Self-funded construction of 2 STR cabins ($620k each). Want to build 100 more by 2030

[Mike Bator]

I've self-funded the construction of two STR cabins ($620k each; land included) in separate locations over an hour's drive apart. Both are probably in the top 0.01% of all STRs nationwide at 99.2% occupancy, $772/night even when accounting for unbooked nights as $0. This equates to $281,965/year/cabin, with revenue covering all-in costs in 26 months and profits in 43.

Naturally, I aspire to build more. The goal is at least 100 cabins by 2030, but I only have the resources to construct one more in 2024.

How would you go about financing it? Challenges I'm facing:
1. My personal DTI ratio is at 49.9%, so personally I can't take any more loans.
2. Many lenders avoid funding construction loans for an LLC in rural areas.
3. Although I receive investment inquiries from guests every 2-4 weeks, none can invest a substantial $500k+. Dealing with less substantial amounts like $50k creates more trouble than it's worth.

Ideally, I need a single investor who can engage deeply with our numbers & vision and finance the construction of 3-10 cabins at once ($2-6m). After an 8-12 month construction phase, we can refinance the cabins, freeing up to 75% of the invested cash for the next construction round. And so on.

[Mike Dymski]

Quote from @Mike Bator:

Quote from @Mike Dymski:

Refinance after they are built with commercial or DSCR loans.

If you are cash flowing that much per property, there is no need for 100 cabins, investors, and so many headaches.  Your cash and portfolio growth will snowball quickly.

I guess the full story is:
1. Began with $620k cash.
2. Constructed cabin 1.
3. Appraised at 80% all-in costs.
4. Refinanced at 75% LTV, retrieving 60% costs.
5. Reapplied 60% + profits + personal cash = cabin 2.
6. Same 80% * 75% scenario
7. Currently repeating step 5 for cabin 3.

This rinse-and-repeat process would enable the construction of 1 cabin per year, until profits expand to allow for 2 per year... All that while state and IRS taxes on profits are increasingly challenging, as refinanced funds for construction in progress aren't deductible expenses, thus not lowering tax bills.

All that said, the "snowball quickly" effect you mentioned isn't quite happening yet. I'm aiming to be part of something exciting, not just a lifestyle business. Besides, we've already secured over 100 domains for future builds nationwide :)

Perform cost segregation to reduce taxes.  @Yonah Weiss