1007 and Short Term Rental

[J Grant]

Oddly, the 216 form income and expense statement used to be required in STF investment properties and in 1025 form small income and has been dropped from required

Either they do not want to know -- the GRM supports the price or value, but the cash flow is negative!
(or the UW does it - idk)

I personally think the GRM is ridiculous because all it does is circle back and support a price or value in most cases - but the property can still be a money loser wrt the income and expense or break even,

as far as Airbnb income, a borrower can still claim it as income even if the property is valued using long-term rental income. How the UW reconcles that, or if they need , I have no idea since i am not on the lending side of thing wrt qualifying a borrower.

 

[Surf Cat]

Typically, the Lender wants the 1007 to establish income to qualify the borrower. You shouldn't use the 1007 to establish the STR income for valuation purposes. Instead, write comments.

The only thing I've done in regards to commentary when I run into properties being utilized as STR's, is to check the tenant box for occupancy and state in the report "it appears the subject property is being utilized as a short-term rental."

When the borrower starts making statements that they make this much a night or that much a month.... I don't touch that with a 10-ft pole in regards to including it in the report.

 

[J Grant]

The only thing I've done in regards to commentary when I run into properties being utilized as STR's, is to check the tenant box for occupancy and state in the report "it appears the subject property is being utilized as a short-term rental."

When the borrower starts making statements that they make this much a night or that much a month.... I don't touch that with a 10-ft pole in regards to including it in the report.

If I am on-site with a borrower or owner and they make such statements, I politely mention that we use longer-term leases as the market rent.