How would you finance your FIRST 20 houses if all STRs?

[Jonathan H.]

To me, Airbnb Short Term is done.   Covid forced adaptation to long term, by the room, and whereas an 8k/m net house turned into a 4k/m net, the time / attention required cut to 5%, and I'm not needing to go back.   Coliving, instead of STRs, my new jam. 

But, if your just starting out like me, and have a proven track record to cashflow rentals ( airbnb arbitrage ) and are ready to start buying, the STR strategy breaks a fundamental link in the BRRRR Model.

My understanding: ( pls correct where I am wrong ) - Is that to finance the first house, you need to show 3x the mortgage payment in income.  Lets say you made 108k/year the last 2 years.  108k/12 months = 9k/month.   9k/3 = 3k.  So you can afford a mortgage payment up to roughly 3k/month. 

If you follow the BRRRR model and its time to repeat, you need to account for that 3k/m mortgage to qualify for the next one. So, ideally you get a lease signed for 1.3x the mortgage cost, it offsets the expense and your qualified again? Is that about right?

But what IF your real gift is in cash-flowing that house by not requiring leases?  Month to month tenancy through Airbnb forming coliving spaces will earn 8k/m in the house that's got a 3k/m mortgage.  After expenses, about 4k/month profit if done well. 

Then you dont have the lease to show the bank!  Unless you wait 2 years, file the taxes, show the income that way, your business model just froze.  

Strategies?  Corrections?  Feedback?

Im digging into this and researching it daily, and this is the best idea I have got. 

Instead of my running the Coliving space, move operations to my LLC. Have my LLC run the business, and have it sign a lease with me for the space at 1.3 x the mortgage rate.  Present that signed lease to the broker to forge the next lease.

Would that work?  Got better ideas?  

2nd best idea:   Find the house you want to buy, offer to lease as master tenant with option to buy, ( and plan / intent to buy ). 

Then, lease it to your LLC.

Then approach the banks for a mortgage to purchase the house with the lease, already cashflowing. 

Would that work? I am only interested in fully legal, above board ideas. In both of these ideas, the LLC would actually cashflow the property and pay the actual lease payments.

2nd Question for fun: I am learning that forming a trust, which runs a C Corp ( instead of an LLC ), provides a legal buffer that protects your net worth from frivolous lawsuits legally. The trust does no business except with the C Corp, leasing houses/equipment, at a profit. the C Corp makes little money and has no possessions, thus, if sued, lawsuits would fall short.

Anyone have experience and/or feedback about this?

I understand this is also a perfectly legal and above board way of reducing tax liability through effective tax rates from roughly 28% to roughly 15%, and a common practice among the wealthy.   Would love feedback!