Mortgage based on Vacation Rental Potential?

[Chris Politylo]

I'm curious if anyone has ever successfully pitched a mortgage lender an investment property on the basis of the potential income it could generate from Airbnb, VRBO, Flipkey, etc.?  Obviously showing a business plan and examples of similar properties in the area.  I'm curious if any lenders would bite on this.  

[Maura Paler]

We have two investment mortgages based on vacation rental income. The first investment mortgage was obtained using income from two vacation rentals that we owned, the first rental was bought with cash, the second rental was purchased with a mortgage as a vacation home.

The second investment mortgage (third mortgage) was based on the income from the three properties that we rent out on a weekly/nightly basis. The rate for our 2 investment mortgages is same rate as a conventional one but required 20% down. All are under 4%.

My business is also based on commissions from vacation rental reservations that I take for properties I do not own. Not sure how much of an influence that had on the banks decision to give us these investment mortgages. Don't think it had much as these were with big banks. Going forward we will try to use a local bank, the big ones take too long and were a very stressful experience but did offer better rates.

We are in discussion with a local bank to hold portfolio mortgages for us going forward based on this business model. They have agreed to hold paper for us on unique properties they wouldn't normally, such as off the grid properties.

Finding the right properties is the biggest challenge, once that's done getting them ready and rented is easy and the fun part for us!