Rental Property Investor · Catonsville, MD · Member since 2017 · 52 posts · 17 votes
I figured this would be the place to ask a question about finding the best strategy for our next deal which would be deal #2! For the first deal we had 20% to put down and did a conventional 15yr second home mortgage in my husbands name. Our primary residence I bought before we were married and its in my name. We want to go for another real-estate investment (we are doing buy and hold..buy low, renovate and make them short term rentals on airbnb in Ocean City, Maryland). What are our options? Do we have to do an investment property loan? Can we do a second home loan for me since the only thing I have in my name is our primary residence? We would love to not have to put down 20% and want the lowest interest rate. Even 10% or 15% would allow us to get the kind of property we want since we want to save cash to put into the renovation. Are there investment property loans that dont require 20%? Thanks for any help or suggestions.
Many hard money lenders are looking for folks to have money in the deal, which it sounds like you would like to have money in the renovation. A HML is likely to see that as a plus, so if you factor the capital cost into the deal and it works for you -- HML might be the way to go. The only issue is a traditional refi likes to see some seasoning or a local management company in place for a vacation area (and maybe some reserves for the off season).
How are you planning to handle the turn over of the Airbnb? Who locally is going to be there in the 4 or 5 hour window to clean, redress, restock, and report any issues? How reliable will they be as you will be giving refunds and free nights if the place isn't turned over?
Ocean City is ripe for utilizing a local management company like Shoreline Properties (I have no relationship with them other than renting from them) that have all of the services in place. Yes, the margins are a little less than being very hands on with an Airbnb, but they handle thousands of properties probably just like the one you are looking for.