All Forum Posts by: Billy Sutton

This property is technically a house — it was built with a steel frame in 2014, has cedar siding on the exterior, and reclaimed, varnished heart pine on the interior walls. It’s not a cabin, though it definitely gives cabin vibes to guests. It looks great, and it performs well.

The current situation is: we originally took out a bridge loan on this property to use as a down payment on another STRV in a different market. The plan has always been to place long-term financing on the asset and hold it — we own all the adjoining parcels, so it makes a lot of sense to keep it in the portfolio.

Here’s where things got a little messy: when we took out the bridge loan, we prepaid what we believed were the full 18 months of payments into the loan servicer’s escrow. Turns out, we had only prepaid 15 months. We ended up missing two payments before realizing what happened — once we caught the mistake, we wired the missing payments and fees immediately. The lender was cooperative and extended the loan until June 1st, with an option for a further extension.

That said, any missed payments showing on a mortgage statement can scare off DSCR lenders, even though they don't show up on credit. So now we're considering replacing the current bridge loan with a new one — effectively resetting the clock — and then refinancing with a DSCR lender that either allows for little to no seasoning or waiting it out until we hit 12 months seasoning to access the equity.

That’s the general game plan. Pretty standard scenario — just a hiccup in the timing that we’re working around now.  

 Hey Zach, Awesome- we look forward to talking with you!

Hey BP Fam,

We’re looking for a DSCR lender who gets rural STRs — and doesn’t mind a smaller loan amount when the numbers make sense.

The Deal:

We own a 2-bed, 2-bath cabin, hot tub, acreage, etc. on a private lake in rural Georgia. It just appraised at $240K, and we owe under $75K. The STR is bringing in $4K–$5K/month gross, reliably, thanks to steady demand from vacationers who want something peaceful, private, and not in a crowded city.

We’ve used DSCR loans before, specifically in the Savannah tourism market, and we know the ins and outs: DSCR ratios, prepay structures, rate buydowns, all of it. But now that we're expanding into rural properties, we're hitting a wall with lenders who:

• Don’t like rural zip codes
• Don’t want loans under $200K
• Require 12+ months of seasoning
• Don’t want to touch STRs unless they’re in major metros

The thing is, this deal crushes on cash flow and has a huge equity cushion. We’re not asking them to take a flyer — just to look at the actual performance. We are looking for a strong, long term lending product to settle this asset into, with room for additional doors.

Our Take on Rural STRs:

Rural STRs — especially unique, experience-driven stays like lake cabins, tiny homes, and farm getaways — are one of the most overlooked opportunities right now. You get:

Lower cost per door
Less local regulation
Strong guest demand for “off-grid” and “unplugged” vacations
Great ROI with the right setup

We’re planning to scale this model across several similar properties and think there’s a real lane here.

What’s Everyone Else Seeing?

I'm new hear and really excited to hear from the BP community:

• Have you had success getting DSCR loans on rural STRs?
• Which lenders were actually willing to look at smaller deals with real cash flow?
• Have you found creative workarounds when seasoning or zip code became a problem?

Drop your stories, wins, lender recs, or even horror stories — we’re trying to learn and share as we grow. Might even do a follow-up post on what we find if there’s enough interest.

Thanks y’all — excited to hear what’s working (and what’s not)!

—
Let’s keep building,
Billy
🏡 STR / Multifamily Rehab Investor | GA & Beyond
DSCR-experienced | Savannah ➡️ Rural Expansion

You're spot on about the evolution of the STR market. We've definitely seen similar trends here in Savannah and across Georgia. Back in the day, STRs were still a bit of the "wild west," and returns could be pretty impressive if you found the right place and ran the operation well. But like you're noticing in Phoenix, the market has matured a lot. Here in Savannah, for example, the competition has definitely picked up, and so has pricing.

Looking at the numbers, AirDNA shows that the average daily rate (ADR) for STRs in Savannah has increased by about 30-35% over the past five years. While the return potential is still solid, the margins are tighter now, especially in prime areas like downtown. The property prices have gone up too — homes in the Historic District have seen price increases of about 40% in the past five years. This means getting those outsized returns is tougher now, and it's less about flipping a property for a huge gain and more about the business side of things.

