All Forum Posts by: Kevin Pillow

My fiancée, my brother and myself are looking to partner together to get our first STR. We are having trouble on how to structure the deal between us three. One idea is to get a vacation home loan in one person's name but have all three people on the title and/or can quitclaim into an LLC that us three are all on. We would like to not have the other two people's DTIs affected if possible so that those two people will be more easily able to get pre approved for another loan. Any advice on how to best structure this would be greatly appreciated.

I have had couples do this before where the wife will be on the mortgage because she can qualify for the loan on her own. Then the agent(me) will write on the purchase contract the names of all parties wanting to be on the deed in the buyers section. Then at the bottom of the contract where there is an additional terms section I write those individuals not on the mortgage as non borrowing purchasers. For example, John smith is a non borrowing purchaser. Then I inform the the title company of what we are doing and as long as everyone is on the purchase contract they will be on the deed. I’ll caveat that I’m licensed in Florida so you will want to check with the state specific agent or title company to see if you’re able to do this.

While I’m bullish on STRs for the longterm and will continue to invest in them, the situation is different than 2020 and is not only interest rate hysteria. There is a legitimate decline in vacationing in many markets (especially mountain markets or low lead time markets) in the summer of 2022. This is likely to have some effect on prices in the next 3 to 12 months. For example, many Smoky Mountain cabins were priced in anticipation of continued tourism growth from 2021 numbers. While the decline or normalization is fine for most of us it definitely is not fine for many of the cabins purchased in the past 6 months. I have a hard time seeing how 90% of the cabins sold in the past 6 months in the Smokies are making money with the numbers for this summer, for example. This is the same for smaller cabin Blue Ridge where you can already see price drops on types of cabins that were being bid up way over list merely 3 months ago. 

@Wesley Myers

Rates are on the rise and 6% doesn't sound unreasonable for an investment property. If you feel rates will be back down in the coming years you could always start buying these properties with 2+1 bridge loans. This is a 2 year interest only loan with an option for a 1 year extension. 2-3 years down the line, the properties would be fully stabilized & seasoning requirements for every bank would be met so you could refinance with just about anyone at that point.