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Are Short-Term Rentals a Good Investment in Florida?

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Are Short-Term Rentals a Good Investment in Florida?

Thinking about investing in a short-term rental property in Miami or elsewhere in Florida? You are making a great choice. Short-term rentals are a smart investment in general, and Florida is a particularly good market for them. Let’s go over a few reasons why you will be glad that you moved forward with this investment idea.

1. Florida is a classic vacation destination.

When people in the US think about where they want to vacation domestically, Florida is high on a lot of lists. It is also a prime destination for international travel. The beautiful weather and sparkling waves give the state a strong magnetism for those looking to get away from it all, as do popular attractions such as Disneyworld and the Everglades. No matter what changes are in store over the years ahead, it seems likely that Florida’s appeal to tourists will continue to hold strong. That means that demand to stay in your short-term rentals should also continue to hold.

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No matter what changes are in store over the years ahead, it seems likely that Florida’s appeal to tourists will continue to hold strong.

2. “Post”-pandemic travel remains popular

Even though COVID-19 is still everywhere, 2022 saw a lot of people return to their previous life routines, including travel. Because they were cooped up for so long, the pull to get back out and see and do things has been particularly compelling. That has boded well for tourism in the state of Florida. As reported here, “According to VISIT FLORIDA, 32.6 million domestic visitors traveled to Florida in Q3 2022, representing 18 months of domestic visitation growth from 2019. So far this year, Florida has welcomed 104.5 million travelers, an increase of 4.1 percent from the same period in 2019, and over 15.3 percent more than in 2021.” It seems likely that this trend could continue for a while, so this is the perfect time to get in on it.

3. Less work, more money

Okay—some aspects of short-term rentals arguably involve more work than long-term rentals. You need to be constantly and aggressively marketing, for example. But there are definitely some aspects that involve less work. You do not have to worry about maintaining long-term relationships with tenants, for example. Many people also choose to just work for part of the year, and leave their rental empty (or occupy it themselves) the rest of the year. At the same time, you can pull in a lot of money with short-term rentals. It is not uncommon to charge as much for a night in a short-term rental as you would for a week or longer in a long-term rental.

It is not uncommon to charge as much for a night in a short-term rental as you would for a week or longer in a long-term rental.

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4. Amazing flexibility

Speaking of taking time off, you can make a short-term rental available or unavailable as needed throughout the year. If you need to remodel the property, for instance, you can do that at the drop of a hat. Just close reservations for the period when you plan to work on it. With a long-term rental, you might not have this option at all until a tenant voluntarily vacates.

5. Doubles as a getaway for you

As we mentioned, some people may choose to reside in their short-term rental properties part-time, or even just stay there for a weekend now and again. You can use your rental property as a vacation home when you want to stay in it, and then rent it out the rest of the time when you don’t. If your primary residence is out of state, that makes it your home away from home.

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You can use your rental property as a vacation home when you want to stay in it, and then rent it out the rest of the time when you don’t.

Bottom Line

We recognize the potential financial benefits of real estate investing. It goes without saying that the many benefits of real estate investing outweigh the costs, and that as a real estate investor, you could earn a steady income that provides you with long-term financial freedom.

This year definitely looks promising for investors, and your real estate investments will indeed bring you high returns. The real estate market and housing conditions are in great shape, and you can be sure that you will make money if you invest in the right locations. It’s a simple equation: when the economy grows, the real estate market flourishes, and there is an abundance of real estate opportunities for you to take advantage.

We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 📲 305-851-5225

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Benefits of Soft Money Loans for Investment Properties

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Benefits of Soft Money Loans for Investment Properties

Soft money loans are the perfect type of real estate investment loan for a variety of reasons as it primarily serves as an in between option for hard money loans and traditional money loans. Generally speaking, soft money loans are term loans, meaning they cover financing for a set period of time, offered by private lenders that typically have low interest rates, high LTV ratios, service long-term projects (5-30 years), and can be approved as quickly as a hard money loan. They are the primary alternative option in private lending when the hard money option is too expensive for investors and a reasonable option when you can’t get a traditional bank loan. Additionally, the fast approval rate of private lending allows for soft money loans to be competitively appealing against traditional bank loans as those can take months to process and approval. So, why should you get a soft money loan for your real estate investment project? What are its benefits and what can it be used for?

