Originally posted by @Victor Warnsley:
Originally posted by @Jesse T.:
Originally posted by @Victor Warnsley:
Hi fellow BPs!
But I do have a great interest in acquiring a property within the Gulf Coast Alabama region.
Over the years I've made connections with some realtors in the area and recently was introduced to a few beachfront properties within the $170-$240K price range. These properties tout a good cash flow history (although I will need to analyze this further) and is within my desire price point; however, I have no clue how to finance a property like this.
My hope is to gain some insight as to what financing options are out there for this unique situation. I'm open to suggestions AND critique as well so all ears!
You will need to finance it as an investment property. Since you won't have traditional leases you will need to qualify on the basis of your income.
They key to your success will likely be property management. You might start there, find a good established company. They might be able to refer you directly to an owner looking to sell, or they might help with a sanity check on a property you would want to buy(since they make money when you make money).
Thanks for the advice! A couple questions- An investment property is normally funded at 80% LTV, correct? Would it be a better strategy to obtain it under an LLC and then finance it as a commercial loan or go the good ole' fashion way of financing it under my own name?
A lot of the big name players (Wyndam for example) now manage most of the condos and beach houses in the area I'm targeting so I think that might be my best route.
Hey Victor,
Good for you. This is a huge accomplishment! I think it was mentioned before, but for an investment property you will need to put down at least 25%. Property Management will be a huge factor and will call for a more in-depth group than the normal PM's. Vacation rentals tend to have high turnover, which requires more frequent inspections, cleaning, tenant placement, etc. If buying a condo, be sure to read up on the HOA regulations pertaining to renters. I spent a lot of time researching in Palm Springs, CA and came across a lot of HOA communities that force renters to stay a minimum of 1 month.
Furthering on what I said earlier about Vacation Rental Property Management, they tend to charge a lot higher than your usual PM's. I had a quote in Palm Springs as high as 25% of annual rent! For that rate, it might be a better solution to find a steady, long-term renter and a cheaper (but still good!) PM. Best of luck to you, feel free to give me a shout if you have any questions and I'll do my best to help you out!
-Matt
