How to Finance an Airbnb

Take a look at LoanBud to Finance Your Airbnb!

You can try several ways to start your own Airbnb. Financing an Airbnb property can be easier than many investors realize. The opportunity may already be there in a room, a camper, a docked boat or a pool house you currently own. If looking to purchase, it may take less initial capital to finance than you may think. With travel back in full swing and people ready to explore, starting your own Airbnb is an investment idea with a lot of potential. 

How to Finance an Airbnb Property

Investment properties can be tricky to secure conventional financing for. Many investment property loans require higher down payments and higher interest rates. While there are some options such as a home equity loan or purchasing a multi-family home and living in it, lenders like LoanBud have great alternative financing. 

Unlike many banks, LoanBud allows investors to qualify based on the projected income from the rental property. There are no tax returns required, and the down payment can be as little as 15%. Even better — if starting an Airbnb really works out for you, LoanBud doesn’t set a limit to the number of mortgages you can have for investment properties. 

Airbnb is a great way to make passive income. Go ahead and invest, knowing that it’s easy to get started and there’s an opportunity to progress into multiple investment properties. 

How to Start Your own Airbnb — A Step-by-Step Guide

Step 1: Decide what type of property to use as an Airbnb

Looking for a condo by the beach, a lake house bungalow or a loft in the city? Narrow down what area would be best to invest in and what type of housing you want to invest in. Something with little upkeep is ideal, and knowledge of the area is helpful to determine if an Airbnb would succeed there. 

Remember that an Airbnb needs to be rented out consistently to keep the cash flow coming, and the lender will need to see that the potential Airbnb income makes sense to qualify the loan. 

Step 2: Obtain financing

Once you have narrowed down your area and found a potential investment property, work with a lender and seek the best plan for how to finance your Airbnb. Make sure your FICO score is at least 620 or higher and you have at least 15% to put down on the property — the down payment can be a gift. 

LoanBud is an excellent lending option for investment properties, with many investor-focused lending programs available. It understands real estate investors and has a variety of options to get your loan approved and closed fast so you can start earning rental income quickly. 

Step 3: Furnish and decorate

Now that you have secured financing for your Airbnb rental property and closed on iy, the fun part can begin. An Airbnb is a home away from home — you’ll do better with rentals if you can capture that quality. Fix up the property if needed, pick a theme to decorate and purchase the furnishings. 

Besides regular necessities like furniture, make sure you have towels, sheets, dishes, pots and pans, dish soap and a coffee maker available to your guests. Make this a place that people are excited to book — your investment depends on it. 

Step 4: Determine the logistics

After each stay, will you be cleaning the property or will you hire a company? How much will you charge for holiday weekends? Any weeks you want to block out for yourself? Will you have a property manager, or will you do it all? 

Line up your team before your listing goes live, or be ready to take care of it yourself, as many Airbnb hosts do. Have a clear plan to achieve the most success.

Step 5: Market your Airbnb

Sign up on the Airbnb website and create your listing. Hire a photographer or take the pictures yourself, but be sure to impress your potential renters. 

What made you want to invest in this property? Is it the lake views, the beach access or the proximity to a national landmark? Whatever it is, talk it up in the listing and get great shots of it to excite travelers. 

Share your listing on social media, with friends, on your blog and in vacation rental forums. The more you market your property, the more bookings you’ll get and the more cash you’ll find in your pocket. 

How Much Money Does it Take to Invest in an Airbnb?

If you use a mortgage lender that caters to real estate investors like LoanBud, you can start investing with as little as 15% down. Depending on your budget and your area, that will determine how much that 15% truly amounts to. 

Don’t be afraid to start small. Get some experience with your first Airbnb, make some money and use that for the downpayment on your next investment. There’s no limit to the number of mortgages for investment properties you can have with LoanBud. 

Just keep in mind that you’ll incur other startup costs for a successful Airbnb. These properties are usually offered fully furnished and nicely decorated. If you decide on a budget and stick to it, even this can be done minimally and still have style and functionality. You can hit yard sales for furniture and decor or use things you may already have. 

Strangers will be using these items, so spending less on bigger items is ideal, as visitors may not handle your furnishings the same way you would and things do get broken. 

Frequently Asked Questions