With the rise of influencer culture and travel bloggers promoting unique opportunities to escape the hustle and bustle of the city and hide out in a tiny home or ornate treehouse for the weekend instead, there’s a new interest in the less-traditional property and building types. Let’s look at some of the financing peculiars for some of these more experience-driven dwellings!
Once again, from a lender’s perspective, these types of investments are not ideal. That doesn’t mean they can’t be successful, because many are, but they have to be financed differently. If you’re interested in buying in this space, you may need to refinance properties you currently own to buy your new investment outright. You can also look into commercial financing if you have a stellar business plan and it’s deemed to be a profitable business.
Myth: Any and all property can be financed through residential lending.
Fact: Although there’s a structure that someone could live in and therefore make it a viable residential property, this is not the case. Lenders have very specific parameters that their deals are based on and not all properties are a fit. The more unique the property, the smaller the buyer pool is which means more risk.
So let’s assume you’ve found an amazing piece of property and you want to buy the land, get some cash, build some yurts, and use it as a glamping getaway that can be rented. Similar to what we saw with cottages and vacation rentals, just because there is a building and business idea, doesn’t mean you automatically get financing.
In a case like this, we can definitely help out with the land but not the yurts likely. Banks and other lenders just don’t see yurts as a viable investment because there aren’t a whole lot of people who want to live in one forever — despite what an Instagram photo caption might say. Even in a situation where the building itself might be more accommodating, without an established history of income, the lender won’t be factoring in whatever you might intend to make renting it out.
We can help with the land. We can help with refinancing so you can buy it outright. Until these niche properties and dwellings are a more common investment, and therefore less risky, the financing situation will continue to be a bit different as well!
Contact the Kyle Miller Mortgage Agent team if you‘re looking at more unique properties. We’ll provide you with different options so you get the best financing possible!
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