Airbnb Investment Property Loans

Every year, Airbnb continues to grow in popularity all over the world.

The word is out: staying in a house you have all to yourself beats a hotel room. It’s often cheaper, too.

This is also why Airbnb investment property loans continue to grow in popularity. Investors have learned that this new breed of rental properties promises incredible returns.

Just be sure you understand what’s required to make the most of these loans.

Taking out the right kinds of Airbnb investment property loans isn’t enough. You also need to understand what’s required of you in order to turn these properties into profitable investments. Below are the three proven approaches for making the most of Airbnb investment property loans if you’re looking to build an impressive portfolio.

Most people who use Airbnb investment property loans to purchase homes are “active investors.” This means that they are the ones who are handling all of the work involved with renting out their houses. That includes everything from the administrative tasks to showing up after the occupants have left to clean up the home. They may even take care of maintenance work and repairs.

This kind of active approach is best-suited for people who are trying to conserve their profit margins, have enough time on their hands to oversee this kind of work, and, when it comes to maintenance and repairs, have the experience required to conduct this type of work.

Experienced property investors will generally take a more passive approach. They are interested in using their Airbnb property – or, more likely, properties – as traditional investments. That means they don’t want to be involved with their management on a regular basis. Their goal is to purchase a rental property, outsource most of its requirements, and then collect regular checks from satisfied customers.

Generally speaking, the former will need more generous loans. That’s because they may need to factor in the costs of the employees who will help them with management. They will most likely need to consider nonbank lenders, too. Most banks don’t understand large-portfolio investors. Many won’t even offer loans to any investors who own more than five properties.

It would be nearly impossible to build a large portfolio of Airbnb properties without taking on some form of property management.

For one thing, overseeing a large portfolio is often a full-time job in itself. The majority of investors have no spare time to go around to each and handle cleaning and maintenance every weekend.

Secondly, poor property management – or none at all – is a surefire way to attract unnecessary losses for an otherwise promising portfolio. This is especially true for Airbnb properties. The company makes it very clear that maintaining a “high overall rating” with guests is one of their basic requirements. So, if your property isn’t well-maintained, not only can you expect poor customer ratings – which will definitely hurt your income – you might even find that Airbnb takes your property off their site altogether.

Offering a well-maintained, well-stocked, and cleaned property isn’t just about keeping your occupancy rates up, either. Making the most of your Airbnb investment property loans is also about being able to charge the most for your properties.

That’s only possible when guests leave you great reviews, attracting further interest. By hiring a property management company/professional, you can rest assured that you receive nothing but glowing reviews and, eventually, the ability to raise your rates considerably.

Another big advantage of outsourcing the management of your Airbnb property is that you’re less limited in terms of where to buy. As every good property investor knows, it’s all about “location, location, location.” When you don’t need to pick a location nearby so you can handle all of the house’s upkeep, you can simply focus on the most promising neighborhoods.

Finding the best possible locations will require a bit of research, but it’s worth it before committing to Airbnb investment property loans.

There are three main options most property investors will use:

• The first is simply looking at the country’s top rental-property markets. These most likely reflect the desire for long-term rentals, not vacation homes, but as these locations also tend to coincide with healthy economies, they’ll most likely reflect good long-term investments, as well.
• Alternatively, you can look at the country’s most popular tourist cities. With millions of tourists flocking to these cities each year, it makes sense that they all need a place to stay. While you’ll need a bigger loan to acquire properties in these cities, you also won’t face the same risk of extended vacancies.
• Don’t forget about your own city and the surrounding area. As a local, you might have advantageous information about which areas are best suited for people on vacation. You can even use that information in your Airbnb properties’ profiles.

Obviously, if you’re interested in taking out multiple Airbnb investment property loans because you’re serious about growing your portfolio by leaps and bounds, more research will be necessary. Still, you’re better off clustering your properties in the same cities, as opposed to spreading them out all over the country. While diversification is just as important with properties as it is with stocks, it’s easier to oversee fewer management companies if you can limit them to fewer cities.

Once you have a list of cities that you are sure will make it easy to profit from your investments, you can begin considering the size of the mortgage you’ll need. This is another important consideration because, for what it would cost to buy an Airbnb rental property in NYC, you might be able to buy two in another area. While the former would mean fewer vacancies, the latter may make up for it in less overhead.

Are you interested in Airbnb investment property loans because you want to add to your already sizable portfolio?

Then you’re our ideal client.

As a nonbank lender, we can offer you as many loans as you want and a streamlined procedure, so you never miss an amazing opportunity. Contact us today to start the origination process right away.

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