In fact, we’ve seen the same shift in our own portfolio. We no longer just expect big returns from the appreciation of the property itself — it's about optimizing the guest experience, staying on top of cleaning, setting the right pricing, and making sure everything runs smoothly. For instance, during peak season (March and October), we’ve been able to charge higher rates due to our strong reviews, repeat guests, and the fact that we offer a unique experience that sets us apart from other properties. But if we weren’t hands-on and running the business efficiently, those returns would definitely be smaller.

To your point, a lot of folks still think they can get “windfall” profits, but with prices up 40% on prime properties and competition high, those days are pretty much over. What we’re seeing now is that the real value in STRs comes from running it as a business — managing the operations, optimizing pricing, and really creating a standout guest experience. In Georgia, especially in markets like Savannah, it’s still a great opportunity if you’re willing to put in the effort to run it as a business. The returns are there, but they’re more sustainable and predictable when you’re hands-on.

Congrats on diving into property management — that’s awesome! Getting your first client and a 5-star review right off the bat is a solid start. Some days it can feel like you're getting grey hair by the hour, but mostly its great-never a dull day! 

You’re definitely on the right track by focusing on design, photography, and pricing. These are crucial for attracting guests and ensuring your properties stand out, especially in a saturated market like Scottsdale. To continue getting those 5-star reviews, a few things I’ve found work well:

1. Consistent Communication: Quick, friendly, and helpful responses to guest inquiries and issues go a long way in earning great reviews.

2. Professional Photos: High-quality, well-staged photos are key. They help guests visualize their stay and build trust.

3. Streamlined Experience: Automating check-in/check-out, cleaning schedules, and guest messaging can help things run smoothly and reduce any potential stress on both sides.

4. Exceed Expectations: Small touches — like providing local recommendations, quality amenities, or a personalized welcome note — can make a big impact on guest satisfaction.

You’re already setting yourself up for success with your team and systems, so just keep focusing on delivering a smooth, memorable guest experience, and the 5-star reviews will keep coming! Keep it up!

Hey there, welcome to the STR world!

So short answer — no, paying down 20% of the principal doesn’t change the original terms of the loan. If you bought it as a vacation home (second home), the 14-day requirement and personal use rule stays in place for the life of the loan unless you refinance into a different loan type.

That said, lots of folks do exactly what you're thinking — buy as a vacation home with 10% down to get in the game, and then eventually refi into a DSCR or investment loan down the line if it makes sense financially or for STR scaling purposes.

Just keep in mind: Fannie/Freddie vacation home loans technically still require the borrower to maintain exclusive control (i.e., not be subject to a property management agreement), and the lender can ask questions if it looks like it’s being used as a pure income property.

Hope that helps clear it up a bit. We've used both routes — vacation home loans and DSCR — depending on the deal. Let me know if you want to compare the two side by side.

Hey Yair,

Totally get where you're coming from — we've been down the STR road ourselves (including some out-of-state deals), and you're in a solid position with that $250K set aside and clarity around your goal of reducing capital gains through STR tax status.

You’re right that proving material participation is the easy part — if you're willing to self-manage and document everything — but market selection under pressure can be a total mind game. Here are a few thoughts based on our own journey:

We absolutely love the Savannah market. It's been a consistent performer for us, thanks to its mix of year-round tourism, historic charm, and strong weekend traffic from nearby cities. The tourism demand is solid, and even with STR regulations in place, it's still one of the most STR-friendly cities in the Southeast if you know how to navigate it. Our DSCR-financed properties there have done incredibly well, and it's a market we'd invest in again without hesitation.

That said, if you're on a tight timeline and want to get moving fast, you might want to consider markets where licensing is more streamlined or where you can buy a property that's already operating as an STR. Look for places with clear or minimal restrictions and year-round demand, so you're not banking on just seasonal spikes to justify the investment.

We've also seen great ROI in rural or tertiary vacation markets. Think lake towns, quirky tourist spots, or small cities with universities and hospitals. They tend to have lower acquisition costs, less competition, and more stable occupancy. Even just one or two really well-run properties in these kinds of places can make a big dent in your tax liability.

If you’ve already spent a lot of time underwriting, my advice would be to trust your gut and pick a market that checks 80% of your boxes — then go. The longer you wait, the harder it gets to hit those material participation hours.

Also, it might be worth looking into deals where the seller has a performing STR and is willing to share historical numbers — it'll make financing and due diligence way easier.

Let us know what markets you’re considering — happy to throw in thoughts if you’ve narrowed it down.

Hey, sounds like you’ve got a great setup already — love that your daughters help with the cleaning too. We self-manage our short-term rentals as well and totally get how important it is to really know your market (especially when platforms like AirDNA and Rabbu throw out numbers that feel way off).

