What is the best financing option for us? Vacation Rentals

[James Krahula]

My wife and I have been managing a vacation rental cabin for my mother-in-law for about a year now. Now, my wife and I have a possibility of buying 1 or 2 cabins next to it, and also have the opportunity with some vacant lots of the property that we could build on. We have just crawled back to zero debt (minus student loans) after being financial messes for our whole adult lives. We now have a great opportunity that has recently been presented to us, and we are trying to take advantage with very limited funding.

These cabins are very affordable, and the rental income on them is pretty decent. They are located on a property that is designated for shops and short-term rentals only, with a big event in town every month that we are guaranteed to rent out for a large profit at least 9-10 months out of the year. I've done very limited marketing on my mother-in-law's cabin, and I'm ranked above all the other cabins more times than not. My day job is marketing, so I have a lot more I can do there. I'm renting her cabin out more than anyone else is renting out their cabins despite others having established businesses on this property. As for the boots on the ground business side of things, we already have a very dedicated cleaner who handles our cleaning, and we have taxi/golf cart service from another business owner for our guests on those event weekends. (She and her husband are great business people, just not very tech-savvy, but I'm going to be helping them with that side as well.)

Cabin Costs:
Cabin prices are anywhere from $15k-30k.
Lot rent: $200/month
Utilities: $50-100/month
Taxi Service: $25/per event weekend we have a guest

Cabin Rent:
Event Weekends: $180 Thursday & Sunday, $260 Friday & Saturday. Must rent Friday & Saturday, and it's usually just those 2 days.
All Other Times: $80-100/night
Average Occupancy Rate: 30-40%

Average Cashflow: $550/month

We want to purchase 1 cabin for $15k that needs minimal work and is currently being rented today. It is a much nicer cabin with wonderful cute branding that on the can on the very conservative end, rent for the same prices as my mother-in-law's cabin, with the same monthly costs. It also has a tiny storefront that's being rented for $75/month but can rent for $150/month with some work and a new tenant.

The empty lots have the same $200/month lot fee, and already have water and electricity running to them. We want to build unique stay lodging (those dome homes if you care to know) which should attract more stays and higher nightly rent. These would be nicer than most of the surrounding properties (maybe the nicest if we do our job right) but would be a really nice complement to the other cabins and shops. They would probably rent for more on those event weekends as well. We can build these for $20k/each (I'm running the numbers at $25k because we all know we will come in over budget!) I will conservatively estimate that these will cash flow $700-800/month, but if done right, I can see this cash flowing much more. We want to build as many as we can get funding for.

Wife's credit is 680, but high utilization after purchasing solar panels. My credit score is 710, but I, unfortunately, have a Chapter 7 that is still on my record. Looking at $25k cash on hand (possibly more but I'm not counting chickens). What are our best options for funding of this project? Is it even possible for us with our rocky past and credit situation and low cash on hand? Should we be looking at hard money? Any advice would be appreciated, and I can answer more questions if needed. Thank you for taking the time to read this.