Tag Archive for: funding options

Stacking Your Funding Options can Guarantee Profits

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Today we are going to discuss how stacking your funding options can guarantee profits! Smart investors don’t rely on just one type of funding. They stack their options to create the best deal possible. By combining different funding sources, you can lower costs, increase cash flow, and keep more profit in your pocket.

Let’s say you find a great fixer-upper for $100,000. A hard money loan covers 80%, but you still need $20,000 for the down payment. Instead of using your own cash, you could tap into a HELOC, a 0% interest credit card, or even a private lender. This way, you spread out your costs and keep more cash available for renovations.

Another example? A rental property with a DSCR loan. You might finance 75% of the purchase price with a DSCR loan and cover the rest with a seller carryback or a line of credit. This lets you close deals without draining your bank account.

Stacking funding isn’t about taking on more debt, it’s about using the right debt at the right time. The goal is to build wealth while keeping your cash flow strong.

In the full article, we’ll break down different ways to combine funding sources, so you can structure deals that work for you.

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Text: "Using a DSCR Loan for Airbnb Investing"

Airbnb Investing with a DSCR Loan

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Can you use a DSCR loan for investing in an Airbnb?

Short answer: yes. However, you may come across a few obstacles.

Using Standard Rental Rates for DSCR Loans

Typically, to refinance an Airbnb, a lender requires 2 years’ history of rents and expenses for the property.

If you can’t provide that, a DSCR loan could be an option for your short-term rental.

But to get the DSCR loan, you need to use the standard rental rates for a standard rental property in that area. Without a longer history, you can’t use your Airbnb rates as the income for the property.

This can be a major hurdle.

A property that’s successful with short-term rentals (Airbnb, VRBO, etc.), probably makes more money than a standard monthly rental in the same area. In fact, the monthly income from an Airbnb can be 3-4x the standard rents in an area.

But a DSCR will require you to use the number for standard rents. So it’s possible that even though your short-term rental is cash-flowing, it might not qualify for a DSCR loan.

Lenders and Airbnb Investing

DSCR loans vary from lender to lender. Three-quarters of DSCR lenders will be open to loaning for Airbnb properties. The other quarter will want nothing to do with it.

Some lenders look at Airbnb as a riskier investment. Cash-flow has the potential to be higher, but there are a lot of moving parts. Also, some municipalities put restrictions on short-term rentals, making them a more unpredictable investment in lenders’ eyes.

It’s still worthwhile to research a DSCR loan for investing in your Airbnb. You should always shop around – you’re bound to find the right lender with the right loan for your project.

Read the full article here.

Watch the video here: