1. Previous Short-Term Rental (STR) – Determine current history.
   1. Must have 12 months or more of history.
   1. Provide documentation from Airbnb, VRBO, or other
   1. Calculate DSCR using 80% of average monthly rent to achieve DSCR of 1.1 or greater
2. No STR History – use AirDNA
   1. Check that HOA and CC&R’s allow STR
   1. Check AirDNA Rentalizer and Overview Report
      1. Calculate qualifying rent – Use the Rentalizer Report gross rents forecast period, which must cover 12 months from the anticipated Note Date less a 20% expense factor.
      1. Occupancy rate: must be greater than 60%.  Maximum occupancy limited to 2 individuals per bedroom.
      1. Comparable Properties: Must have 5 comparable properties within the same zip code that are similar in size, room count, amenities, availability, and occupancy.
3. Must be in a strong market:
   1. Overview Report Market Score by zip code is >60%.
4. Calculate DSCR of 1.1 or greater

Other Questions About STR Financing

• Can I finance more than 10 STR properties? Yes, DSCR loans typically allow for an unlimited number of loans on individual properties and can also be structured as a blanket loan covering multiple properties.
• Can I acquire properties as an LLC with multiple members? Yes, DSCR loans are provided by lenders who specialize in working with real estate investors and provide non-owner-occupied investment property loans. They typically prefer the borrower to be an LLC or another type of entity, allowing investors to bring in various partners to expand and scale their investment activity.
• How are DSCR loan rates calculated? DSCR loan rates are determined by various factors, including Loan-to-Value (LTV) ratio, FICO score, and whether the rate is fixed or adjustable. While rates may be slightly higher than conventional rates, the ease and ability to qualify for these loans enable investors to scale their real estate portfolio effectively.

Home123 Mortgage is a nationwide direct institutional lender dedicated to providing residential real estate investors with access to competitive, transparent, and reliable financing options.

Our Home123 Mortgage Counselors collaborate with investors and real estate agents to evaluate properties. We ensure they offer the necessary cash flow before you make an offer or even visit the property, saving you valuable time.

Work with one of our Mortgage Counselors and we will make finding the best program for your unique needs as simple as 1 – 2 – 3.