Building a STR Business

[Ryan Foster]

Hi All -

I am new to BP but love Podcast and the Site.    

I have been vacation renting my previous primary home for about 5 years now.  It has cash flowed from the beginning.  The area I am in is beautiful (especially in the winter), warm and close to lots of golf courses.    I am currently renting another house in the same area as my residence.

I have decided to take the leap and grow my STR business. My strategy is to stay in my local area (I know it well and can self manage for now) and acquire 1 STR a year using cash and equity on each new home.

My questions---

Currently in escrow on a 2nd STR and in the midst of choosing financing.

So far, I have a local lender offering a 30y fixed at 6% with 20% down.  Investment property loan.  

My goal is to keep the $ in at a minimum.  I still need to furnish, etc.

For the experts here, do you typically use traditional financing or use other sources?  

What about different types of financing for STRs?  Adjustable and balloons?  And then refi later. 

The good news is I was to slide one of my potential renters from my 1st STR (it was booked) to this STR for a 3-month stay - starting 3 weeks after close.

However,  I have to close the deal!   Going to be a busy summer :)

Thanks all - Happy to be here with like-minded individuals.

---Ryan

[Paul Sandhu]

I use my other rentals to finance the purchase of a new STR. Just keep the rent in the bank and when I find a good buy on a house I get a cashiers check to pay the seller. Houses are cheap in this town. $9500 will get you a 3BR with CH/A in an above average neighborhood. The house will need up to $1000 in repairs or upgrades, then it'll need to be furnished. It'll rent for $600 per week. Lather, rinse and repeat after 26 weeks. Refinery contractors are the tenants; welders, pipefitters, boilermakers and other such occupations where owning a big 4wd and having neck tats are a prerequisite.

This is a nice town to invest in, but you wouldn't want to live here.