First Benefit

First, there is the LTV ratio. What is an LTV ratio? An LTV ratio is the Loan-to-Value ratio, and it is calculated by dividing the amount of money borrowed by the value of the property’s appraisal. Both the value of the property and the money borrowed can fluctuate, meaning the LTV can also fluctuate. Also, the higher the LTV, the less the borrower is required to put down. With soft money loans, the maximum LTV is higher than most traditional loans. To be specific, soft money loans tend to have a maximum LTV of 85% while traditional loans have a maximum LTV of 70%.

Second Benefit

The second benefit and probably the largest benefit is the timeline for soft money loans. While traditional loans from institutional lenders may take months, soft money loan application processes are much faster. Soft money loan applications can take as little as 2-3 weeks to process and you can have your money in that short timespan. When you are trying to purchase an investment property and the deal will close in a month, you can’t wait for traditional loans. It will be too late. If you have a tight deadline on your investment property and you want a quick turnaround, soft money loans are the best option.

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If you have a tight deadline on your investment property and you want a quick turnaround, soft money loans are the best option.

Third Benefit

The third benefit is that an investment property borrower doesn’t have to worry about income verification. That means you don’t need to provide a source of income as a part of the loan application process. You can get approved for a loan without showing a bank statement or a pay stub. Another bonus is you don’t need to show your taxes on your income or assets. All you need is a decent credit score (above 650), some primary facts about your investment property and strategy, and provide documentation related to your previous investment experience. These are all the things you need, and you can be approved in 2-3 weeks and get the necessary money for your investment property. This is a great opportunity for an investor who may not have a stable cash flow. Additionally, this may discourage traditional bank lenders from providing you with a loan, but for soft money loans, this isn’t an issue.

Fourth Benefit

The fourth benefit is the variety of soft money loans. You can use them on a variety of investment properties. It can only be used for investment properties but there are so many options to choose from. Here are some options: single-family homes, condos, townhomes, multi-family homes, commercial properties, mixed-use properties, office properties, retail properties, industrial properties, warehouse properties, and so much more.

The third benefit is that an investment property borrower doesn’t have to worry about income verification. That means you don’t need to provide a source of income as a part of the loan application process.

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Bottom Line

Due to the great perks of this loan program, soft money loan programs tend to be very exclusive. There are so many types of loans, so you want to make sure soft money loans are the ones for you. There are qualified mortgages and non-qualified mortgages and it can get confusing. This would be why it is important to reach out to a private money lender who has a lot of experience with non-qualified mortgages. A private money lender can guide you through the entire process and help you decide if soft money loans or another home loan may be perfect for your investment needs. But as mentioned previously, there are plenty of benefits of soft money loans for investment properties.

Contact DG Pinnacle Commercial, the leading hard money and NON-QM lender, to speak with one of our experienced loan officers at (305) 851-5225.

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6 Benefits Of Investing In Real Estate

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6 Benefits Of Investing In Real Estate

Today is definitely an interesting time for real estate investors, and many investors have been able to use the recent record price increases to their advantage.

Even though today’s market presents a number of challenges, such as the current shortage of appraisers coupled with a huge demand for appraisers, supply chain issues such as a lack of construction, and the shortage of inventory that is having a major impact on property values, real estate investing has proven that it can serve as a wealth-building tool for savvy investors.

Investing in Real Estate is a great Opportunity

Given what’s happening in the world today, it’s easy to understand why so many investors want to put their money into real estate rather than the stock market, which can change in a second.

Investing in real estate is a popular career choice for good reason. It requires commitment and strategy, but when done right, real estate investing offers a variety of benefits over other career options. In this article, you’ll learn about the benefits that make real estate investing such an attractive career choice.

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Real Estate investing has proven that it can serve as a wealth-building tool for savvy investors

1. Cash Flow

A major advantage of real estate investment is the ability to generate cash flow. In many cases, cash flow increases over time as you pay off your mortgage and build equity.

2. Tax Benefits and Deductions

A major benefit of investing is the tax breaks and deductions you can take. Generally, you can deduct the costs of operating, managing and owning your property from your taxes. Depreciation may also be deductible, as well as insurance. And while many may think it’s not worth it, it does add up over the years.

3. Equity

Positive equity is one of the best reasons to invest in real estate. That’s because it can help you buy more properties, increase cash flow and make more money overall. In addition, equity offers other benefits if you want to use it for retirement planning, refinancing or a loan.

