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Updated over 7 years ago on . Most recent reply

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Dusty Hulet
  • Investor
  • Salt Lake City, UT
5
Votes |
9
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Question: BRRR but with a "V" in there for "Vacation" Rental?

Dusty Hulet
  • Investor
  • Salt Lake City, UT
Posted

HELP?

The following questions are related to the BRRR strategy, but in a market where it makes much more sense to AirBnB than longterm rent.

Any insights would be appreciated, or if you know of another thread that's covered the topic, I'd like very much for you to redirect me that way. I've heard on the podcast and read about a number of examples of the BRRR strategy, but helping out a friend with this particular situation would be the first time for the rubber to hit the road for me. Thanks for any suggestions you might have!

THE STORY

A friend I grew up with is killing it on AirBnB. The banks he's talked to aren't willing to consider the AirBnB income in his attempts to get a a mortgage on another property. 

Managing the property himself on AirBnB, he's grossing $45K this year. He paid around $180K (FHA Loan) for the home about four-ish years ago. As a longterm rental, he'd be earning closer to $18K in his market. As long as he can manage it, it doesn't make sense to longterm rent it.

The property has appreciated with the rebound from the recession, and is now worth over $300K.

THE QUESTIONS

So, if banks don't like the idea of refinancing a property that doesn't have a longterm lease on it, and they're not willing to recognize the AirBnB income, what do you do? Is he talking to the wrong banks? Is he talking to the banks in the wrong way? What specifically should he say to get a bank onboard with refinancing, allowing him to pull out some of the appreciation, while not losing out on the AirBnB victory?

Thanks again for your help, and again, I'm new to the forum, so if you know of a thread that's already been created, please tag me!

Most Popular Reply

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Chris Mason
  • Lender
  • California
10,790
Votes |
9,934
Posts
Chris Mason
  • Lender
  • California
ModeratorReplied

Hi @Dusty Hulet,

Good news for you and all the other AirBnB folks out there (@J. Martin tagging you).

Freddie Mac remains unwilling to sully his good name by using the word "AirBnB." But he did say this, in August of 2017, about two months ago...

It was a bit of a watershed Bulletin, that flew under the radars of many. We're starting to gain traction on the furnished rental front.

I've got one in the kitchen right now (pre-heating the oven atm), not in the Bay Area but down in SoCal right on the beach, where it's a portfolio Jumbo loan predicated mostly on AirBnB income and very little day-job income, on an exception basis with strong reserves and solid credit. 

My first Fannie/Freddie "I have no job, just AirBnB! Weeee!" loan was about a year ago.

Ask your friend to keep networking and looking around to find an investor friendly lender. All hope is not lost. 

  • Chris Mason
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