For travellers and property owners across the world, Airbnb has become the go-to facilitator for short-term rental agreements. It allows property owners to turn their investment into a source of income, whilst also allowing guests all of the comfort and convenience of a home to stay in while travelling. However, for those that are looking to buy a home as a short-term rental property, there are many things that need to be handled first. This is where working with a mortgage broker can be invaluable, as they will assist and support you through the process of choosing and acquiring your Airbnb property.
While each case is different, and will require a strategy that is tailored to your specific situation, here are a few situations where working with a mortgage broker can assist you with acquiring your short term rental property.
Despite Airbnb becoming a viable source of income for hundreds of thousands of people in Australia alone, many lenders still refuse to accept Airbnb rental as a valid source of revenue. When working with a well-established mortgage broker, they will be able to help you find other possible ways to find funding, including creating a list of lenders that are known to approve these kinds of loans.
The moment that you start to consider making a purchase, especially if you’re hoping to buy in one of Australia’s more popular locations, you should speak to your mortgage broker about your current financial situation. This will allow them to assess you, consider your needs, and calculate both the required cost and your capacity for borrowing. This is to help you plan out your next moves, whilst also ensuring that you aren’t spending beyond your limits.
Remember to tell your mortgage broker all potentially-relevant information, such as discussing other properties you may already have a mortgage on. This will give your broker everything they need to get you the best possible rates.
Planning Out Viable Repayment Options
Lenders aren’t known for being very optimistic when deciding on loan repayments. This often leads to them offering higher interest rates by planning for the worst-case scenario based on your assessment rate. This can be avoided by working with a professional mortgage broker. A good broker will be able to connect you with specialised lenders that base their decisions on actual repayments, rather than your assessment rate.
Although all this may seem like small wins, your interest rate and its associated cost can be the deciding factor in you getting your loan and your property.
Choosing Your Area
With lenders being forced to change and adapt with a shifting real estate climate, many lenders will not approve loans in areas that are considered to be “high-density”. For those that are planning to purchase in a high-density suburb or an area that has seen a considerable amount of development and growth recently, it’s important that you speak with your mortgage broker. They will be able to provide information on how this affects the loaning process and your property, as well as find banks that are more likely to look at your chosen suburb favourably.
A lot of lenders in Australia will have certain rules and restrictions that most people aren’t aware of when it comes to loans. One issue that is of special significance to aspiring Airbnb property owners is that lenders often restrict loan approvals for units that contain less than 45-square meters of internal space. Airbnb renters often prefer these smaller dwellings as they require a smaller initial investment.
A mortgage broker will be able to point you in the right direction and help you find lenders that accept applications for these smaller properties. This can take a lot of the stress out of applying for loans, as it ensures that your application will be taken seriously by the lender.
The process of getting your Airbnb property is made so much simpler with help, so why stop there? At Cozy Hosting, we are there to help you through the rest of the short-term rental process. Working with an established Airbnb manager will help you to increase rental yields while ensuring that all of the paperwork and guest communication is handled with care and professionalism. Contact Cozy Hosting to list your property, and experience the Cozy difference.