How do lenders treat short term rentals in terms of a value add?

[Leo B.]

Hello all-

I just came from the SF Bay Area RE Summit provided by @J. Martin and all the great speakers from BP here and the presentations definitely got me thinking more creatively on my investments.  There were presentations on short term rentals and monthly leases that definitely got me intrigued.  Thanks @Al Williamson and @Kim Smith!

If I was to purchase a multifamily investment, for example a 6-unit property, and turned two of the units into vacation or short term corporate rentals that increased NOI when compared to traditional rental income with lower NOI, how would lenders look into this in terms of a value add to the property? I'm assuming most commercial lenders would require stable long term leases in order to consider it part of NOI and an increase in value? In other words, are short term rentals considered "stabilized" income? If yes, is there a certain time period for this income to be seasoned in order to be considered? Maybe @Joel Owens and/ or @Bob E. might have some insight on this since you both also work in this space.

Again, awesome event @J. Martin  Thank you!

Best,

-Leo B.