If so you need to fall into the guidelines (for the investor whos funding it) regarding non arms length transactions.The most common scenarios they typically prohibit are:- Gifts of Equity- Bailouts- Leaseback OptionsAt the end of the day it needs to be a legitimate transaction, with legitimate funds coming into close.

I like that you pointed out all the positives and negatives for a fair balanced post that will help other investors evaluate future options.I have been posting for a while on how hard the North Alabama market has become, and this post shows a good example of it. 

Or do they leverage debt, and use the subsidies to cover the equity needed?

This can encourage positive word-of-mouth and build goodwill if they’re ever a reference for your property.Ultimately, focus on fairness and clear documentation.

Hi Anthony, it sounds like you’re in a good position to start building your STR portfolio, especially with no debt, great credit, and rent-free living!

My recommendation would be different if you were a high-income earner or if you wanted steady equity growth.

I just re-read and realized you're talking about getting loans for lien position 2, is that correct?

If the seller has equity at the closing table part of the proceeds could go towards the utilities being caught up.

I would keep as much liquid as possible and essentially get you to 20% equity or more by renovating the property. 

So far, it’s 100% positive.