Types of loans available for airbnb property CONSTRUCTION?

[Ian Siegel]

My family owns 120 acres of land in Augusta County, VA in land use. Currently there's only a working well on the property and we're working on electricity. We're wondering what mortgage options would look like if we sectioned off a piece of the property and transferred ownership to an LLC involving same members of the family and then have revenue from the airbnb go through the LLC.

In this case, would we able to get loans from the SBA, etc?  Or what else am I not thinking of?  I ask because we were hoping to avoid having to convert the land loan to a construction loan and then to a conventional loan.  Because once it switches to a conventional loan, the interest rate skyrockets because the size of the loan is above some benchmark like $600k (I forget the exact number).  Please correct me if I'm mistaken on any of this.  AndThanks for any advice!

[Nick Belsky]

@Ian Siegel

I love deals like this!

Ok, so you can definitely look at SBA and move into an LLC. Another option would be to do a bridge loan for the construction, then refi to perm once the build is completed. I work with a few lenders who love STRs and another who loves GUC. Putting them together gives builders/developers a nice package to help finance the construction, and then help them recover their costs rather quickly. Similar processes for both loans, but there are very different criteria for each.

SBA will go up your arse with a scope. Tax Returns, income, DTI, etc... very much like a conventional loan. The terms will be much better than private GUC lending, but it is a lot of work to qualify upfront. Often, you can also get a OTC GUC loan with SBA. That's a One Time Close Ground Up Construction.

For GUC then Perm lending, we won't need taxes, Income, DTI, etc... we will look more at liquidity, experience with GUC or Fix and Flips, and location. For the Perm refinance, we can use AirDNA to project rental income and use that for a DSCR calculation to qualify for usually 70-75% of the new appraised value after the build is completed.

The biggest question I see from your post so far is.. what kind of Development or GUC experience do you or your family have?

Cheers!