Quote from @Steven Stanimirovic: Hi Rich,The prepayment penalties you’ve encountered are quite standard with DSCR loans, as lenders often structure these penalties (commonly called "step-down prepayment penalties") to offset the risk of early loan payoff.

Like you mentioned, there is a risk for a mid term stay entering your top season.

but if you're that leveraged, it will be higher risk and very difficult to cash flow - so that is not something I would typically recommend.

Everything would be in your name and he would be at risk possibly even with a legal agreement.  

Thanks - will likely have to be an exception but definitely possible since the story "makes sense" from a lender's risk perspective

Many people do this and as long as they keep paying the lender nothing happens, but just understand your risks as they may be able to call the loan for whatever reason.

Why would you buy an out of state property, with all the related risks, when you can get a similar if slightly smaller yield on a completely liquid investment? 

The book is useful for understanding how to structure deals, assess risks, and think like a lender, rather than just an investor.Pair this with engaging in forums like this one and attending local meetups to put what you learn into practice.

Plus, as mentioned your risk exposure would be huge if you didn't have a contract in hand to lease, plus they won't want to lease from you, because they are a Sticky or capture tenant.Start small and Make Your Big Mistakes Early.

Partner Driven and Traci Stephens recognized this as a low-risk deal with high potential for a rapid turnaround, making it a perfect addition to our portfolio.