If you’re confident in that $25k–$35k range, that kind of cash flow on a $120k property is solid — especially in a stable market near a university and hospital.

As for low down payment options, here are a few thoughts:

1. DSCR Lenders – Some DSCR lenders offer 10% down, especially if you've got a good deal and strong projected cash flow. You may pay a slightly higher rate or need to show some reserves, but it could work. Worth calling around to a few and seeing who plays ball with small-town properties.

2. HELOC on Another Property – If you've got equity in your current STR or primary home, a HELOC could be your bridge for the down payment without having to go in with a partner or pull from savings.

3. Local Banks or Credit Unions – We’ve found local lenders near our rural properties are often more flexible than the big banks — and sometimes more comfortable lending on “non-traditional” vacation areas if you can show cash flow and solid management history.

4. Seller Financing – Long shot, but if this property has been sitting or the seller is open to creative terms, you might get in with less money upfront if they’re willing to carry a note.

5. Partnership or Co-Buy – Not always ideal, but if there's someone you trust who's interested in passive income, you could offer a JV deal where they bring the down payment and you handle all operations.

Bottom line — I’d say if it cash flows and you know the area well, it’s worth pursuing even if you have to get creative. Especially since you already have the systems in place and can hit the ground running.

Let me know what direction you end up going — always curious to hear how folks make deal #2 work!

Sounds like you and your partner are off to an awesome start — and doing the build yourselves is no small feat, so props for that. We’ve been in a similar situation before, so here’s what I’ve learned from our accountant and my own experience:

You’re right that you generally can’t deduct material costs until the property is placed in service — meaning it’s ready and available to rent. At that point, those costs usually get capitalized into the basis of the property and depreciated over time. So yeah, most of that will fall on your 2025 taxes once you start renting.

Now, about mileage — yes, you might be able to deduct those miles as part of your startup costs. The key thing is documentation. If you kept a mileage log (even just a spreadsheet noting dates, purpose, and mileage), that definitely helps. Those travel expenses could be considered part of the business startup costs, which are a little different from ongoing operational deductions. You can usually deduct up to $5,000 in startup costs in the first year, and amortize the rest over 15 years.

Same goes for LLC filing fees, some legal or accounting fees, and anything related to setting up the business side of things — those can be included in startup costs for 2024.

Land isn’t depreciable, but you’ll want to track that cost since it gets added to your basis for the property. Mortgage or land loan interest (not principal) might be deductible once the property is placed in service, but not beforehand in most cases. Utility bills for construction purposes and gas to get to the site may also be capitalized into the cost of the property — again, it comes down to solid record keeping.

Bottom line: you probably won’t be writing off a ton on your 2024 return, but it’s 100% worth tracking every dollar spent now. Come 2025 when the cabin goes live, you’ll be in great shape to start depreciating everything properly and even catch some of those startup costs as deductions.

Might be worth checking in with a CPA just to make sure you’re classifying everything the right way, but you’re definitely on the right track.

Good luck finishing the cabin — that’s going to be such a cool asset once it’s up and running!

Hey there — totally feel where you're coming from.

We host several pet-friendly units in Savannah and learned early on that yes, this is just part of the pet-friendly business model. That said, it can absolutely be managed — and profitably.

We charge $100 per pet (not per stay), and while that doesn’t cover a full deep clean every time, it does allow us to build in an occasional scheduled deep clean rotation that keeps everything fresh. Honestly, being pet-friendly is one of our biggest occupancy drivers — people are actively searching for listings that allow their dogs, especially in vacation towns or places with walkable parks.

Your idea of no unattended pets is smart. We’ve also added a similar note to our pre-stay message and even reinforce it with a small sign in the unit. Something like:

It won’t stop all the issues, but it helps set expectations. Also, don't hesitate to be more upfront about specific pet rules — like no pets on furniture unless guests bring their own covers, or that pet waste must be cleaned up from the yard.

We’ve only had a couple of outlier situations with heavy shedding or muddy paws, and in those cases, we’ve charged additional cleaning fees and guests have usually understood.

In short — it’s frustrating in the moment, but it sounds like you’re approaching it smart. With a few tweaks and a little more upfront messaging, you’ll probably filter out most of the higher-impact pet guests. Long term, being pet-friendly will likely continue to pay off in higher bookings and repeat guests.

Happy to swap more notes on this —