BRRRR + Airbnb (short term rental)

13 Replies

Any success stories combining the BRRRR method and Airbnb? This is a topic I do not see discussed here very often.

I have two Airbnb properties that cash flow phenomenally. More than double what a long term tenant would ever pay. I have bought both properties using conventional financing but want to try the BRRRR method on my next property.

Has anyone been able to use STR income like this to qualify for a cash out refi? Any other pitfalls form combining STR and BRRRR?

Hey @Kyle Moore ! That's the difficulty of this method - finding a lender who will refi based on STR income, especially projected STR income. I know of a private lending entity that will do it, but a conventional lender will not.

You would need to find wholesale prices on any subject properties to be able to refinance and get your money back out for the next property. 

I've had conventional financing for short term properties and also a commercial loan. The first 3 I financed were conventional and the 4th was a commercial loan with a much higher interest rate. Do some research and you may be able to find a good lender for this. I think it could be successful but I haven't tried it myself. 

Originally posted by @Kyle Moore :

Any success stories combining the BRRRR method and Airbnb? This is a topic I do not see discussed here very often.

I have two Airbnb properties that cash flow phenomenally. More than double what a long term tenant would ever pay. I have bought both properties using conventional financing but want to try the BRRRR method on my next property.

Has anyone been able to use STR income like this to qualify for a cash out refi? Any other pitfalls form combining STR and BRRRR?

Intersting 

We BRRRR'd our STR. We used a conventional loan. STR revenue doesn't count towards your income so you will need enough income to qualify for the new loan without including the STR revenue. And I haven't heard about many banks that will count STR revenue as income. I'm sure if you dug you'd find one but I think this is the reason you don't hear about STR BRRRRing often.

I'm trying to do this now. We have one VR and I'm working on some finishing items to get it refinanced and then using that cash out for the next down payment. Because it will only be my second property, but an investment I'm having to put 15% down. It doesn't look like I will have a problem though.

@Kyle Moore

It's a great strategy although you are going to have to be looking at more business type financing as opposed to traditional real estate financing.

On the flip side we're selling a few operating units as operating businesses right now. We're seeing the flip side of people trying to purchase our properties as operating businesses and the lenders that will or won't lend because we are selling them for more than the property value because of the business value ad.

@Kyle Moore my STR was a BRRRR. I have not gotten to the refi stage yet but the STR is doing great these first two months. I am more than $1000 per month over the LTR numbers. I have a great relationship with a local credit union and I don't foresee a problem getting my money back out.

I purchased a SFH that I rent out short term. I got a great price on the house and used a commercial loan with 10% down to purchase and a heloc for most of the repairs. After the repairs were completed I refinanced with a conventional loan and paid myself back for all the repairs. The bank wasn't very concerned with my rental strategy.

Hello Kyle,

Yes, it is doable.

Recently did cash out refinance on two STR's (nearly simultaneosly). One in Palm Springs, one in La Quinta, CA.

The PS house appreciated (per appraisal) approx. $150k in 1 year. Appraisal on the LQ house was a bit underwhelming
(low compared to comps), but still enough for cash out.

Lenders are shy of STR income (as my lending broker expressed). Solution was to "snooze" the listings during application and refi process. Technically, not operating as STR at that time.

Generated $117,000 cash out PS house, moved it with the existing PS private lender $250K note to acquire additional STR LQ pool home.

Approx. $68,000 cash out from LQ #1 for reserves.

Results so far very good. Now back to desert for 30 days to ramp up LQ #2 (furnish, decorate, lighting, light comsetic reno, obtain permit, photograph & launch) to get the cash flowing.




Originally posted by @John Underwood :

You would need to find wholesale prices on any subject properties to be able to refinance and get your money back out for the next property. 

 When you say wholesale prices, you're referring to 70-75% - repairs? 

Originally posted by @Bruce Arellano :
Originally posted by @John Underwood:

You would need to find wholesale prices on any subject properties to be able to refinance and get your money back out for the next property. 

 When you say wholesale prices, you're referring to 70-75% - repairs? 

 Correct.

Originally posted by @David M Trapani :
Hello Kyle,

Yes, it is doable.

Recently did cash out refinance on two STR's (nearly simultaneosly). One in Palm Springs, one in La Quinta, CA.

The PS house appreciated (per appraisal) approx. $150k in 1 year. Appraisal on the LQ house was a bit underwhelming
(low compared to comps), but still enough for cash out.

Lenders are shy of STR income (as my lending broker expressed). Solution was to "snooze" the listings during application and refi process. Technically, not operating as STR at that time.

Generated $117,000 cash out PS house, moved it with the existing PS private lender $250K note to acquire additional STR LQ pool home.

Approx. $68,000 cash out from LQ #1 for reserves.

Results so far very good. Now back to desert for 30 days to ramp up LQ #2 (furnish, decorate, lighting, light comsetic reno, obtain permit, photograph & launch) to get the cash flowing.


I don't see why snoozing the listing would do anything, the property is still going to show up on your tax return.