How to refi an Airbnb portfolio

Question

I have a portfolio of 9 homes (single-family, duplexes, and triplexes) in Indianapolis that I bought individually and rehabbed with cash in the last 18 months. Some are long-term rentals but most are short term Airbnb rentals. Cashflow is very strong but I'm struggling to find a lender who will do a cash-out loan on the portfolio because of the Airbnb properties. Does anyone have a recommendation or experience with getting mixed properties like this leveraged?

My goal is to redeploy about 1mil and get a 15-30 year term at a sub-6% interest rate.

Account Closed · Answer

I'm a loan broker and would love to help, but without lease contracts, it's hard.

Will Dixon · Answer

@Marc Phelps Setup up a business entity acting as the intermediary and have that entity sign 1 yr lease agreements for each property. Then have the entity operate the AirBnb business. AirBnb arbitrage’ing yourself.

...I am not a lawyer

Stephanie P. · Answer

@Marc Phelps

The key is going to be short term rental comps for the Air BnB's instead of long term so you'll need an appraiser that understands the difference coupled with a lender that will work with that type of appraiser.  Also, instead of doing them as a unit, separate the properties and do them as individual properties.  A mixed blanket loans is going to be a nightmare down the road.

70% is going to be your max, but I bet you can get close to your rate target.

Stephanie

Dan Gamache · Answer

@Marc Phelps there are private lenders that will use the market rent from appraisal for properties that are being used as AirBnB. If deal works based on market rent you should be good to go. I'll send you message.

Nicholas Covington · Answer

@Marc Phelps let’s chat

Marc Phelps · Answer

@Nicholas Covington I'm not concerned with how much I take out.  I would like to do >70% LTV but I'm real flexible, I just want to add some leverage to the deals.  I don't have a particular cash amount in mind.

I also don't mind single loans as long as I could work with the same lender on all of the properties.  Everyone is willing to lend on the LTR individually, the challenge is putting something together that would allow me to lever the whole portfolio.

Nicholas Covington · Answer

@Marc Phelps how much equity do you think you can take out? Are single loans an option for you?

Marc Phelps · Answer

@Nicholas Covington Thanks for the feedback.  I'm finding that also.  I assumed that we would look at the portfolio as a commercial-type blanket mortgage with an excellent DSCR but I'm finding that bankers don't like creative real estate - no matter how profitable.  I've had some offers from "Hard money" companies but the rates are hard to swallow.

Nicholas Covington · Answer

@Marc Phelps that type of loan with for sub 6% I will say I doubt will exist. I do know a lender that does short term but their portfolio refinance is 4-7 properties so you will have to separate them.