How to Generate 5X Rental Income on a Property?

When considering investing in real estate there are multiple elements to consider and include: location, property type, budget, efforts and more. On the topic of property types, one of the increasingly popular property types in the real estate investing market is Short-Term Rental properties. These are often called Airbnb rentals or even vacation rentals. There is a huge array of properties that qualify for as a good short-term rental income. The move in society after Covid of people working from home multiplied the profits you can achieve in a rental property. Instead of holding an investment property and renting it on a year-to-year basis, try purchasing a property in a location that attracts a lot of out-of-town visitors and rent it on a nightly, weekly, or monthly basis.

How to Finance a Short-Term Rental

One of the first questions that get asked often after considering purchasing a short-term rental property, is what financing can I find for this property? Well, that’s where Short-term rental loans come in. Many traditional lenders will not finance a property like this and don’t often offer loans for non-owner-occupied properties. You have to seek out investor-grade financing options. At Solution Providers, we offer our clients the opportunity to work with us and we will shop over 40+ lenders to find the best solution for their property-specific scenario. We offer Short-term rental loans to achieve the best financing available for a Short-term rental property.

What are Short-Term Rental Loans?

Short-Term rental loans are loans created to meet the needs of the industry market shift towards these properties. The loans are different from traditional mortgage loans and replicate the process of a DSCR loan. Check out our blogs on DSCR loans to learn more. When purchasing a short-term rental and seeking financing, the loan will originate based on the POTENTIAL income of the property and not on the borrower’s qualifications. The realtor you select to partner with to locate the properties will actually supply you with information on the property such as past rental incomes, future rental income potential and occupancy projections and history. The property-specific details regarding the rental income of the property are vital to the financing of the home. If you already own the home, then the loan will be completed based on the past rental history and not the future potential.

Benefits of Short-Term Rental Loans?

There are numerous benefits to financing your Short-term rental property with a Short-Term rental loan and here are just a few:

1. Quick Approval – compared to other standard mortgages or even other commercial mortgages, short-term rental loans are often significantly quicker and require fewer documents on the borrower. Investors can arrange and obtain financing fast to be competitive in offering properties.
2. Higher Rental Income – the annual profits on a short-term rental property are far greater than the potential and ability of any other rental property. The charge for a nightly or weekly rental will always exceed the amount you can charge on a yearly rental of equal value.
3. Unlimited Ownership – traditional mortgage lenders limit the number of properties you can own. Through short-term rental loans, you can own an unlimited amount of properties.

Short-term rental loans are available for investors to finance a real estate property that will be rented on a weekly or nightly basis. To qualify for this style of lending, you need a report stating the properties’ potential annual rental income. Investors can achieve much higher rental profits on these properties and hire a property management company to run the day-to-day operations of the property. Contact us to find out more about short-term rental loans and how we can help finance your next investment property.