Creative Financing for AirBNB

5 Replies

Hello Everyone,

I am looking at a deal that could be pretty cool. This would be an AirBNB in wine country where there is already a very high demand for AirBNBs as their is no hotel nearby and other AirBNBs in the area are very successful. 

The structure I am looking at used to be an old schoolhouse (about 1600 Sqft) and our vision is to convert it into a cool/quirky AirBNB. It already has a bathroom but there is no kitchen. I spoke with my Broker and being that there is no kitchen they are not able to provide conventional funding. I am currently exploring private lending and seller financing options but in the event these options don't work out what other creative financing options should I look into? Any insight is helpful. Thank you in advance!

Ask for owner financing, even if for only 18 months to give you time to add the kitchen and refinance.

Explain why you need it to the seller.

You could also do a lease option and install the kitchen and then exercise the option.

Tell the seller the problem and see what they suggest to solve the problem.

Hi John,

Thanks for the reply. The property was actually under contract the last month or so but just popped back up on the market. I suspect the previous deal fell through due to an issue with financing. Hopefully because of this the seller will be up for financing until we can add a kitchen and refinance. I hadn't thought of the leasing option so thank you for that! I suspect the seller is ready to offload this property so I'm glad there are a couple different ways to approach this deal. Thanks again!

@John Catlett seller finance only works if the seller owns it free and clear or has very little left on a mortgage. Lease option is a good idea.

You could also explore commercial loans or construction loans. Terms will not be as good as a conventional mortgage but could get the deal done for you.

Originally posted by @Tim Delaney :

@John Catlett seller finance only works if the seller owns it free and clear or has very little left on a mortgage. Lease option is a good idea.

You could also explore commercial loans or construction loans. Terms will not be as good as a conventional mortgage but could get the deal done for you.

 If there is a mortgage you can still buy Subject to the existing mortgage.

The owner leaves his mortgage in place until you can refinance and pay off his mortgage. 

So a little update: the seller isn't opposed to seller financing but will want about 25% down. With that being said, I'm having trouble calculating an accurate ARV. This property is in a rural area and the School house type structure is on a small lot that doesn't match the other property types in the area (they are mostly bigger houses on large acreage farms). I want to make sure my numbers are accurate so that I can refinance this correctly and pull my down payment back out when the time comes. (Thinking about using the BRRRR model). Thanks for the advice and patience as I try to piece this deal together!