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Air Bnb Income Used For Loans

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J Grant

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https://www.housingwire.com/article...nance-mortgage-apps?eid=387508289&bid=1998925

Risky imo....anyone else? What proof will they want of income and what if air bnb clashes with res zoning laws...but who cares, Quicken is very invested in technology, Fannie wants to be cutting edge etc...only thing is, when properties are over valued and loans go into default later, nothing hi tech in the pain and $ losses...
 

J Grant

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Can't wait to see the creative "income statements " from air bnb hosts...for inflated value appraisals or evaluations based in part on these income statements- figures Quicken Loans is in there- quick, close it with a Rocket mortgage before anybody looks too close at the income statement...and Fannie is enabling this?

I already see an uptick i REO work and it's early in the game with the roll out of more risky products and the roll back of appraisal requirements yet to come.
 

Mr Rex

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Is it really that much different than short term rentals in resort areas or similar? Do you rely on income statements or actual market rents and GIM or GRM?
 

J Grant

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Is it really that much different than short term rentals in resort areas or similar? Do you rely on income statements or actual market rents and GIM or GRM?

Right now many GSE lenders don't accept short term rentals in the terms of they do not lend on condo hotels or condos with over a certain % of units rented.

If an appraiser is using short term rentals and lender wants to accept that in resort areas rather than annual leases, then ar bnb may or may not be different-

air bnb is questionable re residential zoning in a number of areas with a change of enforcement or zoning able to shut it down...it might be more a real income source in NYC or highly sought after resort areas, elsewhere I don't know- I looked it up in FL in my area and many of the condo/house owners looked desperate, offering to rent a room for as little as $30 or $40 a night- like really, how much do you make doing that...and as article says, it certainly removes what is supposed to be residential RE into a commercial/hotel/bed breakfast category...my view others may have different views.

How would they be able to track what is a legit income statement and what is creative- it's not like there are annual leases to review, it's all short term. am shore Quicken will come up with some instant fast "tech" way to enter the income......
 

TRESinc

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I already see an uptick i REO work and it's early in the game with the roll out of more risky products and the roll back of appraisal requirements yet to come.

can't say i have seen the same thing. while i am seeing more REO work the houses have all been in shadow inventory for 2+ years. none of the REO work i have done in the last 12 months has been for anything recently becoming REO.
 

J Grant

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https://www.highya.com/rocket-mortgage-reviews

Read the reviews...Rocket Mortgage approves loans in 8 minutes, with air bnb income qualifying...will it take a grand total of 9 minutes? Of course more takes place after initial approval but the game plan is to close as fast as possible..Rush rush rush before anyone including UW looks too close, pressure for a fast appraisal or better yet no appraisal...

Just my opinion, this income from airborne to qualify for refinance has the air of teaser rates high risk lending practices that flourished pre crash- guess they have to keep the loans coming and after the stable round of homeowner refinances are used up only way to generate more volume, especially if interest rates rise is to offer exotic and "creative" aka risky products. Which of course invites the speculators and fraudsters in for the ride, along with regular people desperate for cash.
 

hastalavista

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Is it really that much different than short term rentals in resort areas or similar? Do you rely on income statements or actual market rents and GIM or GRM?

From what I know (which isn't a lot on this), it could be a lot different.
It depends how the loan is structured. Air BnB has two value components: The underlying value of the real estate (land + improvements) and then the BEV value (FF&E/going-concern).
If lenders want to structure the loan based on the underlying real estate, and use the income as a secondary consideration, then that would make life easy for most residential real estate appraisers.
If, however, lenders want to know what the income-producing ability of the property as an Air BnB is, that is going to get complicated.

I think this presents a niche-market potential for appraisers. But, depending on the lending program, these could be relatively complex assignments (make a 1-off fourplex om the land of SFRs look easy). And, the relatively simple income-approach techniques that are commonly used for residential (1-4) properties may not work for these properties.

Risky imo....anyone else?

Risk is relative to how well it can be identified. With the proper valuation analysis, this will be no more riskier than any other loan (on the collateral side).
 

J Grant

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Florida
Imo ( and I don't know a lot either but from what I do know), the increased risk with air bnb is 1) the quality of proof of these income statements...seems easy to create one...and 2) the volatility of air bnb, if a community or zoning board or condo crack down on it, it;s gone , as well as dependent on how committed the "host " is to the PITA of running an aribnb ... vs more stable duplexes or regular year round or seasonal rentals or even condo hotels / ..jmo, it feels "hinky", the way a lot of the lending products and activity during the crazy part of boom felt- but I could be overly cautious.

My vie is if a lender or bank lender wants to loan on properties using air bnb income to qualify, go for it, but why should taxpayer backed and fannie if acting as GSE entity be insuring/funding them....

What next, 3% down FHA with air bnb income and flipper profit potential rolled into the value? Why not? Why not to a whole bunch of potential creative lending lol
 

hastalavista

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Imo ( and I don't know a lot either but from what I do know), the increased risk with air bnb is 1) the quality of proof of these income statements...seems might easy to create one...and 2) the volatility of air bnb, if a community or zoning board or condo etc crack down on it, it;s gone vs more stable zoned duplexes or regular year round or seasonal rentals or even condo hotels (I never understood why lenders often won't lend on condo hotels )...jmo, it feels "hinky", the way a lot of the lending products and activity at the bad end of the boom felt- but I could be overly cautious.

IF a lender wants to loan on properties using air bnb income to qualify, go for it, but why should taxpayer backed and fannie if acting as GSE entity be involved...

Would you feel better if they were made under a commercial loan standard?

Warning! This is a loaded question. :cool:
Who says that these loans will be pooled with traditional loans and who says the underwriting guidelines will not be significantly different from an SFR?
 

George Hatch

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The value of the property to the typical buyer is best demonstrated by the actions of the buyers who buy those properties.

Just because you can forecast an income stream attributable to a solar install doesn't mean the typical buyers for such properties are responding to it, or responding to it exactly the same way that buyers 1000 miles away are responding to it.

Even in an income analysis, you need to solve for more than just the income itself

Value = income x rate
 
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