Best Airbnb Loans - Features Comparisons
Check out the table below for a quick summary and comparison of lenders and their borrower requirements.
Company |
Min. Credit Score |
Min. Time in Business |
Min. Annual Revenue |
Loan Amount |
Interest Rate |
Biz2Credit
|
575 |
6 months |
$250,000 |
$25,000 - $6 million |
7.99%+ |
Credibly |
500 |
3 years |
$180,000 |
Up to $5 million |
9.99%+ |
Fundbox |
600 |
6 months |
$100,000 |
Up to $150,000 |
10.1%+ |
Fora Financial |
Not disclosed |
6 months |
$144,000 |
$5,000 - $750,000 |
Varies |
BlueVine |
600 |
6 months |
$120,000 |
$6,000 - $250,000 |
4.8%+ |
How to Use Airbnb Business loans?
Airbnb business loans can be used in so many different ways that you may not have even considered. Below, we highlight some ways that our experts suggest using these loans:
- Fix up an existing property: Make it Airbnb ready with furniture, kitchen gadgets, linens, new appliances, and bathroom basics.
- Furnish and accessorize: Buy furniture, home decor, and art work to spruce up your space.
- Turn empty space into an Airbnb rental: Fix up that neglected empty bedroom, that studio, or mother-in-law suite, and start making rental income from spaces you already have.
- Sub-lease your space: Rent out your space when you’re out of town and use the Airbnb business loan to paint, do any repairs, clean, and maintain the space. Make sure you get the landlord’s permission first.
- Use the loan to landscape: Add grass or pavers, build a sun deck, add a fire pit, or have a hot tub installed to give potential guests the amenities they’re looking for. Airbnbs that offer amenities typically rent more often and for higher prices than those without amenities.
- Purchase a new property:This new place is solely intended to use as an Airbnb rental. In this case, the loan will cover the majority of the cost of the property. This property could be any type of dwelling that permits Airbnb rentals, such as a condo, townhome, single family house, or a multi family building. You may purchase a property in an area that is popular for Airbnbs so you get the best return on your investment.
What To Consider Before Buying An Airbnb Property
Airbnb rentals have become globally popular, with tourists preferring them over hotels. Still, your success isn’t guaranteed. Here are a few things to consider before purchasing:
- Reputation: Airbnb’s success relies heavily on host involvement with guests. Online reviews can make or break your Airbnb business.
- Maintenance: Will you be able to handle the constant cleaning and maintenance of your property? Or do you have the resources to hire a property manager?
- Location: You might find a beautiful property, but if it’s not in the right location, you won’t have many bookings. Before purchasing an Airbnb property, do your homework. Check for amenities for tourists such as restaurants, entertainment, public transportation, and more.
- Legality & Taxes: Due to the popularity of Airbnb and pressure from the hotel industry, some cities have created burdensome regulations for short-term rental properties. Check with the municipality to learn about regulations, licensing, and tax requirements before investing in the property.
- Airbnb Rental Income: Airbnb income can vary from month to month. According to research, the average Airbnb host earns around $924 a month. Keep in mind that you will more likely earn a larger income in peak seasons than during the off-season. You will need to make provision for mortgage payments, maintenance fees, and other expenses during the off-seasons.
- Airbnb Occupancy: The number of nights your Airbnb is booked vs. the number of days available will give you an occupancy rate. A good rate depends on the real estate market, the time of year, and your listing position in the Airbnb market. The occupancy rate helps determine how successful your Airbnb will be.
- Capitalization Rate: The CAP rate is a metric used to measure investment return on your rental property. You can calculate this rate by dividing your Airbnb's net operating income by the current market value.
- FICO Score: This score will help lenders determine how likely you are to pay back a loan. A good FICO score is 670 and up. If your score is lower, don't let it deter you from investing in Airbnb since many lenders will still assist you even with a 500 credit score.
Conclusion
Airbnb is a popular vacation trend that doesn’t seem to be going away anytime soon. In order to capitalize on this growing market, you may need to obtain an Airbnb loan to help cover some of the associated costs. These loans can be used to help you remodel and furnish existing properties or purchase real estate to use as Airbnb rentals. Keep your budget in mind, think about location, accessibility, and how easy it will be to manage the property. And then when you choose a lender, keep in mind their rates, terms, fees, and qualifications to make sure you’re getting the loan that best fits you and your needs.