Especially if the Air BNB owner is a first timer,
Meet Edward Brown
most banks will be very wary of lending to
borrowers looking to buy a house for Air BNB Edward Brown currently hosts
income. How does the new owner know how two radio shows, The Best of
much to charge? These and other questions will Investing and Sports Econ 101.
make banks turn down more often than approve He is also in the Investor
these types of loans. Relations department for Pacific
Private Money, a private real
If the buyer of an Air BNB house has experience estate lending company. Edward has published
and other rentals in their portfolio, the bank may many articles in various financial magazines as
be more inclined to take a closer look. Otherwise, well as been an expert on CNN, in addition to
the buyer of the Air BNB house will have to look appearing as an expert witness and consultant in
for alternative lenders. If the buyer/borrower puts cases involving investments and analysis of
a significant down payment, the alternative lender financial statements and tax returns
may be able to be convinced to make the loan
since this type of loan would be considered a non Edward Brown, Host
owner occupied [no consumer] loan and not have The Best of Investing on KDOW AM1220 on
as many restrictions in its lending practices due to Saturdays at noon
Dodd Frank, TRID, ATR, and other regulations. 21 Pepper Way
The alternative lender is more willing to look at San Rafael, CA 94901
what can be done with the house upon a 4152990330
foreclosure. Can the property be sold easily to an [email protected]
owner/user? Can it be rented to a normal tenant
lease? Most likely, the alternative lender will not
look at keeping the house [upon foreclosure] as
an Air BNB; that is a business rather than a rental
and in need of more management.
The prospective buyer of an Air BNB should look
at what a typical lease would look like should the
Air BNB model not work for any number of
reasons previously mentioned. If the typical lease
income is too far below what is prudent from the
standpoint of NOI, the buyer may decide to
choose a different property to Air BNB if that
model is so desired.
17