Airbnb-like Condos Can Get Financing
Daily rentals have always been an issue in the mortgage biz.
Our friends at the big mortgage whales Freddie Mac and Fannie Mae (hereinafter F and F)are happy to help borrowers buy properties that are single family, 2–4 residential, PUDs (also known a townhouses- that’s a whole different post) and condos. But condos, as long as you don’t rent it out daily.
Yes, there are condos that get F and F money AND have airbnbs. The difference is that the condo docs allow for rentals, but require a minimum term of (usually) 6 months.
How are people getting around it? That’s a case-by-case thing.
Since F and F won’t finance them, they have basically been impossible to finance unless there is a loan shark or local, tiny bank that portfolioed. But now, the secondary mortgage market has (slowly) put out money to lend to daily tenancy condos.
You need to do it as an investment property( not owner or even 2nd home because rules are harder), you’ll need to put at least 25% down and pay a rate somewhere in the 5’s or 6’s depending on the day.
WTF? Why do F and F not allow people to get better rates when they actually getting more income from their property than another condo owner that only allows 6 month minimum? You have to do the numbers to see if it is worth it or not too.
The daily rate times even 20 days a month is higher than a monthly payment in most cases. Even after doing the cleanup and bed changes, it’s better. Why can’t they do a program for investors with a little bit of extra rate? Risk and the inability to sell on the secondary market. I say bull.
You were able to sell 100%, no-doc option ARMs (yes, bad product) but you can’t sell places with better income? This is part of the mortgage finance problem that still make good deals think they are bad.
Thanks to the lenders that do do these. They are stepping up and maybe will be able to convince F and F to do and get better rates. In the meantime, you may be able to get a better deal on a daily fee allowable condo than others because the financing is hard. Then, after you get in, help to change the rules so your value goes up!