A major advantage of real estate investment is the ability to generate cash flow.

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4. Protection Against Inflation

Real estate investments often provide a hedge against inflation. And they protect the value of your money when those goods or services go up. And when those costs go up, so do your real estate values. So your investment hedges against inflation, allowing you to earn more from your money in the long run.

5. Appreciation

Appreciation in real estate is when the value of your property increases over time. This can benefit you if you sell the property, or increase your monthly income if you rent the property. Normally, property values increase over time. So if the increase in value is large enough, you can make a substantial profit when you sell or rent it out.

6. Leverage

In real estate, leverage refers to using debt for the possibility of yielding a higher rate of return on your real estate investment, it is a technique used to expand the potential for returns, while equally expanding the downside of any risks involved if things don’t work out.

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Real Estate investments often provide a hedge against inflation. And they protect the value of your money when those goods or services go up.

Bottom Line

We recognize the potential financial benefits of real estate investing. It goes without saying that the many benefits of real estate investing outweigh the costs, and that as a real estate investor, you could earn a steady income that provides you with long-term financial freedom.

This year definitely looks promising for investors, and your real estate investments will indeed bring you high returns. The real estate market and housing conditions are in great shape, and you can be sure that you will make money if you invest in the right locations. It’s a simple equation: when the economy grows, the real estate market flourishes, and there is an abundance of real estate opportunities for you to take advantage of across the country.

We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 📲 305-851-5225

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No More excuses for Investing In Real Estate

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No More excuses for Investing In Real Estate

As many of us know, Real Estate development can be one of the most lucrative small businesses there is. A smart businessman who can take reasonable risks can build an empire that finances a comfortable, rewarding lifestyle.

Investing in Real Estate Requires Experience

Although no formal training is required to become a developer, successful residential and commercial real estate developers have certainly gained their training from experience. However, starting your own real estate development business and finding investing clients is not dependent on a certain level of education.

However, some real estate developers have had formal training in a specific field, such as commercial real estate broker, general contractor, or residential real estate broker, all of which require specialized training and licensing. Or they may have worked for a company that specializes in construction management or property management. Experience in different areas of the real estate market can certainly help you be the competent manager of an investment property that is being built from the ground up, especially when it comes to more diverse projects.

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Although no formal training is required to become a developer, real estate developers have certainly gained their training from experience.

Investing in Real Estate Requires Proper Funding

Nowadays, many people want to invest in real estate but are hesitant to take the plunge and do not know how to finance a real estate deal. Many assume that it is impossible to start a business without their own capital.

There are a variety of ways to finance a real estate business without using your own money. Not only are there real estate development loans, but there are many private lenders willing to take a risk on your business. Here are 4 ways you can finance your real estate development business:

  • Private Lenders: private lenders can be anyone who has access to capital and is willing to invest it. In other words, a private lender can be anyone from a close friend to someone you met at a networking event. As their name implies, private lenders are not institutionalized or licensed to lend money, but do so to get their money back with interest. The terms of private lenders are usually easier to meet, and the length of time they are willing to lend money for is much shorter, but at the cost of a higher interest rate.
  • Hard money lenders: hard money lenders are not institutionalized, but may be licensed to lend. Their loan terms are typically short and are leveraged to the asset in question. Hard money loans carry a high interest rate, but they can provide borrowers with quick access to capital.
  • Home equity loans and lines of credit: Home equity loans and lines of credit are a type of revolving credit – not unlike a credit card. However, home equity loans use the equity in your home as collateral.
  • Traditional Loans: Traditional loans are those you receive from a bank or institutional lender. Their interest rates are relatively low in order to remain competitive. However, the terms are usually long, and the lending is on a large scale. Most traditional loans have terms of 15 to 30 or more years and carry a low interest rate.

There are a variety of ways to finance a real estate business without using your own money.

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Bottom Line

As you can see, financing problems are no longer an excuse not to invest in real estate. We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 📲 305-851-5225

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Who Can Become a Real Estate Investor?

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Who Can Become a Real Estate Investor?

Becoming a real estate investor can seem like a challenging and ambitious career choice as it seems like it is only open and accessible to an exclusive and experienced group. But, here’s the catch, anyone can become a real estate investor. That’s right, anyone! When it comes to becoming an investor in real estate, anyone can sign up.

