used from a primary home unless it's a 2-4 unit property or one that has an accessory unit. If you are able to find a 2 unit property or one with an accessory unit, you could then use the projected rent income to offset the PITI of the new mortgage payment. Then there is still the challenge of showing monthly income for debt to income ratio. For this, with the sum of money you have, you should be able to use asset dissipation as income. Asset dissipation works like this: when purchasing a primary or second home with 20% down, Freddie allows total assets (some restrictions on type of assets/age/etc) minus cash to close to be divided by 240 months to get a monthly "income" number. For example, if you use $60K of the $300K for the purchase, you would be left with $240K/240 months = $1000/month effective income that can be used. It may be a challenge, but with that combo depending on monthly debts and credit, you should be able to qualify.

Hey @Renee Chase!  Congrats on the inheritance and especially on wanting to do something smart with it!  

You've gotten lots of great feedback here, though I think @Parker Borofsky can definitely add something to the lending conversation, so I want to focus on something else you said: 

My first priority to to purchase a home for myself in the smoky mountains. I plan to rent out a portion of this home as a STR.

While I'm a fan of the house-hacking model, I am sorry to say this is not likely to do so well in the Smokies.  I own four cabins here, and most guests are not going to be interested in a house-share, they'll want a cabin to themselves or otherwise they'll get a hotel/condo.  If you particularly want to live here, it's possible you may find some success doing something a little more mid-term, having a comfortable furnished place for business travelers in town for awhile to stay (I had a traveling nurse approach me once about renting my cabin for her 13-week stay, and there's many seasonal workers in town).  There's definitely a housing shortage for those staying much longer than a week!  But for an overnight rental style, I don't think you'll find much demand for a shared space.  

Hi @Renee Chase, what @Ken Latchers said. With that kind of cashola you could get into some great cash flowing multi family that is a lot more passive than a STR.

We decided to rent our lake house after we bought it and it has been great for us, but it is more work. I love it personally. It helps me stay busy with my disability. I love the interaction with the guests, but sometimes I think a nice 4 plex or small apartment would be a pretty nice thing to have.

Remember once you get into the place you will have to fix up anything that needs it as well as fully furnish and stock it for vacation rentals. That add cost and time.

We started with a blank slate and it took almost a year getting it ready to rent to guests. It is amazing how much stuff you have to buy to finish it for vacationers, let alone fixing the deck railing, replacing appliances etc.

Don't just jump into the short-term rental game with you no experience because you think it is the thing to do. You are 62. There's nothing wrong with getting commercial loan or two on a small apartment building and making reliable rent without the many risks that come with short-term rentals.

@Joe Splitrock If you want to be hands on then consider purchasing a few properties for cash. If you want to be more passive hop on to someone else’s deal with syndication. You get all the perks without the work! All the best.

@Renee Chase I would reach out to local banks and check into commercial loan options. If the bank is writing the loan, they are not subject to typical mortgage lending guidelines. Assuming you have good credit and a healthy down payment, you will find a bank who will work with you.

Avoid paying all cash, because leverage is where you get power in real estate.

I would suggest while you decide what to do with the money, place the funds in FDIC insured high yield savings accounts, so you can earn 1.9% with no risk. Keep living your minimalist life style and only withdraw for down payments.

You should chat with @Avery Carl about STR. She has good experience in your chosen market with STR.

 One option is to get a credit partner. We do this all the time for hotels for example. There's no reason you can't do it for a bigger deal.

You can have the credit partner puts up the downpayment and qualify for the loan. Then you after he/she closed on the property, the property then gets transferred to a land trust with the CP as the Trustee and you and the CP as equal beneficial interest in the trust. In exchange for this, the CP can be paid back the downpayment plus a percentage of the cashflow every month.

Having said this, I am not an attorney so consult a real estate attorney licensed in your state to ensure the above set up can work in your state.