Case StudyAirbnb Vacation Rental Financing Loan
Loan Amount: $250,000
Loan-To-Value: 65% LTV
Term: 30 Years
Situation & Challenge
The owner of an Airbnb vacation rental wanted to pull cash out for another investment opportunity in the area.
Cash flows on Airbnb properties usually aren’t as consistent as having a long-term tenant in place, so it made it harder to obtain conventional financing.
Solution & Result
Non-QM loans have filled the space between conventional loans and private money or hard money loans. Non-QMs will do stated income verified asset programs on rental properties, which works well for Airbnb properties.
The borrower had the option of 5 and 7-year interest-only loans but preferred a 30-year fixed rate loan at 6.75% for the stability factor. The loan came with a 3-year prepayment penalty, but that was okay since the borrower wasn’t planning on selling the home, which brought in significant income to service the debt plus a healthy profit.