I'm on Airbnb #5, have interviewed over 20 lenders, and am fighting to get a REFINANCE (80% LTV rate and term, no cash out) loan for one of my properties (which has a balloon in June). I've never had a problem getting a loan before because my of my job income but now that we have enough revenue from our rentals, I'm not working. Also, since these are NOT LTRs (but vacation STRs) I don't have leases and I write-off all of my expenses on my taxes so it looks like my properties (that do VERY well) "take a loss" on paper.
So now I'm looking at DSCR loans, or loans specifically for Airbnbs but even these require an appraisal which will be based on LTR estimated rents! But these are waterfront lake houses and not good LTRs!
Are all lenders afraid of Airbnb Right now? My revenues have skyrocketed since Covid so I'm not sure why there is still reluctance. I guess because it is still new?
Many lenders have increased their LTV requirements due to COVID. As far as DSCR goes, I know many programs require you to have a renter actually in the unit, which does not bode well for STRs. It sounds like maybe your debt to income ratio is not working for Conventional due to the write offs?
@Luke Hoge It's going to be tough if you don't have other income beyond the STRs. How long have you owned these STRs? Having them on a couple years' tax returns should get you over the hump to the best of my knowledge (I am not a lender) but if you have owned most of them less than 2 years it's going to be tough.
Visio and HostFinancial are two portfolio lenders who will specifically underwrite short term rentals. I don't know about in your market, but in mine (TN Smokies) some appraisers will use a very conservative overnight rental estimate for an income-based approach.
@Parker Borofsky is a great person to shed more light on this topic.
Thanks @Julie McCoy and @Elise Marquette - Yes my DTI on paper looks close to 100% (to a conventional lender) LOL!
The past 2 years ALL profits from ALL STRs have been put back into the next STR. We've been focused on expansion and growth so I actually (again on paper) haven't taken any of the profits from these Airbnbs.
I think I'm just going to have to be prepared for 65% - 75% LTV and higher interest rates moving forward.
@Luke Hoge Yeah if your DTI is that high based on conventional metrics, you're not going to get a conventional loan. It's the hazard fo quitting your job "too soon". Gotta be patient now or find alternate means!