Buying a Vacation Rental Property: Understanding Your Financing Options

Many investors now how lucrative buying a vacation rental property can be. When it comes to making a profit on vacation rentals, there’s no shortage of destinations. Money, however, can be harder to come by.

Arranging financing is one of the most crucial steps in property investment. A few tricks can go a long way, and it pays to have a clear understanding of your financing options for properties.

In short, a limited liability company (LLC) is able to act as an independent legal entity, separated from the person who started it. Among other things, this means LLCs can receive tax identification numbers, open bank accounts, and conduct business – all as a distinct entity unto itself.

This interesting legal arrangement can do much more, though.

As a real estate investor, an LLC will also benefit you in the following four important ways.

Acquiring vacation rental properties is a pretty straightforward process. The biggest hurdle you’re going to have is getting financing for the property. As an individual real-estate investor or as a limited liability company (LLC), there’s a suite of financing options available.

While there is a wide variety of mortgage options out there, blanket loans are among the most advantageous mortgages for investment and vacation rental properties.

One of the most convenient ways to finance your rental vacation home is with a blanket loan mortgage. The key advantage of a blanket loan is that you can shuffle the financing for multiple vacation rentals into one loan. By consolidating your financing, you will see lower payments. All the extra fees from having separate loans on each rental property add up quickly and can suck up a lot of your profits.

One of the most comfortable financing options available is the blanket loan. Benefits of this loan include:

• Applicants do not have to be citizens of the United States to receive capital
• Unlimited cashouts
• $300,000 and over in available financing
• A minimum credit score of 620 to apply
• 5% as a starting rate

Blanket loans are used to finance the purchase of multiple properties. With Vacation Rental Property Loans, there is no limit on the number of properties from your portfolio that can be financed. With these specialty mortgages, you can scarf up as many rental properties as you can qualify for.

These loans also offer impressive flexibility and are well suited for lower scale properties for fast turnarounds.

• 30 year-fixed-rate amortization
• Sell the property anytime without issue
• Loan sizes of $75,000 and higher

Having a fixed rate loan is a huge advantage and means you won’t have any nasty surprises like interest rates that suddenly jump up when you least expect it. The predictability of fixed-rate loans makes them a favorite for savvy real-estate investors.

With a No DSCR Ratio Program, you can close the deal quickly and start making money faster.

Advantages include:

• Suited for vacation rentals
• Good fit for short term rentals
• The premier choice for high-end residential properties
• Loans with 5, 7, and 30-year terms
• A minimum credit score of 650 for qualification
• Bankruptcy from over two years ago is acceptable

These programs can jumpstart your vacation rental property investment venture and get you off the ground.

There are a few things you’ll want to keep in mind when renting out vacation homes. Starting with the IRS, tax considerations should be at the forefront of profit analysis. For example, you can rent a second home for up to 15 days and not report the income. However, if you are renting the home and spend less than two weeks in it, the income must be reported. If you rent the house for $500 a day, for example, you can still make a tidy profit and cover your property taxes with the income.

Another tip is that second homes you rent out that are valued below $150,000 can be used to declare passive losses. These losses represent significant tax write-off opportunities. For those with an AGI less than $100,000, you can realize $25,000 in deductions.

The only other major requirement is that you have to actively manage the property, which means handling the repairs and sourcingtenants. Be prepared for a lot of hands-on management. While the tax benefits can be fantastic, it can inhibit expansion. However, as an individual income property investor, the tax deductions are usually worth it.

When engaging in the vacation rental market, having the right financing partner can make all the difference in the world. Customers who partner with Vacation Rental Property Loans enjoy an easy application process that doesn’t require personal or business tax returns to receive financing.

There’s no W2 or 4506’s, making the application process a breeze. All you need is to have a minimum credit score of 600. The higher your credit score is, the lower your rates will be on the loan.

Loans come in 3, 7, 10, and 30-year terms with fixed rates available and Vacation Rental Property Loans can cover up to 75% of the property’s value.

Another advantage of working with Vacation Rental Property Loans is that the organization is not a bank or hard money lender. The added flexibility of this is an advantage for customers who will be afforded more flexibility.

For the best deals on financing for vacation rental property ventures, you can count on Rental Home  Financing. You’ll get flexible options and high-level expertise that will help launch your LLC and allow you to start picking up suitable properties to turn an enviable profit.

Get in touch with Vacation Rental Property Loans right away and start enjoying the lucrative revenues of vacation rentals.