Rental Property Investor · Scottsdale · Member since 2021 · 9 posts · 3 votes
I'm looking to build a 200k guesthouse in my backyard that will have good cashflow. My mother originally agreed for me to refi some money out of the equity of a house we co own but then she changed my mind after I signed the contract on the guesthouse. Long story short, I have no primary home and the property the guesthouse is being built on is a LLC with 3 years remaining of 20k PPP. I was looking into unsecured personal loans but they only cover about 50-100k for 1 year duration. I'm okay with a high interest rate up to 15% because I can still breakeven on the mortgage but not sure how to finance this deal without losing my initial payments
Hey Jimmy, sounds like a solid project with good cash flow potential. Here are some financing options to consider:
HELOC or Cash-Out Refi on Another Property – If you or your mom have equity elsewhere, this could be a more flexible and lower-interest option.
Business Line of Credit – Since the property is in an LLC, you might qualify for a business LOC, which could cover construction costs.
Private Money Lender – If you’re okay with 12-15% rates, a private lender could fund this as a short-term loan, especially if the guesthouse will generate strong income.
Construction Loan – Some lenders offer short-term construction financing, which converts to a longer-term mortgage once completed.
Seller/Partner Financing – Bringing in an investor or structuring a joint venture with someone willing to fund the build in exchange for a share of the income.
Credit Card Stacking or Unsecured Business Loans – Riskier but could work if you need to bridge a gap until the unit starts cash flowing.
Would love to hear more details—especially your timeline and expected rental income. Happy to brainstorm further!