All Forum Posts by: Christy Flora

We have quite a bit of equity in our home and are considering using a HELOC to become a "cash buyer" for a second home (Short Term Rental). The plan would be to pay back the HELOC using rental income (or just our income if we don't have renters) for about 6 months to season the loan and hopefully build a tiny bit of equity (both through hopefully natural appreciation and forced appreciation in the form of renovations). At that point, use delayed financing to refinance the "cash" home to a conventional mortgage (with a lower fixed interest rate than the interest-only HELOC rate) with a lendor. If this is fairly straightforward, we can then pay down the HELOC and then rinse, repeat with a third property when the time is right.

My question is, who has used this strategy successfully? How hard was it to get a lender to create a mortgage on the "cash" home. I'm assuming with a straight-forward yearly rental (with leases) it's easier to get the mortgage than with just a few months of STR income. Would we need to wait a year or two to build enough of a track record with lending?

So, I'm assuming if I'm in the market for a second home loan, I need to have it funded by April so go into contract no later than March 2022?