Can I buy an out of state investment property (Airbnb) 15% down?

Question

I’m located in New York and would like to buy an investment property near a Florida beach . The plan would be to rent the beach house out on Airbnb. Is this possible with only 15% down ?

Also in your experience, how many months does it take until the property is cash flow positive ? How much reserves should I set aside ? I’m primarily looking at smaller single family homes near beaches that aren’t currently used as a short term rentals.

Parker Borofsky · Answer

@Frank S. 15% down for investment properties is totally doable and meets the Fannie Mae/Freddie Mac guidelines.  @Avery Carl is correct that I am able to finance investment properties with 15% down, and @Lucas Carl is correct about the PMI if you aren't putting 20% down.  Depending on the overall use for the property it may or may not qualify as a second home, but is definitely worth looking into.  Hope that helps!

Avery Carl · Answer

Some lenders can do an investment property for 15% down, although it’s not the norm. @Parker Borofsky can.

John Underwood · Answer

I know Associated Credit Union in GA was able to do 10 % down with PMI.

Account Closed · Answer

You're taking on quite the risk by "buying" a property out of state for your first STR deal. Just saying. I'd find something a little closer to home.

Luke Carl · Answer

@Frank S. As the boss said 15% is totally doable depends on lender. Current regulations are 15% so if you're dealing with a lender that doesn't know that -chances are they're not used to doing investments.

Anything under 20% down on an single family home you'll have to pay monthly mortgage insurance so figure that into your numbers. Generally not a huge amount unless you're dealing with a pricey property.

You could even do 10% down as a "second home loan" but then you're dealing with what's called a "second home rider" and you'll get a lot of mixed feedback on that. Give it a google and read previous sentence with "air quotes."

Obviously first and foremost, this thing would need to be a money maker if you're putting a low down payment.

As for your second question.... well that's a whole other forum post. You might search the forum for these subjects or even google "Florida vacation rental bigger pockets" and you'll find hours of reading material.

Go get em!

Parker Borofsky · Answer

@Ken Latchers I am not sure what your qualifications are to make such a statement, but I am a Mortgage Loan Originator licensed in 7 states and I specialize in financing short term rentals. Fannie and Freddie have absolutely no language in their 200+ pages of guidelines that would not allow for an STR property. Not only can these properties be financed with traditional Conventional mortgages, we can also use short term rental income once it has been reported on Schedule E of a tax return to qualify the borrower for additional residential financing.  I have had over 250 of these specific type transactions over the last few years and have never had an issue.  I really hope you are not telling others that they cannot obtain Conventional financing for an STR because that could be very misleading.

Matt Ray · Answer

@Frank S. How long it is going to take to cash flow will vary. A couple of factors to consider 1. If you put 15% down your monthly payment will be higher meaning longer to cash flow, 2. for STRs Florida will be seasonal so you may cash flow well some months and worse others. In my experience your best bet if your not familiar with the market is talking with a good property management company to understand the characteristics of your area.

Parker Borofsky · Answer

@Ken Latchers Fannie/Freddie are not government-backed entities.  They are backed by their own corporate health and not insured by the government.

Actual government backed loans such as VA/FHA/USDA can typically only be used to purchase a primary residence.  These loans are not intended to purchase rental/investment/STR properties and there may be STR language existing specific to these type of loans.  I have never nor would I ever close or even attempt to close a loan for an STR using an actual government loan program, it would not work.

Can I buy an out of state investment property (Airbnb) 15% down?

Most Popular Reply