Financing Options on VRs? Hard Requirement on Investment Loan?

[Brett Shoemaker]

Hi All, 

Currently pursuing the VR market and I've been researching best options for financing a VR property and need some clarification. To point out, this will be our 1st VR. As I understand it there are 3 main options (4 if you include paying cash...I wish:) 1. Conventional Loan at 10% minimum down. 2. Investment Property Loan at 20% minimum down. 3. HELOC against primary residence.

My issue is understanding what if/any implications exist for going the Conventional Loan route and the lender attaching a "Second Home Rider" in the loan agreement. What issues does this cause? Does this setup some potential legality issues since we'd plan to AirBnB/VRBO the property greater than 75% of the time? Our underlining issue is the 20% down. I've looked into HELOC, but I will reserve that option for leveraging the 1st VR against a loan for a second for scaling the portfolio, leaving our VR(s) unassociated from our primary residence.

Any guidance and thoughts are greatly appreciated.