Best Way to Finance your Short-Term Rentals

Finding the Right Financing for Your Airbnb Can Make All the Difference. Hosts that nail the numbers and combine their capital with the right loans can create life-changing wealth through real estate. Choosing the wrong loan and lender could leave you with headaches, lost deals, and worst of all, a money-losing portfolio. Identifying the correct short term rental financing options for your unique situation is crucial if your goal is financial freedom.


Securing the right lending partner and loans for your properties can be overwhelming and difficult. The good news? Sites like The Host Co can cut through the noise and give you the information you need to find the right lender and loan type for you, no matter where you are on your hosting journey. The better news? Once you find the right lender, your financing worries can evaporate. A trusted lending partner that you can go back to time and time again to scale your portfolio saves time and money. This allows you to shift your focus back to where it belongs: Providing amazing experiences for your guests through Airbnb!


Airbnb Financing Options

Conventional Financing


Conventional Financing is when you go to a bank or mortgage lender that provides mortgage loans that follow the conventions of government-backed housing agencies such as Fannie Mae and Freddie Mac. The advantages of going conventional include putting the least money down and get the lowest interest rates and fees. It’s also the perfect option newer hosts that still have a strong W2 income and full-time income stream.


The downsides? There are plenty, mostly come into play when you are ready to scale and grow your portfolio. Conventional lenders have plenty of restrictions that can kill your deals when looking for properties. For one, they calculate a Debt-to-Income (DTI) ratio to qualify you, which demands you have a consistent salary and can cover the expenses of all your properties. There are also all sorts of limits, on size ($647,000 for 2022), on number of properties (currently 10) and more. Also, as you build your portfolio, protecting yourself and your wealth becomes paramount. Most investors place great importance on structuring their investments in entities such as an LLC. Unfortunately, you are not allowed to do this under conventional loans.


Private Lenders – “DSCR” Loans


The great news is that there is a perfect alternative to conventional financing – “DSCR” loans from private lenders. DSCR loans are loans that qualify based on the debt service coverage ratio, or the property’s cash flow, rather than your personal income. Easy Street Capital is a private lender that is the best of both worlds – both specializing in short term rentals (loans for Airbnb) and do it through a well-oiled DSCR lending machine!


These loans do carry slightly higher rates and fees compared to conventional lending. Typically, the difference here is less than 1%. The benefits of DSCR loans are very advantageous to investors and are much needed by STR Hosts.


These include:


  • No Income Verification or Tax Returns: Quitting your W-2 job to invest in real estate full time? No problem!
  • No DTI calculation for qualifying: Each deal looks at the property expenses only and doesn’t consider your income, other properties, or any other expenses.
  • No Limits: OK – technically maximum loan size is around $3M, but loans can easily qualify way over the $647,000 conventional limit. There is no maximum number of properties you can finance!
  • LLCs/Investing with Partners OK (and Preferred!)


OK Great – DSCR loans sound like a perfect option, which DSCR lender do I choose? When searching for short term rental financing options, you should choose a lender with programs that align with your goals. You want a lender that’s as passionate about STRS as you are. In addition, underwriting and qualification for STR loans can differ quite a bit from DSCR lender to DSCR lender.



Specialized, Forward-Thinking Short Term Rental Financing Options: Easy Street Capital


Easy Street Capital is the nation’s leader in STR DSCR loans. Not only are STRs eligible, but Easy Street has pioneered creative underwriting that works for professional STR owners. Instead of needing a year of history to prove up Airbnb income – or to qualify at long term market rent, generally only half of what you earn as an STR (this is the majority of DSCR lender’s qualification procedures), Easy Street will underwrite based on AirDNA projections – meaning you can qualify on STR income you expect to earn on Day 1!


Easy Street lends in 47 states and lends on beautifully hosted short term rentals everywhere from including oceanfront vacation markets, mountain getaways or urban homes. Not only are they experts in STR lending – they are STR hosts themselves, with two units sitting above their Austin, Texas headquarters on Airbnb today! A trusted lending partner for your journey to scale your STR portfolio and achieve financial freedom, don’t hesitate to get a quote and talk to a loan expert today!