The Next Deal...

[Ryan McKay]

Hey folks, happy ho ho to you all!

Question...I'm now two years into my first STR - a cabin in Murphy NC that is doing fairly well for me. It took a year of painful lessons (the first of which is that NOBODY will care about your business as much as you do (Evolve), and that - in my case at least- self managing makes more sense -even remotely- than allowing someone else who has different motivations to take the reigns.

After a rough first year where I lost money for 8 months followed by another 4 months of learning how to self manage remotely, I had a great 13th-25th months where we have kept the placed booked, kept it profitable, and largely reinvested into the property.

Here is the question though- to buy the first property, my wife and I used a HELOC on our primary and used that for the downpayment on a new property, for the furniture, appliances, etc, and all of the other little costs that go into getting going. We've since paid off the HELOC, but realistically it wouldn't be smart to rinse-repeat these days as the borrowing market is obviously MUCH different than it was in early 2022 when we started down this road to begin with. Now that we are looking into the next property, we are trying to figure out the best way to handle the financing of it.

We don't want to do the HELOC again - it worked the first time, but things have changed and - realistically- we were pretty fortunate that it worked as well as it did the first time.

The cabin is was purchased at $230K and it's probably worth around $285K now. We put $75K down to begin with and likely have $85-100K in equity ( depending on what non-scientific source you check since I haven't had a full appraisal done) on it. I am profitable right now (cash flowing between $1200 and $2500 per month depending on the season), but don't have any desire to raise my monthly payment with a cash-out refi (nor am I likely to match my current rate). I have some money put away but I am trying to avoid 20% down on the next property.

Any recommendations on how to best finance property #2 with these pieces already being in place? I'm looking for another STF property that doesn't need to be rehabbed (which makes wholesale properties, BRRRR properties, and a lot of "Creative Finance" properties POSSIBLE but certainly less likely to work cleanly).

I know - a lot of caveats lol! 

My goal is NOT to grow as large and as quick as possible, but rather to grow slowly and deliberately - The Small But Mighty Investor is kinda the roadmap!