STR Refinance Reccomendation?

Question

Hi all,I have a performing portfolio of short-term rentals that I'm looking to refinance. Here's where things stand:• Current rate: 7.25% with local lenders• Average LTV: ~70%• Strong cash flow across the portfolioI'm open to individual loans or a blanket/portfolio structure, and comfortable with a 5-year term amortizing over 15–20 years. Ideally looking for lower rates without heavy points or closing costs.One important note — I need a lender who will underwrite off actual property performance, not AirDNA projections.Who are you all seeing that fits this? Appreciate any introductions or recommendations.

Pierre Guirguis · Answer

Most STR lenders default to AirDNA or projections because it’s easy, but if you have 12–24 months of strong operating history, there are groups that will underwrite off actual performance - which usually puts you in a much better position on both leverage and structure.

Where things get interesting is deciding whether to go asset-by-asset or portfolio/blanket. A lot of investors assume blanket = better, but it can actually limit flexibility depending on how the DSCR is calculated across the pool. In a lot of cases, a hybrid approach (selectively refinancing stronger assets individually while grouping others) ends up producing better overall terms and keeps optionality.

How consistent is your income across the portfolio (seasonality / volatility), and are all the properties in similar markets?

Andrew Glisson · Answer

Thanks Stacy - we're pretty sohpisticated borrowers but there's always an achilles heel on STR lenders... we are highly flexible on loan structure and can model options quickly. Ultimately, the problem I find is that the spread over 5 or 10YT for STR is too high for no other reason than "it's an airbnb." Or, lenders just default to prime+ which isn't helpful.

Stacy Raskin · Answer

There are short term rental refinance options where the past rents will be analyzed. Individual loans will give you more flexibility for selling or refinancing. 30 year fixed is the option I see most investors use. Prepayment penalties from 1-5 years. Having had STR rental experience for at least a year.

More on how these loans are structured and what goes into the rate. DSCR loans won't use your income to underwrite the loan. DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth. Here's a bit more in detail about how rates are calculated for DSCR loans:1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs. I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals. Happy to connect to discuss further.

Andrew Steffens · Answer

Ill defer to the lenders, but I think this may be a little premature as rates look like they should continue to sink to maybe the 4s?

Jonathan Lee · Answer

Hi Andrew,

There are definitely lenders that will underwrite based on actual property performance rather than projections, and both individual and blanket loan structures could make sense depending on your long-term goals.

I work with a lot of investors refinancing short-term rental portfolios and helping them lower their rate or improve overall loan structure while keeping costs reasonable. I’d be happy to take a look at your current setup and see what options might make sense for you.