underwriting 7 unit short term airbnb building

9 Replies

Hi all. We came across a property that is a 7 unit apartment building and converted to Airbnb. 

When underwriting this type of property, do we underwrite it as a long term tenant at market rents for the lenders sake? How do you go about analyzing a short term rental vs a long term apartment when underwriting? Any differences? 

Any advice would be great.

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It depends on the bank you are using, most of them prefer long term income (which is more reliable to them and safer) but if you can show proof of income history being used as short term that might help too. Assuming this is going to be a business loan.

@Brennan Vaughn

There isn't really a "hospitality" section on these forums...besides "Commercial Real Estate." CRE is so broad and you don't see much hotel/motel stuff on there, but a 7-unit building isn't going to follow most of the rules for AirBnBs that get discussed here all the time. So, I see why you'd ask about it here, but 95% of these folks are buying residential properties with residential loans and converting them to STRs.

As for the underwriting...who knows! The bank is going to be confused too and it'll be up to you to convince them that the STR income is sustainable and reliable. I'm sure some banks will get it and lend based on that income on a commercial loan, some won't. Either way, it would be more of a hotel/motel type of loan.