Proving Income on a STR New Property
How can I prove to a bank that a property is going to make money based on projected numbers? I think more specifically is it even possible? My thought process is that I do not have the funds to purchase a house but I have a very high credit score and if proving to a bank that a specific property can produce significant cash flow will persuade the bank to loan me the money. I am more than welcome to other suggestions.
There are lenders that are knowledgeable about short term rentals and their bread and butter are DSCR loans that will take into account projected income. I think it may be against the rules to post specific companies here.
@Jen Whitehead You are still going to need to have funds for a down payment, closing costs and reserves for the ramp up period and slow times. In addition, I am guessing that the underwriting process will be a bit more demanding than it may have been in the past, depending on the market, given the slow down in STR income this year vs. last.
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#1 Short-Term & Vacation Rental Discussions Contributor
- Investor
- Greer, SC
Difficult to prove it for your property. You can provide comps on similar properties.
Possibly talk to PM's and owners in your area.
I think it would be hard to prove cash flow to the bank, you may want to look into a DSCR loan. Most lenders can use projections to underwrite the deal. Good luck!
Quote from @Jen Whitehead:
There are lenders that are knowledgeable about short term rentals and their bread and butter are DSCR loans that will take into account projected income. I think it may be against the rules to post specific companies here.
Thank you Jen this is very helpful.