Short Term Rental Financing

[Sean Beyrouthy]

Hey everyone! I am out of state and I'm looking into the short term rental market around the Orlando area and I had a question regarding financing. Is it better to look for a local lender in the area I want to buy as they may know that area inside and out, or is it best to look for a national lender (Wells Fargo) to help with financing. Any input would be greatly appreciated. Additionally, I already own a home that I currently live in so I was lookin to get this short term rental as a vacation/second home since the down payment can be less then if I consider it an investment property. Does anyone have experience with this that can shed some light on the pros and cons? 

[Tanner Sherman]

@Sean Beyrouthy I would not suggest you go with the national lenders, as they are typically more profit focused and less user-friendly. A smaller local bank will be more personalized and will sometimes work harder to keep your business.

[Joshua Strickland]

Local bank or a mortgage broker that works in Florida and is used to short term rentals. Your real estate agent should be able to point you to a good one. If they can’t, you may need a new agent.

[Carlos Garcia]

I would go to the STR agent you're working with, make sure he's good at what he does, and ask him for referrals for his/her go to lender and start from there.

[Brandon C.]

I have seen The Mortgage Shop advertised and know its connected with the Short Term Shop.  Has anyone had any experience with them?

[Shawn McCormick]

Hey @Sean Beyrouthy

In general, a local lender is always preferred and lends credibility that the listing agent can call and speak with someone. Big banks are not good at doing any type of investment loans, get a lender that understands these. Some lenders have programs specifically for STR and others don't want anything to do with them due to risk.

You may be eligible to do a second home loan and only do 10% down or stick with conventional to avoid PMI etc. I could share a few of my lenders to you if you still have a need.

[Natasha Jansen]

@Sean Beyrouthy I too would suggest a local lender. @Tyler Gibson is a wonderful agent that works with out of state investors in the Orlando area and he’d be able to provide you with some recommendations for local lenders. Good luck with your search!

[Tyler Gibson]

Originally posted by @Sean Beyrouthy:

Hey everyone! I am out of state and I'm looking into the short term rental market around the Orlando area and I had a question regarding financing. Is it better to look for a local lender in the area I want to buy as they may know that area inside and out, or is it best to look for a national lender (Wells Fargo) to help with financing. Any input would be greatly appreciated. Additionally, I already own a home that I currently live in so I was lookin to get this short term rental as a vacation/second home since the down payment can be less then if I consider it an investment property. Does anyone have experience with this that can shed some light on the pros and cons? 

 You probably want to work with someone that has done something like this before. I can get you a name if you would like. The benefit to a 2nd home loan which Shawn already mentioned is that you can do 10% down. I am not a lender so don't quote me but I believe that you will be required to sign a document that since this is a 2nd, home you will live there 14 days a year and will not be using a property manager for the home. 

[Jefferson Brown]

@Sean Beyrouthy we've used Visio Lending since they specialize in loans for short term rentals (thats a very rare thing).  Id put my contact there in this email if it didn't get blocked.

[Kerry Baird]

@Jefferson Brown, do they use market rents? That’s what LendingOne does. I’m curious about their process, as it has been awhile since I did a refi with Visio, but we used them on a long term rental.

[Jefferson Brown]

Originally posted by @Kerry Baird:

@Jefferson Brown, do they use market rents? That’s what LendingOne does. I’m curious about their process, as it has been awhile since I did a refi with Visio, but we used them on a long term rental.

They use airdna to calculate DSCR (debt service coverage ratio)