New investor seeking financing guidance for STR

[Brandon S.]

So glad I found this forum, so much information and an active community to help others. Thank you in advance for the advice!

Your goals and story: 38 years old and looking to get into the STR market. I currently own my primary residence. I would eventually like to end up with enough properties to cover my income and retire young. I have a little bit of LTR experience helping my parents manage a few properties throughout the years, but this would be my first and flying solo.

Type of property: Single family home for STR

Location of property: For my first property I am trying to focus on Broken Bow, Oklahoma as it’s a fairly new and hot market. I also vacation here often and its 2.5 hours away. Open to other areas if the price becomes out of my reach.

Purpose of financing: Purchase

Type of financing sought: Not sure here. I have begun looking at DSCR, 10% Conventional, Investment property loans, etc. This is where I am looking for help with recommendations from those much more experienced than I.

Current or prior ownership of real estate: Currently I have owned my primary residence for about 7 years now in the Dallas/Fort Worth area.

Occupancy: Investment/Short term furnished rental in which I do plan to use quite a bit.

Value of property at present and/or your offer price: I have not yet found a property, but the price range will be $400-600K range in Broken Bow. Could be less in other areas I have been keeping an eye on.

After repair value: N/A

Anticipated or actual appraisal issues: N/A

Current rents per month: Daily average in Broken Bow is $358.00 with a 68% occupancy rate. 

Fair market rents per month: Monthly Average in Broken Bow is $6620.00

Down payment or equity: Up to $120k with HELOC? I heard that they can recall these and expect payment sooner, is this true?

Source of down payment funds, if applicable: Currently I have $20k cash, $250k in my 401k, but I planned on possibly doing a Cash out Refi or Fixed rate HELOC for around $120K, current interest rate is 4.125% for fixed @ 15 years.

Income Source: Salaried/hourly W2 and have been with my company for going on 20 years.

Gross monthly income (optional): $11k ($130k+ annually)

Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc.: My only monthly debt would be $1752 mortgage and a $386 car payment.

FICO: Excellent 780+

Credit issues: None. Never missed a payment, paid off numerous high $ loans.

Additional details:

I personally think my only negative is not having more cash in hand upfront. Stupid me built my race car and THAN decided this is something I wanted to pursue while rates were low and markets were starting to boom. With my equity in my primary residence and or my 401k I hope to be able to safely achieve my goals in getting my first STR in Broken Bow. Cash on Cash I expect to be minimum of $15-20k annually and that's on the low side. The advantage to Broken Bow for me is having a huge network of friends who often rent houses here and do not know anybody so they use AIRBNB. This would help to keep the bookings up and kick it off quickly. I do have emergency funds set aside that I will not touch or put towards this, but something to fall back on for worst case scenario.