Question about DSCR loans and STR

[Ryan F.]

If anyone has a strong understand of DSCR loans, I would greatly appreciate your input.

- Say you're purchasing a house/condo with $3,500 PITI

- Sellers have STR receipts going back 2 years, showing $40k per year in STR rent.

- Sellers only rented half the year, since they used the property the other half of the year (snow birds).

Will most (or any) lenders calculate this as $80k in rent, since the sellers purposefully did not rent for half of the year? Or would the deal be stuck at $40k?

[Adam Windham]

Hi Ryan, 

For a purchase or refinance of a short term rental, any STR lender is going to look at EITHER the gross income received in the last 12 months (trailing 12 month income statement) OR the AirDNA income projections.

In this scenario, it certainly seems like it would make sense to take the $40k/yr and double it since it was only used 50% of the time, but that is just not how any underwriter will look at it. STR's can be highly seasonal, and depending on when this property was primarily rented, it can drastically effect the projected out yearly income.

So my recommendation would be to check the DSCR based on the trailing 12 and the AirDNA separately. There is certainly a case to be made to underwriting to use AirDNA if it is higher than the tailing 12, given the limited availability of this STR based on owner use.