Financing the Short-Term Rental Boom

Ready to invest in a vacation rental? We are ready to help.

As the pandemic fades and travel rebounds, Americans are becoming tourists again. Airports are full, summer vacation is just around the corner and home values are soaring. All these factors have translated to many investors looking for opportunity in the short-term rental market.

Think an investor can’t get a mortgage on a property marketed on Airbnb or VRBO? Think again. Stronghill Capital is one of the nation’s leader in providing mortgages on properties used in the fast-growing field of short-term rentals.

We are willing and able to lend on short-term rental properties. Whether the property is a suburban house rented on Airbnb, a luxury condo in a major metro area or a professionally managed vacation rental property near a golf course, beach town or ski lift, financing is available at competitive rates.

Our short-term rental loan program combines the traditional 30-year fixed-rate, fixed-payment residential mortgage with flexible and hassle-free underwriting. We deliver quick and painless 30-day closings and non-intrusive documentation requirements. We require no tax returns and no income verification.

Because our loans are best in class, these mortgages are the perfect option for many borrowers. Whether a first-time investor, diving into the short-term rental world, or an industry veteran looking to expand their portfolio, Stronghill has the solution.

Stronghill’s short-term rental loans are available in most states. We’ve done deals in a variety of markets. The list includes, but is not limited to, short-term rentals in New Orleans, Louisiana; Gatlinburg, Tennessee; West Palm Beach, Florida; Gulf Shores, Alabama; and Joshua Tree, California.

There are a handful of states where Stronghill Capital doesn’t lend, on short-term rentals: Arizona, Michigan, Minnesota, North Dakota, South Dakota, Virginia and Vermont. We do however provide loans in smaller and non-traditional markets within every eligible state.

Curious to find out more about our process? Here are a few frequently asked questions, about Stronghill’s options:

What type of down payment do I need?

Stronghill lends up to 80% of the home’s value, so as little as 20%.

I am a first-time investor and have been told by other lenders I need experience to obtain an investment property loan. Are you able to work with me?

Yes. We have options to fit the needs of borrowers with varying levels of real estate investment experience.

I was turned down by my bank because they were not comfortable with my tax returns or being self-employed as a full-time investor. Will this be an issue for Stronghill?

No, no issue at all. We do not use tax returns or income verification as part of our qualification process.

My property is a small apartment building that rents each unit separately as a short-term rental. Is this eligible?

Yes, we can lend on properties up to eight units operated as a short-term rental.

I am looking to purchase in a vacation market that is centered around specific seasons, like ski or beach towns. Is this okay?

Yes, we are happy to lend in areas that are dedicated “vacation towns.” This includes properties with seasonal variations in revenue especially when most comparable properties are also vacation rentals.

I’m looking to buy a home that someone is living in but I want to turn it into an Airbnb. Is this property eligible for financing?

Yes, our short-term rental lending program is available to buyers of properties currently operating under any use, including vacant homes, primary residences, or vacation rentals.

I want to do a cash-out refinance on my short-term rental property to access the equity I’ve built. Is that okay?

Yes, we do many cash-out refinance transactions, primarily to allow for our borrowers to continue to grow their portfolios. In these cases, LTV is limited to 75% and the cash-out must be used for business purposes, such as purchasing more properties, property upgrades, or hiring staff.

How are your loans structured?

Our loans are typically straightforward 30-year mortgages, with a fixed interest rate and monthly payment. We require monthly escrows for property taxes and insurance. Stronghill also offers variable rate and interest only options.

I’m in the process of getting the applicable licenses and permits for my short-term rental or haven’t started yet. Is that a problem for qualifying for a loan?

No, our underwriting and qualification guidelines do not evaluate local licensing and regulations when offering these loans.

I have partners in an LLC with split ownership of a property. Is that okay?

Yes, but we require a personal guarantee on loans from anyone who has 25% or more ownership in the borrowing entity.

How does qualification for these loans work? Is there a minimum income or revenue from these properties?

Stronghill’s short-term rental loans are underwritten primarily through the Debt Service Coverage Ratio (DSCR) of the property. This is calculated as the revenue from operations divided by the principal, interest, property taxes and insurance (PITI). Unlike most lenders, we do not look at your personal income or qualify based on a debt-to-income (DTI) ratio of individual guarantors. We do not take into account any property expenses except for property taxes and property insurance. As a result, Stronghill doesn’t factor in utilities, management fees or cleaning fees.

For more information about Stronghill Capital’s short-term rental loan program, contact us here or by calling 888-879-8713.