All Forum Posts by: Jonas Harper

@Kevin Purvis This is the approach we are going to take (phased approach).  We are in the process of securing HELOCs on two of our properties now to leverage some of the equity.  We'll use the HELOCs to build Phase I while simultaneously building a cash balance with our current rentals to complete Phase II.  By the time Phase II is completed, we should have plenty of cash to continue building (from current rentals as well as Phase I rentals).  

@Michael Baum We have a cabin on the property that is currently on STR and have zoning on the acreage that allows for building the glampsite, among other rural/commercial business activities. So while the plan is to use HELOCs and self-fund to get things going, we are also approaching more lenders that will lend for this type of project as a "business loan" versus a real estate/construction-type loan.

Sincere thanks for all the replies.  It has been very helpful making me think/re-think strategy.

@Luke Carl I should have clarified.  We aren't just throwing tents on the land and renting them.  We'll be building tiny houses, tree houses, yurts, domes, etc.  And we will also be building them to code with all the proper permitting so that we can have kitchens, baths, etc.  Some of the lenders we've spoken to suggest we can get financing for the project(s); however, because we are a new business, that becomes the primary sticking point.  

@John Underwood Thanks for the advice. Definitely trying to balance growth while being smart about leverage (and maintaining equity stake). This is primarily why I'm interested in HELOCs vs. cash out refi or other options. With a HELOC, only use what's needed, as needed. The hope is that we have enough cash to fund the glamping site without needing to borrow much more. Or simply do it in phases and not move on to the next phase until we have the cash to do it.

Last year my partners and I purchased 3 cabins in TN using 2nd home loans and we have done quite well so far.  We are in the process of planning and designing a glamping site on 10 acres with a target launch of Spring 2023.  

So what's the problem right!? Well… Financing… We are looking to take out HELOCs on 2 of our properties that have a decent amount of equity, which should cover us for Phase 1 of the glamping site. However, we currently don't have financing lined up to complete the buildout. As a new business, we are having trouble with SBA, construction loans, and other lending options. In addition to the glampsite, we are looking to expand our cabin portfolio, but due to high property valuations we don't have the cash to be competitive in our offers and don't have the liquidity to cover 20%+ down for DSCR or other types of financing.

We’ve spoken with several lenders and are approaching many others, but we are starting to feel a bit stuck.  We’ve discussed partnering with others, but we currently don’t have friends, family, or people in our network that are interested (or have the means) to do so.

Any and all tips/suggestions are greatly appreciated.