If you’ve followed our journey, you know we recently bought a short-term rental in Georgia as our future retirement home. And while short-term rental (STR) mortgages aren’t available everywhere, we thought we would share a bit more about what they are and how you might use them to fund your future piece of paradise.
The idea of a short-term rental is simple. As a landlord, you rent out to vacationers and other people looking to stay in an area for a short amount of time. It’s an alternative to a hotel and is the backbone of rental sites like Airbnb and VRBO. Short-term rentals generate income like a rental property but have a more frequent cadence of transactions. Renters change frequently, your home is furnished, and you have regular expenses like cleaning after every guest.
Short-term rental mortgages are a fairly new lending product that mixes conventional 30-year fixed mortgages with flexible underwriting and much less paperwork. Who doesn’t love that? Of course, since this is an emerging category of loans, they are not an option everywhere, so you will definitely want to get your ducks in a row before making a commitment.
There are other ways to fund an STR, ranging from home equity lines of credit to cash-out refinancing on your primary property. What’s important to realize is that buying your dream retirement home now and paying for it with short-term rental income is a doable option that more and more people like you and me are making a reality.
Where STRs are available, they can be configured in a way that makes it possible for the rental payment of the tenant to cover the mortgage. How amazing is that! You buy your dream house of the future now, then let vacationers fund the mortgage while they enjoy its benefits today. Then, when the time is right, you become the permanent vacationer, with a retirement home that may be fully paid off by then.
When furnishing and decorating your rental, scour consignment stores to keep a tight budget and use local art whenever possible. If you need to decorate a STR property in Midcoast Maine, you have to check out the Landing Gallery (owned by Bruce Busko). If you’re in negotiations for the perfect property, see if you’re able to purchase the home “turnkey.” Once you move in and it shifts from a “mortgage-paying machine” to your dream retirement home, you can swap out everything for things you really love.
To make the numbers work, you need to select a destination that already draws visitors regularly. As you know, the Midcoast area is such a destination, filled with retirement homes and vacation rentals. When you have the good fortune to live in a location that others save for all year to visit, like Midcoast Maine, you may not need to look too far for your dream retirement home.
We will continue to update you on our STR journey. In the meantime, if you have any questions about where an STR is right for you, or you want to explore property options in the Midcoast Maine area, reach out to us today. You can also check out some of our favorite banks and lenders in the Midcoast to dig deeper into STR mortgages.