Using STR/MTR income to qualify for my next house hack

[Ben Einspahr]

One of the most common house hacking strategies in the Denver metro area is the Airbnb House Hack. That consists of buying a single family home with some form of separate living space to rent out as a STR and help offset living expenses.

The Downside

• Lenders Calculate STR/MTR Rental Income Differently- From a lender's perspective, any rental income received on a term less than 12 months is NOT calculated the same way a traditional long term rental is.
• FYI-  for a long term rental, a lender will consider the income right away (75%) if there is a signed lease agreement or an appraiser' estimate 
• STR/MTR Income Must Show Up On Your Tax Returns- Before a lender can recognize that income for underwriting to offset your DTI, they must see it reported on a schedule E on your most recent tax returns.

So, What Does All Of This Mean?

If you purchase House Hack #1 (an Airbnb House Hack) on January 1, 2023, you cannot purchase House Hack #2 until you receive your tax returns back in early 2024, assuming you need that rental income to offset your DTI.

What's Next?

• Report Your Income!- Properly document your rental income on a schedule E and report it to the IRS.
• Connect with an Investment Friendly Lender- Not all lenders are equal. Connect with a lender familiar with your investment strategy to set yourself up for success and continue building your house hack stack.

I recently interviewed a local lender to dive deep into these details and talk about all the nuances. Happy to share the recording.