Finance Your STR Investment with Host Financial (EP 315)

Finance Your STR Investment with Host Financial (EP 315)

Finance Your STR Investment with Host Financial


Do you have dreams of investing in a short-term rental (STR) property but don’t know your financing options? Opportunities beyond the traditional bank loan DO exist to help investors like you start building or expand your portfolio of vacation rentals.

Adam Windham is the Cofounder and COO of Host Financial, a firm that provides alternative financing and creative capital solutions for STR investors. Today, Adam joins me to discuss the pros and cons of using a conventional mortgage or hard money loan to finance a STR investment and explain what differentiates Host Financial from your other financing options.

Adam shares the three factors that determine the interest rate on a Host Financial loan and walks us through the process of securing a loan with his team. Listen in for insight on how Host Financial hedges against potential regulations and learn how to determine the best market for your next STR investment!

Topics Covered

The pros and cons of using a conventional bank loan

  • Loan size based on borrower’s income
  • Borrowing power eventually tapped out
  • Challenge for self-employed investors

The pros and cons of using a hard money loan

  • Short-term (one to three years)
  • Interest rates vary wildly from 7%-12%

What differentiates Host Financial from the other options

  • Qualify deals based on property’s income potential
  • All loans fully amortizing over 30 years

Where investors can buy property through Host Financial

  • Properties must be in US at present (plans to expand)
  • Borrower does not have to be US citizen

The three factors that determine interest rate

  1. Borrower FICO or credit score
  2. Level of income property likely to generate
  3. Loan size (maximum approx. $2.5M)

Host Financial’s ability to make loans to entities

  • Keeps personal borrowing power separate
  • Owner of LLC remains personal guarantor

How to provide income projections for a property

  • Experience as operator in given market
  • AirDNA report

The process of securing a loan from Host Financial

  1. Enter specs of deal on Host Financial website
  2. Receive term sheet of options within 48 hours
  3. Complete commercial loan application
  4. Submit underwriting documents
  5. Appraisal and close (within 30 days)

How Host Financial thinks hedges against regulations

  • Consider market-rate value for long term rental
  • LTVs increases if cashflow positive both ways

The trends Adam is seeing based on loan requests

  • Seasoned investors looking for multifamily financing
  • Growth in invisible service boutique hotel model
  • BRR method and master lease with option to buy

How to determine the best markets for STR investments

  • High gross income relative to low asset price
  • Pigeon Forge/Gatlinburg, TN + Poconos in PA

Adam’s advice for aspiring STR property investors

  • Create folder in shared drive for underwriting docs
  • Do due diligence (demand, regulatory risk, etc.)

Connect with Adam

Host Financial

Email adam@hostfinancial.com

Resources

AirDNA

AirDNA Blog on Best Cities for STR

Email jasper@getpaidforyourpad.com

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