New STR deal under contract — looking for advice on financing options

Lender · Member since 2022 · 1k+ posts · 507 votes

5mo

If the property is habitable / the appraiser would mark it as habitable / "as is not "subject to" repairs you could structure it as a DSCR loan. This is generally a 20% down payment depending on credit score and property location.

If it won't be marked "as is" on the appraisal form you could do a hard money loan where you then convert to a DSCR loan once the property is rehabbed and its up and running. If possible it's better to start with a DSCR loan so there's less transactions and closing costs if you have the money to do the rehab. Generally an underwriter will also want to see it rented if it's a refinance or there will be a LTV reduction. Happy to connect to discuss further.

[email protected]818-770-0340

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Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
5mo
Quote from @Stacy Raskin:

If the property is habitable / the appraiser would mark it as habitable / "as is not "subject to" repairs you could structure it as a DSCR loan. This is generally a 20% down payment depending on credit score and property location.
If it won't be marked "as is" on the appraisal form you could do a hard money loan where you then convert to a DSCR loan once the property is rehabbed and its up and running. If possible it's better to start with a DSCR loan so there's less transactions and closing costs if you have the money to do the rehab. Generally an underwriter will also want to see it rented if it's a refinance or there will be a LTV reduction. Happy to connect to discuss further.

Hard money to DSCR.
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Ariel Reboh
OP
Member since 2020 · 9 posts · 3 votes
5mo
Quote from @Stacy Raskin:

If the property is habitable / the appraiser would mark it as habitable / "as is not "subject to" repairs you could structure it as a DSCR loan. This is generally a 20% down payment depending on credit score and property location.
If it won't be marked "as is" on the appraisal form you could do a hard money loan where you then convert to a DSCR loan once the property is rehabbed and its up and running. If possible it's better to start with a DSCR loan so there's less transactions and closing costs if you have the money to do the rehab. Generally an underwriter will also want to see it rented if it's a refinance or there will be a LTV reduction. Happy to connect to discuss further.

I am familiar with DSCR. Never heard of closing with hard money and converting to DSCR. Interesting.
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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 507 votes
5mo
Quote from @Ariel Reboh:

Quote from @Stacy Raskin:

If the property is habitable / the appraiser would mark it as habitable / "as is not "subject to" repairs you could structure it as a DSCR loan. This is generally a 20% down payment depending on credit score and property location.
If it won't be marked "as is" on the appraisal form you could do a hard money loan where you then convert to a DSCR loan once the property is rehabbed and its up and running. If possible it's better to start with a DSCR loan so there's less transactions and closing costs if you have the money to do the rehab. Generally an underwriter will also want to see it rented if it's a refinance or there will be a LTV reduction. Happy to connect to discuss further.

I am familiar with DSCR. Never heard of closing with hard money and converting to DSCR. Interesting.

Yes, it's an option if it's going to be a non owner occupied investment property that can't qualify for a DSCR loan due to the condition of the property. You can use a hard money loan to rehab and then convert to a DSCR loan for longer term financing since the rate will be less.
[email protected]818-770-0340
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Mike Klarman

Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes

5mo

My first question is, in your four that your are operating in the JV partnership, who is holding title and if it is an LLC are you in it.

If you are not on title or in the LLC that holds title then you won't get credit for the 4 experience. That affects your financing options.

New STR investors are subject to 80% of AirDNA projections for rent calculations. That really constrains you, where as if you could claim that 4 experience on paper, you can get 100% of airDna. That affects the leverage.

I know the pocono mountains well and I have refinanced lots of STRs up there for a client of mine who is heavily invested in that market. There's good money to be made there with the right house.

Do you have 20% - 30% of the purchase price to put down to make the numbers work? No private money person wants to offer you a 30 yr loan, they are more short-term centric. You can get a DSCR loan if your credit is decent and you have the cash to make the numbers work beyond the AirDNA restraints.

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Ariel Reboh
OP
Member since 2020 · 9 posts · 3 votes
5mo
Quote from @Mike Klarman:

My first question is, in your four that your are operating in the JV partnership, who is holding title and if it is an LLC are you in it.
If you are not on title or in the LLC that holds title then you won't get credit for the 4 experience. That affects your financing options.
New STR investors are subject to 80% of AirDNA projections for rent calculations. That really constrains you, where as if you could claim that 4 experience on paper, you can get 100% of airDna. That affects the leverage.
I know the pocono mountains well and I have refinanced lots of STRs up there for a client of mine who is heavily invested in that market. There's good money to be made there with the right house.
Do you have 20% - 30% of the purchase price to put down to make the numbers work? No private money person wants to offer you a 30 yr loan, they are more short-term centric. You can get a DSCR loan if your credit is decent and you have the cash to make the numbers work beyond the AirDNA restraints.

We always close under an LLC and yes we are both on the operating agreement. We have always been putting down 20%. With 1 investor I have two properties and they are both DSCR. Second investor, I have two properties and we did it with bank statements.
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David Atis

Lender · Nationwide · Member since 2018 · 69 posts · 32 votes

5mo

If the property can qualify as-is, DSCR is usually the easiest route since it avoids two closings. The tradeoff is you'll need to cover the rehab out of pocket, as DSCR loans don't reimburse rehab costs.