There are no prerequisites, such as holding an undergraduate degree, or specific barriers, such as having prior years of work experience. There is no license! Anyone can become a real estate investor; the key to becoming successful is understanding the market, doing the proper research, and knowing how and where to acquire the necessary funds and resources.

Finding The Right Property

Now, if you wish to join the market, you should know a few things that could be very helpful. One is that finding the right property to invest in is a lot harder than you might expect. If you want to become successful as a real estate investor, you must be willing to do research and be very patient. There are a lot of factors that can determine the success of a property, such as the type of property itself, the location, the neighboring community, the sustainability of the current structure, the potential renovation costs, the logistical constraints of acquiring permits or supplies and resources in a timely fashion, and the market valuation in relation to its true sense of value, which is at the heart of real estate investing and something that will itself be difficult the most challenging to figure out. Additionally, the market moves quickly and often unnoticed, so even if you find a suitable property, you might not be able to acquire it in time or even for the right price.

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If you want to become successful as a real estate investor, you must be willing to do research and be very patient.

Are There Any Specific Requirements?

Another thing to keep in mind is that even though there are no specific requirements listed that prevent someone from becoming a real estate investor, the more knowledgeable you are about the ins and outs of the real estate market, the better your chances of success are. For example, do you know the difference between a single-family rental property and a multi-family rental property? If not, then you should be aware that not all properties are the same if controlling for all the other variables, such as location, schools, transportation, etc. There are a lot of nuances within the categories of real estate that ask investors to have a more specified understanding of their work so that they can avoid making costly investment decisions. The differences in types of properties can impact everything from the amount of equity and income generated, the types of permits required, and even the level of funding you could receive for a property. To be successful, it is not enough to simply find any property; you must also know which type of property you want to invest in and know which steps to take next.

Build Your Team

Ok, let’s say you are reasonably knowledgeable about the real estate market and are still dying to enter the industry. Well, what else might be important besides being well-informed and educated? How about the ability to create relationships between investors, suppliers, and service providers. This is where your studies can only get you so far, and you would need to rely on your ability to acquire enough social goodwill to build up a strong team of investors and suppliers. Having strong relations with investors is essential to one’s success because they are your peers. They can give advice or even provide funding for your projects. And if you want to impress them, you would need to prove your credibility, track record, and ideas adequately to help you live out your dreams. Making these relationships can be very helpful if you intend to make real estate investing a continual endeavor.

Additionally, it is also important to have a substantial list of suppliers and service providers you will rely on whenever you need to work on a property. As a real estate expert, you would want to find the suppliers with the best sense of quality and reliability to live up to the standards you outlined in your properties. You should also consider where you can find these people and how that may relate to the location of your investment property, as some suppliers may be more reliable and efficient in only certain parts of the country. Overall, finding a sizable and detailed list of investors and suppliers will get you one step further to succeeding in the real estate market, but it too asks for a lot of hard work and patience.

The more knowledgeable you are about the ins and outs of the real estate market, the better your chances of success are.

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Bottom Line

Lastly, if you are persistent enough to do the appropriate amount of research and acquire the right network of people and resources, there is nothing left to do but put your money where your mouth is and work. However, like most things, real estate investing can arise unforeseen challenges that make or break your operation. Those are the moments when your knowledge and skill will persevere and guide you towards success or failure. But, at the very least, even though anyone can become a real estate investor, the more you study, research, and reach out to people to help you figure out how to survive, the more likely you will become to see success.

This article was originally published in www.strattonequities.com

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Investing in Real Estate Will Help You Build a Diversified Portfolio

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Investing in Real Estate Will Help You Build a Diversified Portfolio

The stock market has surged since April 2020, but you only have to look back to March 2020 to see that indexes can plummet in the blink of an eye. On March 11, 2020, the Dow Jones entered a bear market just a few weeks after trading near all-time highs. While the market recovered quickly in this instance, bear markets typically last a lot longer and volatility still remains.

For that reason, investors are constantly searching for ways to reduce the fluctuations in their portfolios and find ways to make their portfolios more resilient. Below, we explore some of the ways you can do that through diversification into real estate.

Building Your Portfolio

The saying, “don’t put all of your eggs in one basket” is essentially an appeal for diversification, which in the financial world, is defined as the process of mixing a variety of investments within a portfolio. A diversified portfolio is invested in a number of asset types and investment vehicles.

