Looking to BRRR then Airbnb. Are there lenders?

Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes

Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?

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Katie Smith

Member since 2023 · 348 posts · 190 votes

Hi Zachary!

You can utilize a hard money bridge loan to kickstart a BRRR strategy with a short-term rental. HML's can finance up to 90% of the purchase price and 100% of the rehab costs, allowing you to complete the renovation with minimal capital out of pocket. Once the rehab is complete and the property is stabilized, you can refinance into a DSCR loan that allows short-term rentals (Airbnb/VRBO, etc.), depending on the location and zoning.

Keep in mind, most lenders will require a seasoning period—typically around 3 months—before you can do a full cash-out refinance, so that’s something to plan for as you run your numbers.

Do you have any experience with STRs? And where is the property located? I’d be happy to see how I could assist.

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Katie Smith
Member since 2023 · 348 posts · 190 votes
1y
Hi Zachary!
You can utilize a hard money bridge loan to kickstart a BRRR strategy with a short-term rental. HML's can finance up to 90% of the purchase price and 100% of the rehab costs, allowing you to complete the renovation with minimal capital out of pocket. Once the rehab is complete and the property is stabilized, you can refinance into a DSCR loan that allows short-term rentals (Airbnb/VRBO, etc.), depending on the location and zoning.

Keep in mind, most lenders will require a seasoning period—typically around 3 months—before you can do a full cash-out refinance, so that’s something to plan for as you run your numbers.

Do you have any experience with STRs? And where is the property located? I’d be happy to see how I could assist.
1 Reply
- Sean MacDonald
  Lender · Phoenix, AZ · Member since 2024 · 32 posts · 17 votes
  1y
  Quote from @Katie Smith:
  
  Hi Zachary!
  You can utilize a hard money bridge loan to kickstart a BRRR strategy with a short-term rental. HML's can finance up to 90% of the purchase price and 100% of the rehab costs, allowing you to complete the renovation with minimal capital out of pocket. Once the rehab is complete and the property is stabilized, you can refinance into a DSCR loan that allows short-term rentals (Airbnb/VRBO, etc.), depending on the location and zoning.
  
  Keep in mind, most lenders will require a seasoning period—typically around 3 months—before you can do a full cash-out refinance, so that’s something to plan for as you run your numbers.
  
  Do you have any experience with STRs? And where is the property located? I’d be happy to see how I could assist.
  
  We have no seasoning requirements on cash out refi's!
  Zachary, could I have some clarification on your question here? Are you wanting to weigh the pro's and con's of STR vs LTR?
  0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Katie Smith:
  
  Hi Zachary!
  You can utilize a hard money bridge loan to kickstart a BRRR strategy with a short-term rental. HML's can finance up to 90% of the purchase price and 100% of the rehab costs, allowing you to complete the renovation with minimal capital out of pocket. Once the rehab is complete and the property is stabilized, you can refinance into a DSCR loan that allows short-term rentals (Airbnb/VRBO, etc.), depending on the location and zoning.
  
  Keep in mind, most lenders will require a seasoning period—typically around 3 months—before you can do a full cash-out refinance, so that’s something to plan for as you run your numbers.
  
  Do you have any experience with STRs? And where is the property located? I’d be happy to see how I could assist.
  
  Hi Katie,
  
  Thanks so much for the reply!
  
  I currently run a short-term rental (STR) management business but we don't own any of the properties we manage—yet! I'm now looking to start personally investing in STRs myself.
  
  We recently finished renovating our primary residence and are exploring the option of pulling cash out to do a BRRR strategy, ultimately landing in a short-term rental investment.
  
  Before I do that refinance I want to look at future projects and work our way backwards to make sure we are doing this right. Does that make sense?
  
  0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Zachary Koran:
  
  Quote from @Katie Smith:
  
  Hi Zachary!
  You can utilize a hard money bridge loan to kickstart a BRRR strategy with a short-term rental. HML's can finance up to 90% of the purchase price and 100% of the rehab costs, allowing you to complete the renovation with minimal capital out of pocket. Once the rehab is complete and the property is stabilized, you can refinance into a DSCR loan that allows short-term rentals (Airbnb/VRBO, etc.), depending on the location and zoning.
  
  Keep in mind, most lenders will require a seasoning period—typically around 3 months—before you can do a full cash-out refinance, so that’s something to plan for as you run your numbers.
  
  Do you have any experience with STRs? And where is the property located? I’d be happy to see how I could assist.
  
  Hi Katie,
  
  Thanks so much for the reply!
  
  I currently run a short-term rental (STR) management business but we don't own any of the properties we manage—yet! I'm now looking to start personally investing in STRs myself.
  
  We recently finished renovating our primary residence and are exploring the option of pulling cash out to do a BRRR strategy, ultimately landing in a short-term rental investment.
  
  Before I do that refinance I want to look at future projects and work our way backwards to make sure we are doing this right. Does that make sense?
  
  0 Reply
Andrew Zamboroski
Lender · Member since 2021 · 495 posts · 130 votes
1y
Quote from @Zachary Koran:

Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
Hi Zach,

we can help with both the short term and long term financing on both sides of the BRRRR. Happy to connect and go through any questions!
0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Andrew Zamboroski:
  
  Quote from @Zachary Koran:
  
  Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
  Hi Zach,
  
  we can help with both the short term and long term financing on both sides of the BRRRR. Happy to connect and go through any questions!
  
