I have spoken with a friend who suggests forming an S Corporation whereby funneling all funds from the airbnb creating your own W-2. Will have a meeting with my accountant and see if this could work…Dan
But won’t they still want to see all tax returns associated with your income?
That is a bit too elaborate and it wouldn’t work because they will still want to see the income. If you want my advice then I will tell you how we do it. Feel free to PM me.
Your right…trying to figure this thing out…otherwise, i could be waiting tables back at Red Lion Pizza…
Hello there…yeah, your right. Much too elaborate. Anything you have, i’m all ears…
Did you private message him? Do you know how to do so on this forum?
You already quit your day job? LOL
Hmmm…i’m beginning to like the fake roommate scenario. Tell me more…i have more than fake conversations with myself all the time so this should come pretty naturally…
If you want to include any income stream, lenders want to see a 2 year history on this income, and want it shown on the tax returns. They want to see what you net out. It is catch 22 - you do long term rentals, they want the income to show in the tax returns. By that time, you would have made so much more on the airbnb income. Best of luck!
It does sound strict, but I have come to understand why. I was in the thick of the business in 2008 when they all crashed - so many lenders were offering loans with almost no documentation - and seeing folks with varying incomes default. Banks want to see the bottom line so that it makes sense, and short term rentals have not made sense in the past. It is sad to say, but the airbnb concept was to host people in your own home, and not to build a business empire. It is pretty sad that many folks could really use this income, and have no way to take advantage…
Thanks Portlandgirl…this leaves me guessing as to how all these small time real estate investors are leveraging their money…damn, guess i’ll end up hugging it out at a real estate seminar…
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Yes, i dont get it also. What is the connection?
I used to work in finance so I do understand how it works. If Airbnb is a large enough percentage of your income that you depend on it to make your mortgage payments; you probably won’t get the mortgage. Mortgage lenders like W2 income over 1099 income in all cases. Airbnb in particular is not a reliable source of income. If you get bad reviews; Airbnb can delist you. If the laws in your area change you can be limited or not allowed to host. These are only two of many scenarios where that income stream could dry up.
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This much i knew, since i went through mortgages few times. WHat i dont understand is how this particular family who has 2 steady jobs, and is quilaified without Airbnb, was rejected based on a fact that they are doing Airbnb.
Thats why i dont see the connection. Airbnb is by itself was not major sort of income for this couple.
I would assume that either they would not qualify without the Airbnb income or that the lender assumed that they had expenses that they didn’t disclose because otherwise why would they host.
During my modification process, I could not count any income from Air toward the total. If I wanted to count it, I would have to “reclassify” it.
We were only allowed to ‘count’ it after 2 years of Tax Returns…which we have bc I feel like we have been hosting since the dinosaurs walked the earth.
Other option, is present a LT ‘lease’ with a family member/friend…not the most ethical way to work around the restriction.
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interesting to see that Airbnb does cause an issue with some peoples mortgages. I had been starting to think I was imagining the difficulty …
I have 2 yrs of W-2 reported Air incomes ($30,000 each year reported) - and I’ve already made over $30K from AIR in 2016 at time of our mortgage REFI applications this August, all of it recorded of course in direct deposits into my bank account.
Regardless of 2 years W2 history AND my current year’s incomes, I’ve been denied by two different lenders because short term income does not apply / is not accepted by lenders as part of the overall incomes.
Would LOVE to hear the actual name of a bank / credit union lender here in the USA that actually HAS accepted Air income as part of the total qualifying income to refi… not looking for generic answers saying ‘try a local lender’ because those have all proven pointless. Instead, need an actual name of a specific institution:)
And for you folks who say "just stop AIR for a couple months during the application for REFI…"
you are either on crack or you’re very outdated.
Our AIR incomes and deposits are shown in bank statements and more and more lenders now ask for several months of history, not just the formerly-accepted two months (only) from yester-year. If, like me, you need to include the incomes from your AIR rental, it is increasingly hard to disguise the AIR income. Indeed, the best way is to make up phony leases and hoping / praying you get a month-to-month renter from AIR at exactly the right time of your application to still show continued and un-interrupted rental income stream…
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So glad I found this thread. We just did a construction loan for a new home, but we also own a building that primarily serves as 2-3 airbnb units.
We originally went with Wells Fargo to try to setup the new loan, but after leading us on for 4 months [2.5 of which were spent going back and forth w/ the underwriter] they finally told us they wouldn’t be able to include ANY of our Airbnb income and could only include rental income w/ a signed 12 month lease and proof of deposit and first month’s rent.
After that mess, we switched gears and went with Citizens Bank [not sure if they are nation wide or just in the North East] and found a loan originator who understood what short term rentals were [he himself rented units on Home Away], how they functioned, and assured us that they would allow that income to count towards our total annual income. He was correct and we were able to secure financing using that income.
I would highly recommend looking at your local and regional banks and being VERY upfront about Airbnb as a source of income — particularly if it’s a primary source. You’ll find a better fit for your financing and experience fewer snags along the way.
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:: making a note :: Citizen’s Bank, though I don’t think I will ever refinance again!