All Forum Posts by: Neil Henderson

It depends on the lender, but in general, no, it's not frowned upon at all.

It mostly depends on the bank's comfort level with that kind of financing and their comfort level with you as a borrower.

The more attractive you can make yourself as a borrower, the better. Most of that is going to come down to your Debt to Income Ratio. What's your tax return show you have made over the last two years? What does your W-2 say you make each month? Does that line up with what's being shown on your tax return? What out standing debts do you have? What are their minimum payments?

What the book may be referring to is the limits you'll eventually face using Agency Debt, Fannie and Freddie backed loans. A individual borrower may have up to 10 Fannie and Freddie loans  under their name. Some married couples will even apply for loans individually so they can have 10 each.

Once you have used all those Fannie and Freddie slots, you'll either need to pay off a loan to open up a slot, or seek portfolio lenders (loans that are NOT backed by Fannie and Freddie) which typically have higher interest rates and can have shorter terms and amortization schedules. 

@Alexis King That's a great question. I don't have a fool proof answer for you. 

I would say most coastal markets would be a good place to start. 

Look for vacation rental owners associations in states where you're looking. They might have some indication of established communities.

@Alexis King

There are also loans called 2nd home loans. If the property is outside of the state you currently reside, you can use a 2nd home loan. As little as 10% down.

@Alexis King

Two banks I’ve heard recently that specialize in loans on short term rentals. Quicken Loans and Visio Lending.

More and more income based loan products are coming on line instead of asset based.

I would look for communities where there is a very established short term rental ecosystem. The competition is a challenge but the community will be less hostile to short term rentals.

Listen! You two @Alexander Felice and @Spencer Cornelia would be billionaires by now if you spent less time in the gym and more time talking to ME!

Welcome @Ignacio Martinez that's a great why!

Have you considered doing some sort of house hack? Buy a property to live in but also have tenants who pay you rent. Allows for smaller down payment and significantly lowers your housing costs. One of the best ways to get started in real estate investing, IMHO. If your lifestyle can handle it, highly recommend it.

Beware the Las Vegas small multifamily market. Mostly C- to D- class properties in rough neighborhoods. 

Hi @Nia Dixon we have interviewed two investors who are making their way with short term rentals, Zeona McIntyre and Mike Sjorgen and I know they coach. I have not used their coaching and haven't spoken to anyone who has but I can say they are both very nice people and know their stuff. 

Vegas is a strange market. Stay away from small multifamily here, they are all in really rough neighborhoods. Short term rentals are illegal in Unicorporated Clark County (Most of the West side of the Valley), highly restricted in the City of Las Vegas (Strip area and West Central Valley), unregulated in the City of North Las Vegas (Northeast of US95) and recently approved (with regulations) in the City of Henderson (Mostly Southeast side of the Valley).

Beware of condo communities as you never know what the association will suddenly decide they don't like. If you do buy a condo, prepare to get yourself elected to the board as soon as possible to protect your investment.

In the areas where it is allowed by the municipality, make sure it's allowed by the HOA, and MOST properties in Las Vegas are in an HOA.

In response to @Daniel Rongo question, I would steer clear of purchasing a condo in Paradise for short term rentals.

A couple of reasons why:

1. Paradise is in Unincorporated Clark County. Short term rentals less then 30 days are expressly forbidden, unless they in one of the condotels on the Strip.

2. The neighborhoods where those condos are are really sketchy. 

3. You never know when an HOA is going to decide it doesn't like short term rentals, or long term rentals for that matter.

All that said, there are people doing it and just rolling the dice that the County won't shut them down. I have many real estate friends who have gotten cease and desist letters in the last 18 months. 

The City of Las Vegas and the County both have administrations who are VERY hostile to short term rentals. The Mayor of Las Vegas is a long time resident of a neighborhood that became very popular with short term rental operators (Scotch 80's). She has pretty much made it her mission to shut down "party houses" in all of Las Vegas. Even going so far as to say she hopes it will be her lasting legacy. I also suspect the hotel lobby has mounted a shadow campaign against them for years.

The news is not all bad, the City of Henderson (basically Southeast Vegas) voted to allow short term rentals just recently. Big thing to be mindful of when looking there is most properties are in HOAs that don't allow short term rentals.

Similar to what @Mark Byrge said, might be an opportunity to try and negotiate seller financing or a lease option to give you time to sort out the financials. 

"I can't take these to a bank to get traditional financing? They'll want to value the property based on the income and the underwriters will want to see expenses and income statements, probably from a tax return."

It amazes me the number of mom and pop self storage owners who will step over dollars to pick up pennies when it comes to reporting income to the IRS. "Congratulations, you cheated the IRS out of $100,000 in taxes over the last 25 years of ownership and yourself out of $1,000,000 in valuation when it came time to sell."

In humble opinion, house hacking is the single greatest way to get into real estate investing, if you're able to do it. Buy a small multifamily, live in one side, rent out the other to long term tenants. Or, do the same, furnish the other unit(s) and rent them out as short term or corporate rentals if your municipality allows it.

Beyond that, begin with the end in mind! What do you want your life to look like once your stratgey is up and running? The life of a house flipper is VERY different from the life of a note investor or an apartment syndicator. They also take different skills, more or less money to get started, etc. 

If you're able, find a strategy that interests you and seek to "intern" at it for a period. Offer your time (for free or mostly for free) to an experienced investor doing that strategy.

This does two things: 1. Gives you experience executing that strategy alongside someone with more experience. 2. Gives you a taste of what life is like for someone doing that strategy. You may find that the money is good, but the life it provides is not what you're looking for.

Good luck!