Can You Use Airbnb Income on a 5 Unit Property?

Why five units changes the loan

I separate residential properties with 1 to 4 units from properties with five or more units because the financing programs change at that point. Many DSCR programs stop counting short term rental income at five units and rely on long term rent instead. I have programs that count Airbnb income on 5 to 9 unit investment properties in 37 states, subject to the property, local permits and program review.

I explain the financing on my 5 to 9 unit short term rental DSCR guide. I confirm the unit count and property classification before recommending a program. Small motel conversions are not included.

How I document the income

I ask for 12 months of platform or property manager statements on a refinance or an existing operation. I review the full year, including slower periods, rather than using the strongest month. I want to see the reporting period and how the income is recorded for the property.

On a purchase, I can use a projection report when rental history is not available. I apply the expense factor required by the program rather than treating the projected revenue as qualifying income without adjustment. I review the report and calculation with the property and program.

I explain the purchase-report approach in my DSCR loan for an Airbnb article.

What I check before you offer

I check zoning and local STR permits for each unit intended for short term rental use. I ask you to confirm city and county rules before making an offer, because a projection report does not establish permission to operate.

I also review the insurance quote, management plan and association rules. I need to know who handles bookings, cleaning, maintenance and guest turnover. I check any rental restrictions in the association documents before counting on the intended use.

A six unit cabin cluster or five unit beach building

If I review a six unit cabin cluster in the Smokies, I start with the unit count, permits and the full year of platform or manager statements. I look at how the cabins operate together and how the management plan covers each unit.

If I review a five unit beach building in Florida on a purchase without rental history, I can use a projection report. I check city and county STR rules for each unit, insurance and association restrictions before recommending the financing.

I am describing hypothetical scenarios, not properties I have financed or a promise of approval. I still review the property, local permits and program.

What to send me

• I need the property address or listing link and the unit count.
• I need to know whether this is a purchase or refinance.
• I ask for 12 months of platform or manager statements, or a projection report on a purchase.
• I need the zoning and STR permit information for each unit.
• I ask for an insurance quote and any association rental restrictions.
• I need a management plan and how title is held. In Montana, I close in an LLC only.

Send me the property

I explain the next steps in my 5 to 9 unit short term rental DSCR guide. Send me the property and I will tell you within one business day whether the short term income works. I review the property, local permits and program before moving forward.