  Thanks so much—I’d absolutely love to connect regarding STRs!
  
  It's great to hear that you can assist with both short-term and long-term financing for the BRRRR strategy. I'd be happy to set up a time to chat and go over everything in more detail.
  
  Let me know the best way to connect
  0 Reply
- Andrew Zamboroski
  Lender · Member since 2021 · 495 posts · 130 votes
  1y
  Quote from @Zachary Koran:
  
  Quote from @Andrew Zamboroski:
  
  Quote from @Zachary Koran:
  
  Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
  Hi Zach,
  
  we can help with both the short term and long term financing on both sides of the BRRRR. Happy to connect and go through any questions!
  
  Thanks so much—I’d absolutely love to connect regarding STRs!
  
  It's great to hear that you can assist with both short-term and long-term financing for the BRRRR strategy. I'd be happy to set up a time to chat and go over everything in more detail.
  
  Let me know the best way to connect
  Sent you a pm!
  0 Reply
Devin PetersonBusiness Member
Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 666 votes
1y
Quote from @Zachary Koran:

Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
Zachary, lots of loan options in the space I recommend working with an experience broker who can help you cross compare loan terms amongst various amounts of lenders
[email protected]860-538-3672
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Zachary Koran:

Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?

What you are looking to do is go from a RTL (bridge loan) to a DSCR or other type of loan. What I STRONGLY recommend is you go with someone who provides both of these products. What we have done with our borrowers in this situation is we have given them a nice discount on the bridge (BRRR) loan if they go with us for the long term financing as well.
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0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Chris Seveney:
  
  Quote from @Zachary Koran:
  
  Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
  
  What you are looking to do is go from a RTL (bridge loan) to a DSCR or other type of loan. What I STRONGLY recommend is you go with someone who provides both of these products. What we have done with our borrowers in this situation is we have given them a nice discount on the bridge (BRRR) loan if they go with us for the long term financing as well.
  
  Chris, this makes sense to me. I'll shoot you a note on the side.
  0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Chris Seveney:
  
  Quote from @Zachary Koran:
  
  Hey experts! Im looking to BRRR my next investment but want to Airbnb vs Long Term Tenant. Are there lenders that will work with this?
  
  What you are looking to do is go from a RTL (bridge loan) to a DSCR or other type of loan. What I STRONGLY recommend is you go with someone who provides both of these products. What we have done with our borrowers in this situation is we have given them a nice discount on the bridge (BRRR) loan if they go with us for the long term financing as well.
  
  Thanks Chris! I'll shoot you a note.
  0 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
1y
@Zachary Koran
i think what you may be asking is - are there lenders who will loan on a property post rehab based on short term rental income? and i think the answer to that is either totally no, or in general no. (if anyone knows of an exception to this chime in).
with that said, many lenders will happily lend on a rehabbed property - it's just going to be based on comps / ARV, not potential short term rental income.
but if that is not your question, let us know.
1 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Nicholas L.:
  
  @Zachary Koran
  i think what you may be asking is - are there lenders who will loan on a property post rehab based on short term rental income? and i think the answer to that is either totally no, or in general no. (if anyone knows of an exception to this chime in).
  with that said, many lenders will happily lend on a rehabbed property - it's just going to be based on comps / ARV, not potential short term rental income.
  but if that is not your question, let us know.
  
  Correct but when you refinance out is a DSCR Loan possible based on Short Term Rental Income vs Long Term Tenant?
  0 Reply
- Mike GriffinPro Member
  Investor · Greater Boston, MA · Member since 2019 · 77 posts · 9 votes
  1y
  Quote from @Nicholas L.:
  
  @Zachary Koran
  i think what you may be asking is - are there lenders who will loan on a property post rehab based on short term rental income? and i think the answer to that is either totally no, or in general no. (if anyone knows of an exception to this chime in).
  with that said, many lenders will happily lend on a rehabbed property - it's just going to be based on comps / ARV, not potential short term rental income.
  but if that is not your question, let us know.
  
  I think you nailed it. I’m dealing with this now so I’m glad I found this thread.
  One lender said they need 2 years of income and expenses for the STR which I don't have because I just launched after my rehab.
  Or I could prepare a business plan outlining my projections and they’d need to buy into those projections. So that is feasible, but that one banks terms aren’t great.
  Another lender said I could set up a LTR lease to show I have income. Either do it with someone we trust. Or my wife or I take 100% ownership and leases it to the other.
  I don’t know about that last option. Seems like it’ll complicate things?
  thoughts on that?
  0 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
1y
@Zachary Koran
in general, no.
0 Reply
Zach Edelman
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
1y
Yes, there are lenders that do do this. You'll want to find one that can use AirDNA projections to qualify the loan and doesn't require a full 12 months of bookings.
0 Reply
- Zachary Koran
  OP
  Real Estate Broker · Chicago, IL · Member since 2021 · 18 posts · 5 votes
  1y
  Quote from @Zach Edelman:
  
  Yes, there are lenders that do do this. You'll want to find one that can use AirDNA projections to qualify the loan and doesn't require a full 12 months of bookings.
  
  Awesome! I manage 6 Airbnb's currently ( management business ) so I know AirDNA well and this makes sense.
  0 Reply

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