A lot of investors go hard/private money first, complete the rehab, and then refinance into a DSCR loan once the property is stabilized.

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Ken M.

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

5mo

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

Are these properties that escrow legally transferred to you?

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Ariel Reboh
OP
Member since 2020 · 9 posts · 3 votes
5mo
Quote from @Ken M.:

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.
Are these properties that escrow legally transferred to you?

Yes I have my name on all 4 properties I currently own with my Jv investors.
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Robin SimonBusiness Member

Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes

5mo

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

1) A DSCR Loan is likely going to be your best bet, the only complication is that it generally needs to have little to no actual rehab needed (if its cosmetic like it sounds, and adding features, not reallly fixes), should be OK. You will also, since its an acquisition, qualify on the projected income from Day 1, even if you do the 4-5 month prep plan which is a huge advantage. You should be able to get credit for market (STR at that) income for those months.

2) If the rehab is more significant, I would recommend finding a quick cheap hard money loan and really try to expedite the process into 3 months if possible and then launch - then you are likely refinancing into a DSCR Loan

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Ariel Reboh
OP
Member since 2020 · 9 posts · 3 votes
5mo
Quote from @Robin Simon:

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

1) A DSCR Loan is likely going to be your best bet, the only complication is that it generally needs to have little to no actual rehab needed (if its cosmetic like it sounds, and adding features, not reallly fixes), should be OK. You will also, since its an acquisition, qualify on the projected income from Day 1, even if you do the 4-5 month prep plan which is a huge advantage. You should be able to get credit for market (STR at that) income for those months.
2) If the rehab is more significant, I would recommend finding a quick cheap hard money loan and really try to expedite the process into 3 months if possible and then launch - then you are likely refinancing into a DSCR Loan

Thank you Robin! What is an example of a cheap Hard money loan?
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
5mo
Quote from @Ariel Reboh:

Quote from @Robin Simon:

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

1) A DSCR Loan is likely going to be your best bet, the only complication is that it generally needs to have little to no actual rehab needed (if its cosmetic like it sounds, and adding features, not reallly fixes), should be OK. You will also, since its an acquisition, qualify on the projected income from Day 1, even if you do the 4-5 month prep plan which is a huge advantage. You should be able to get credit for market (STR at that) income for those months.
2) If the rehab is more significant, I would recommend finding a quick cheap hard money loan and really try to expedite the process into 3 months if possible and then launch - then you are likely refinancing into a DSCR Loan

Thank you Robin! What is an example of a cheap Hard money loan?

If its short term -- then the best idea for "chealp" would be minimum upfront fees or "points" that the lender charges up front -- you could worry less about the overall interest rate since it would be outstanding a lower amount of time
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Zach Edelman

Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes

5mo

- DSCR loan if turnkey and rehab is cosmetic/there isn't enough "value add" from an ARV standpoint.

- Rehab loan if renovations are generating material value from a sales comp perspective and you want to extract equity after finishing renovations.

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Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

5mo

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

Hey Ariel,

You have some great recommendations here. I will add that maybe doing an all cash purchase to DSCR refinance might help you secure the asset quickly and then refinance with minimal seasoning to pay your investor partners back.

[email protected]818-269-7983

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Vijay FriedmanBusiness Member

Miami, FL · Member since 2026 · 766 posts · 122 votes

5mo

Quote from @Ariel Reboh:

Hey BP community — can anyone point me in the right direction? Looking for some advice and would love to hear from people who have been in a similar situation.

I'm an STR operator with 4 properties in the Pocono Mountains, Pennsylvania. What I've done with my last 4 deals is structure them as joint ventures — I bring the operator experience and handle everything A to Z, my capital partner funds the deal, gets paid back first from cash flow, and then we split the asset once they're whole. It's worked well for both sides.

I've been eyeing the Clearwater, Florida market for a while and after constantly getting beaten out by cash offers I finally got one under contract.

Here's my situation — the property is in good condition, we're planning a light rehab plus amenitizing the backyard with permits and everything that comes with it. Projected to go live on Airbnb within 4-5 months of closing. Numbers are strong on projected cash flow.

This time around I'm exploring different financing options outside of my usual JV structure — whether that's private money, hard money, or something else entirely.

For those of you who have done deals like this — how did you fund it? What worked for you and what would you do differently?

Any advice or experience is appreciated. Thanks in advance.

@Ariel Reboh

This sounds like a strong STR operator profile, especially since you already have 4 properties and a repeatable structure with your capital partner.

Since this one is under contract and going live in 4–5 months, I'd compare a few paths: private money, hard money/bridge, and possibly DSCR once the property is stabilized or if the projected STR income can be supported. The key items lenders will focus on are purchase price, as-is value, rehab/amenity budget, liquidity, experience, timeline to operate, and the STR income support.

I’d be careful matching short-term debt with the timeline. If the property needs permits, amenities, or ramp-up time, make sure the loan term has enough runway and the exit does not depend on perfect Airbnb performance right away.

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Ariel Reboh

OP

Member since 2020 · 9 posts · 3 votes

5mo

Very interesting, @David Atis! Quick question — are hard money lenders typically ok with being in second position? And what kind of rates are hard money lenders at right now?

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New STR deal under contract — looking for advice on financing options

New STR deal under contract — looking for advice on financing options

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