It's no surprise I'm a huge fan of the RV rental business. I'm working on buying a 2nd RV, a class B van to be specific and I'm hitting some roadblocks. Goal with buying these RVs is to get to $5k per month in passive income.
I am taking the concept of buying assets for passive income from Rich Dad Poor Dad. Inspiring read, I'm using information from that book to replace my 9-5 income by renting RVs. If you haven't read it go buy it now. If you own it go reread it, I listened to it on Audible in 4 hours on 2x speed.
Main problem is that it is far more difficult to qualify for a second recreational loan. I reached out to my bank yesterday and tried to get prequalified to purchase another RV for $130,000. Yeah wild stuff, but I want to target higher end renters for many reasons. Mostly to try and weed out "low qualify renters". Am I a bad person for saying that? Hell no. I want to charge a premium at the same time hopefully target renters that won't thrash my investment. Bad news, they turned me down.
Denied for 2nd RV Loan
What I've done to qualify:
- Found a less expensive RV that I'd like to buy in the $90k range.
- Offer to put $10k down.
- ask for longer term limit from 15 to 20 years.
Cold harsh truth that I'm facing right now is that I took a pay-cut to work a job that keeps me a happy little bug. My income is the main reason I don't qualify. So I have to work the system and be creative when qualifying. In fact the only debt I have under my name is my current RV. But alas the underwriter gods have not smiled upon me today.
More bad news, they still turned me down. But you know what?! This is just a roadblock that can be over come in some way. Tonight I'm going to put together a business plan on paper that I will send over to them along with the rental income. I've also asked what stopped them from granting me the loan to see if I can make my request a little more sexy to those underwriters.
Once I've been doing this for 2 years my RV income will be able to be used when qualifying for new RVs. So it's only a matter of time when life gets easier purchasing assets like this.
Last Resort to Qualify for 2nd RV
I tried to qualify solely under my own name. My next step is to try and qualify solely under my wife's name. Reason for this is so that when buying assets like this we have a lower DTI when it comes to qualifying for loans. No need to tie up both my and my wife's DTI when taking out loans if we can do it on just one persons credit.
It's not the end of the road for purchasing my new RV. Just need to keep jumping through hoops until we can make it work. I'm not at all dismayed as I know there are a lot more options.
I'm looking at a 2022 Thor Scope 18M. I think this little van is awesome. Where I'm located these vans rent out at $250/night. I am currently renting my 32 foot huge class C RV at $175/night. When parking these things in between rentals it is nice to have a smaller 19 foot van instead of a hulking RV. Side note that I can park the van out front of my house, my HOA does not allow me to park my 32 foot RV on the street.
Stay tuned and I'll keep sharing with you my goal of creating a consistent $5k a month passive income source. Part 4 side hustle here!