Not all diversified portfolios are created equal, however. If you bought 20 different tech stocks, for example, you could argue that you are diversified. But the assets are likely to be highly correlated, increasing your risk in the event of a downturn in tech stocks. But by diversifying across uncorrelated asset classes, one or more of your investments are likely to outperform during tough times, keeping your portfolio afloat.

The goal behind diversification is maximizing returns for a given level of risk.

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A diversified portfolio is invested in a number of asset types and investment vehicles.

How Does Real Estate Investing Help You Diversify Your Portfolio?

The traditional portfolio has been made up of 60% large-cap stocks and 40% bonds. This breakdown does make a lot of sense—stocks and bonds have a low correlation—but it may not be the best way to maximize risk-adjusted returns. While bonds may still deserve a place in your portfolio, investors are sacrificing returns with this low correlation asset in our current low-yield environment. For that reason, you may want to consider other types of investments.

Private Real Estate Is Often An Excellent Addition To Your Portfolio

Real estate not only has little performance correlation with the stock market, but it also has historically strong returns, making it a valuable addition in the quest for diversification. This is especially true for private real estate, as publicly traded real estate, like REITs, still show correlation to other public assets.

The Yale Endowment is a perfect example of how this can play out over time. For decades, the endowment had excellent risk-adjusted returns. The Chief Endowment Officer, David Swensen believed in an 80% allocation to a variety of traditional assets and a 20% allocation to alternative assets, such as real estate.

Real estate not only has little performance correlation with the stock market, but it also has historically strong returns

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Use a Mix of Real Estate Assets to Diversify Your Portfolio

There are several ways to invest in real estate including doing-it-yourself, private equity funds, publicly-traded REITs, and online real estate platforms.

You may be able to use any of these investments to effectively diversify your portfolio.

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The saying, “don’t put all of your eggs in one basket” is essentially an appeal for diversification.

Bottom Line

The bottom line is that the public markets (stocks) have historically been a volatile asset class and this current period is no different. By diversifying into real estate, you can increase the chances that you only experience mild fluctuations in your portfolio—instead of extreme volatility.

This article was originally published in www.investopedia.com

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How to Diversify Your Portfolio With Real Estate

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How to Diversify Your Portfolio With Real Estate

Real estate can be a valuable addition to almost any portfolio. This is due in large part to the stability it provides in relation to other assets. As a tangible asset with historically strong performance, real estate can offer a balance to more volatile assets such as stocks and cryptocurrencies, which over time can help drive performance for your portfolio. Whether you’re just starting to think about real estate investing or you’re already a seasoned investor, knowing the top trends—and some of the benefits of this unique asset class—can be a great way to determine which investments are right for you.

Building Your Portfolio

With a keen understanding of the real estate investment landscape in place, it’s time to think about building your portfolio. Here are some of the key things to keep in mind as you consider investment options and potential returns.

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As a tangible asset with historically strong performance, real estate can offer a balance to more volatile assets such as stocks and cryptocurrencies.

1. Take A Strategic Approach

Keeping your short- and long-term goals in mind can help you develop an effective investment strategy. Be sure to factor in your risk tolerance and your other portfolio holdings.

2. Focus on Strong Passive Income

Investing in private real estate can help you achieve strong long-term yields and a stable income. On average, private real estate holdings outperform stocks, bonds, and even REITs.

Keeping your short- and long-term goals in mind can help you develop an effective investment strategy.

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3. Consider Risk-Adjusted Return Potential

Balancing risk with growth potential can be challenging, but the right investment mix can help you achieve it. Incorporating private real estate holdings into your portfolio will offset risk while helping to maximize returns.

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Investing in private real estate can help you achieve strong long-term yields and a stable income.

4. Plan for Robust Diversification

True diversification requires that you diversify both within and across asset classes. Opting for a diversified real estate portfolio can help you find long-term stability even amid market swings.

This article was originally published in www.investopedia.com

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Using a Home Equity Loan to Start an Airbnb

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Using a Home Equity Loan to Start an Airbnb

The world of travel has changed quite a bit in the last decade—hotels aren’t always the best choice for many travelers, especially families. Short-term vacation rentals like Airbnb, VRBO, and Vacasa can be a great way for private citizens to get into the hospitality game. But unless you’re interested in renting out your primary residence, purchasing a property that will be attractive to travelers is the first step in the process.

