AZ STR investors! What type of financing has worked best for you?

[Jonathan McEntee]

Out of general curiosity, what form of financing have you used in the past for single-fam STRs? what has worked best for your investments? Also, what areas/zipcodes of the Phoenix metro has been most profitable for your STRs?  Always looking to learn from experienced investors' history!  

[Andrew Garcia]

Quote from @Michael Baum:

Sorry @Andrew Garcia, hehe it was for you!

I wasn't aware that they were different products. So bottom line, if it does well for LTR then STR is fine as long as you meet the requirements.

Any difference in the down or interest rate?

@Michael Baum, yes, basically.

Generally, DSCR based on LTRs have slightly better rates and may require as little as 15% down. However, DSCR based on STRs typically requires at least 20% down and might be slightly higher in rate.

This is because there are hundreds of lenders that offer DSCR based on LTRs so their rates have to be more competitive whereas DSCR based on STRs is more of a niche program. Furthermore, STRs are higher risk due to the lack of stability that is provided with a 12-month lease and legal questions in certain areas.

There are not a ton of lenders that offer the STR DSCR so it does not surprise me that you have not heard of it.