Short-Term Rental Loans: What Are the Options ?

Question

Has anybody had any luck finding funding for a short-term rental with a DSCR loans with 25% down? I am finding a lot of mixed reviews about if its possible to find funding this way or if there are other alternative options. Would prefer to stay away from conventional financing.

Ray Williams · Answer

You can absolutely find STR DSCR loans. There are variables that will determine if they will use the AirDnA data, and really it comes down to the ability of an appraiser to find STR comps. But yes, you can.

Garrett Brown · Answer

Hey Samantha! Welcome to the forums.

Most DSCR lenders will either use AirDNA data and/or rely on their own data for a 1007 market rental report of their own basically. 25% should be no problem for them to fund if the deal pencils out. 2 quick suggestions to help would be reading this BiggerPockets blog article on DSCR's

https://www.biggerpockets.com/blog/dscr-loans-the-short-term...

and use BiggerPockets Lender Finder for an investor-friendly lender to walk you through the options here. https://www.biggerpockets.com/business/finder/lendersGood luck and reach back out with any questions!

Zach Edelman · Answer

There are definitely DSCR lenders that can execute at 20% down as well. Especially if they can use AirDNA and do so at 80% LTV, cash-flow should likely check out.

Andrew Steffens · Answer

I know several DSCR lenders who would do the deal at 25% down as long as the DSCR criteria was met.  You should not have a problem.  DM me if you need some recommendations.

Alex Withorn · Answer

Depends on the lender, but some DSCR lenders will run their numbers based on Airdna. Others will calculate their ratio based on appraised long term rent numbers. It is definitely possible and I have used lenders for this exact purpose. When you're calling around, just be specific that you are looking for lending for a short term rental.

Kumar R. · Answer

@Samantha Zanotelli DSCR is a great way to over leverage your dollar. Besides conventional banks, I would consider raising capital from private investors. Happy to discuss a few options where I found success, please feel free to PM me.