If you already own a home, you already have an excellent tool for financing that property: your home equity. A home equity loan can be a viable method of obtaining a hefty downpayment on your new investment property.

What Is a Home Equity Loan?

A home equity loan is based on the equity you’ve built in your home. Equity is determined by the current value of your home minus the amount you owe on your mortgage. Since home values depend on various market conditions, such as available stock and developments in the area, your equity can ebb and flow.

A home equity loan uses that equity as collateral for the amount you want to borrow. Typically, you cannot borrow the total amount of the equity available—80% is the standard rule of thumb.1

Home equity loans are considered secured loans since they have physical collateral attached and come with attractive interest rates.

The process of obtaining a home equity loan is similar to that of applying for a first mortgage. The home’s value has to be established through an appraisal, then terms are decided. Home equity loans are paid in a lump sum of cash and have to be repaid over time on a fixed payment schedule.

In addition to the amount you borrow, you’ll also pay interest on the loan as well as closing costs that cover the preparation of the loan, origination fees, and recording fees. Some lenders offer the option of paying points, or prepaid interest, at closing. This can lower your overall repayment amount but will increase your closing costs. You can choose how many points to take, if any, with your lender.

The beauty of home equity loans is their flexibility. Since they are paid in a lump sum and repaid over time, they can be used for any purpose—home renovations, a fancy vacation, or even buying a short-term rental.

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Equity is determined by the current value of your home minus the amount you owe on your mortgage.

How to Buy a Short-Term Rental with a Home Equity Loan

Once you’ve applied for and been approved for your home equity loan, it’s time to decide how to use the funds. If buying an investment property is the goal, look at the property’s price. See if your loan is enough to cover the entire cost, allowing you to make an all-cash offer. If it’s not, you can still make a good down payment and have a nest egg to cover the setup needed to start your business.

Depending on where you’d like to buy a short-term rental, having cash available can give you significant buying power. If you’re looking at properties out of the country, this can help you avoid the hurdle of finding a local lender. If you’re looking in the United States, an all-cash offer can help you seal the deal in a bidding war since you’ll have secured capital already.

Since you won’t be living in your rental full-time, many lenders want a more significant downpayment —typically 20%-. Mortgage insurance is not available for rental properties, so making that large a downpayment may require funding from a home equity loan.

One thing to remember is that buying the property is just one expense. Funds from a home equity loan could also be used to renovate a property or furnish it if it’s already in good structural shape. Making it attractive and user-friendly is critical to keeping a short-term rental booked. Also keep in mind recurring costs like cleaning services, insurance, and upkeep.

Since many vacation properties may not have a 100% occupancy rate, you may also leave some funds as a cushion for that time. Can you afford to have a bad month?

Pros and Cons

While a home equity loan has a lot of pros—flexibility and low interest rates chief among them—there are also cons to taking this route for your short-term rental kingdom. While you will have a lump sum of money, unless you buy your new property outright, you will have three monthly payments that could be quite sizable: your mortgage, home equity loan, and your new mortgage on a short-term rental. Make sure that your monthly cash flow can support multiple payments.

One thing to remember is that buying the property is just one expense. Funds from a home equity loan could also be used to renovate a property or furnish it if it’s already in good structural shape.

Beautiful tourist next to her lugagge looking to the ocean from the balcony - Using a Home Equity Loan for an Airbnb - DG Pinnacle Commercial - Miami Mortgage Lender

Frequently Asked Questions

1. Can I Buy Only U.S. Property with a Home Equity Loan?

Once you have secured your loan, you can use the funds for anything, including buying property overseas. Having cash may make it easier to buy foreign property. Check your future location for specific details.

2. What Is the Normal Repayment Term of a Home Equity Loan?

A home equity loan typically has a variety of loan terms, including five-, 10-, 150, 20-, and 30-year terms. Keep in mind that your interest rate and the monthly payment will depend on the term length.

The Bottom Line

Home equity loans are a flexible and relatively affordable way to access a large sum of cash at one time, which makes them ideal for purchasing or making a down payment on a short-term rental. Just be aware of how much debt you are taking on. If you expect to be able to repay your home equity loan using profits from your rental, you may have to contend with vacancies and volatile profits. Have a plan in place if your rental isn’t immediately successful.

This article was originally published by Rachel Murphy in www.investopedia.com