How can I get financing to buy my vacation rental home?

I am a newbie when it comes to vacation rentals. I have been reading
up on it and want to get going with it. This has been our dream for a
long while. My question begins with financing. We currently own a
home, and are building one to sell. So we have 2 large loans showing
on our credit. My local mortgage officer said that until the building
is complete and it sells, we probably won’t qualify for a second home
loan for a vacation rental. Then I asked about going for
an “investment loan” after finding a rental with a proven rental
history. He said mortgage company don’t consider vacation property
income because there is not a “lease”. This sounds a little fishy and
wanted to get some feedback from you all. How does anyone ever qualify
for an investment property loan and count the income to qualify? I
hope I am making sense.
Thanks so much.


>”He said mortgage company don’t consider vacation property income because there is not a lease”.

This is mostly true. Banks care only about longer term leases, something with guaranteed income. They care about annual leases and commercial leases
where rental income is contracted for a year or more.

>” I asked about going for an “investment loan” after finding a rental with a proven rental history.”

The former owners have a proven rental history. It is not *your* rental history. Unless you are also buying the specific persons who are responsible for marketing and scheduling the home, then you do not have a proven rental history. Their history is not transferable to you.

> “How does anyone ever qualify for an investment property loan and count the income to qualify?”

Generally people qualify by having a low debt ratio and an income large enough that they can afford to pay the additional mortgage indefinitely even if the home remains unoccupied. After a year or more of proven rental history, the bank will look at your accounting records to decide whether or not you can continue to qualify for additional rental homes.

Chuck Eglinton
Www.Mickeytown.com
www.ChuckEgg.com

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