All Forum Posts by: Daniel Judy

In all my experience here in Missoula, they use 75% of rental contracts, and most want a year of rental history. Maybe this is different for a commercial loan, but I’m assuming you are asking about a residential investment mortgage.

I would go meet with a few local lenders to see what their specific requirements are. Some may only be able to use your Schedule E, whereas others can use a percentage of the rental lease itself, sometimes sooner than a full year. I was actually able to use roommate and basement unit rental income from my first property after only 6 months to qualify for purchasing a triplex. But, times have changed, and lending rules have tightened up during covid. Talking to a few mortgage brokers will give you a better idea of what planning is needed for your specific situation.

As far as traditional rental vs. Airbnb, in my experience lenders seem to prefer more stable long-term leases. I do sometimes rent my personal residence out as a furnished short term rental (typically 1-4 weeks) during the summer months. I find this duration to be a happy medium between the hassle of constant airbnb cleaning and turnover, but with higher than normal rental income. But, this is simply for making some extra cash off my primary residence. It gets included in my Schedule E income, but I can't really use a lease from it for mortgage qualification. All of my other units are long term rentals for 1) ease of management, 2) lender perception and 3) because I'd just rather provide units to local residents than short term visitors while we have such a crazy housing shortage in town.

A good option for you might be to rent your place out fully furnished on a month-to-month lease. You could find someone like a travel nurse, visiting professor, or remote worker who may want to stay semi long-term - perhaps even find someone to sign a 6 month lease. The monthly rent will be much higher because it is furnished and turn-key, and a mortgage lender might view this as a long term rental for income purposes.