Are you looking to buy your first Airbnb? Do you know you could do it with no money down?
If an investor decides to use short-term rentals as an income stream, ideally, they won’t want to pay a bunch of money up front for the property.
But is it possible to buy your first Airbnb with no money down? What does it take to get 100% financing on a property to convert into an Airbnb?
Using the BRRRR Strategy to Invest in an Airbnb with No Money Down
One possible way to get a short-term rental with zero money down is to use the BRRRR strategy.
If you can buy a property undermarket, fix it up within budget, and refinance, then you can set up an Airbnb for no money down.
We’ve helped a lot of people use the BRRRR strategy to get into Airbnbs. They keep the purchase and rehab costs at 75% or below the ARV, then get into a long-term conventional loan or DSCR loan.
The BRRRR process for Airbnbs is mostly the same as for a traditional rental properties, with a few slightly different requirements.
Long-term Loan Requirements to Invest in Airbnb
You’ll find conventional lenders that will lend for an Airbnb. But they may require that you have:
- Two years of experience with Airbnbs
- Other real estate investment history
- The income for the loan (from a W2 job or your own business) without any income from the property.
If you’d need a loan with fewer requirements for your first Airbnb, then a DSCR loan may be right for you. A DSCR loan’s only major requirement is that the income from rent covers the expenses of the property.
What If You Can’t Get an Airbnb for Zero Down?
If you land a good BRRRR opportunity – that is, if you find a property you can buy and fix up for under 75% of the ARV – you can get it with zero down.
Otherwise, you’ll be asked to put 20-30% down, depending on:
- Your credit
- Your income
- The income potential of the property
In the full article, we explore options for covering these down payments and other costs that a loan won’t cover.
Read the full article here.
Watch the video here: