To Airbnb Or Not To Airbnb...

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

To Airbnb Or Not To Airbnb... anybody even asking the question?  Shall we then conjure The Bard to determine not whether renting out some or all of your home(s) through Airbnb or VRBO is a good idea itself, but once done is done, to know how thee mortgage lenders may view thine income?  Whilst the "collaborative consumption" economy may be in full, progressive and dynamic bloom, a rose by any other name,  like the mortgage industry for example, can be quite slow to see the light.  True, our dagger may well be perceived dull held alongside the cutting edge of the Uber-net.

So to venture forth in our quest to interpret and understand this new rental income wrinkle, we shall see that thus far, nothing is either good or bad, but that our thinking makes it so...


"I Like This Place and Willingly Could Waste My Time in It"

Shall we compare three in another way?  Let's first acknowledge that residential mortgage lending has 

but these occupancy statuses:

  1. Primary home.  Wherefore thou art.  Your utility bills and tax returns (usually) forward to this address.  This property is close to (or is) your place of work.  Rental agreements are uncommon unless we have a legal multi-unit dwelling or an accessory unit.
  2. Second or "vacation" home.  A "reasonable" distance from your primary home.  Available for your year-round occupancy.  No rental agreements permitted (though the IRS would differ on this point).
  3. Investment or "rental" property.  Income generating property and/or anything other than your primary or vacation home.


"The Common Curse of Mankind - Folly and Ignorance"

A lender will most often determine a borrower uses Airbnb and VRBO in two ways; deposits on bank statements and personal tax returns.  Even if seemingly insignificant, in my mind's eye I can envision several scenarios where this may let slip the dogs of war:

  • Attempting to qualify with rental income from a primary home.  If you rent part of your primary home, no matter how spacious and/or otherwise unused, and your primary home is legally classified as a single family residence (SFR), you will find that most rental income is not considered in your 
    qualification.  Remember, you cannot cross two occupancy types, so if you live in a home, it is, by definition, not an income generating property.  Unfortunately this holds true even when you have a "1+" or "in-law" unit.  One is one.
  • Second home refinances.  Be warned that if refinancing or purchasing a second home and tax returns and bank statements show all sorts of rental agreements, this could prompt a healthy degree of skepticism on the lender's part.  

  • In lieu of lease agreements.  The lending world loves stability.  If you do not have enforceable leases on any rental properties, but favor online arrangements to derive income, be prepared to provide a two-year history of income history for the property.  Even here, without a "forward" lease in place, it may be difficult convincing an underwriter to qualify rental income.  Sort of our version of "past performance is no guarantee of future results."
  • Condotels.  If you own a condominium in a resort area, be sensitive to the fact that the entire complex does not give the appearance of a "condotel."  The government sponsored entity, Fannie Mae, has specific guidelines on condotels and their allowability for financing.  If all owners are Airbnb'ing their condos, bnb'eware...


"Brevity is the Soul of Wit"

These new online rental services join the ranks of a changing economy where the tech-savvy end-user
will eschew a taxi in favor of Uber, or procure content from a source that produces none of the same (Facebook).  And generally, if you use Airbnb as most will likely use it, you should expect no issues with your mortgage application on either a purchase or refinance.  Where the use gets heavier, more involved and more relied upon, however, realize that it may rub up against traditional lending guidelines that have not yet made specific allowances and exceptions.  Until our industry adjusts, know that I am a resource on this matter should you have any questions.


"Have more than thou showest, speak less than thou knowest, lend less than thou owest,"


Rob Spinosa
Executive Loan Advisor
NMLS: 22343 CalBRE: 01297944
Cell: 415-367-5959 Fax: 415-366-1590 
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941




RPM Mortgage, Inc. – NMLS#9472 – Licensed by the Department of Business Oversight under the Residential Mortgage Lending Act. Equal Housing Opportunity.




Comments (82)

Keith Strawn (Ballenger Realty) - Beaufort, SC

Your ode to othe Bard was nicely done, Rob.

Jul 31, 2015 11:31 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Rob....thou art a poet!

As far as Airbnb and the other online rental sites, they can be wonderful....for investment properties. In Anaheim for instance (where I specialize in vacation rental properties) can make a nice profit. One example:

Bought a home for $495,000 and used it as a vacation rental near Disneyland. Netted $80k-ish/year for 1 1/2 years. Sold at $765,000 1 1/2 years later (compared to comparable homes not documented as a vacation rental). Wow....what a great investment.

Jul 31, 2015 11:51 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA

Anyone who is considering continuing to live in the home and rent out rooms needs to understand the "innkeeper" rules of their state - their residents may not be tenants per their state landlord tenant laws, but may actually be lodgers who do not have the same rights as tenants - when and how rent is paid is usually a key element of this type of scenario!

Jul 31, 2015 12:55 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Rob - A creative post with something important to consider with regards to Air BnB or VRBO though is this different from the weekly rentals we do at the beach?

Jul 31, 2015 04:27 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Rob give me the Four Season or the Ritz Carlton any day, I know what I am getting pampered life style for the time I spend there....Endre

Jul 31, 2015 05:18 PM
Jacy Bowers
Cherry Creek Properties - Westminster, CO
"Working at the Speed of YOU!'

Very clever post. So glad you have addressed this. I had my first clients this past weekend, that actually had Airbnb on their specifics list for purchasing a property. They specifically wanted an extra room/space just to be able to do Airbnb. Power to them, not my thing, but it's out there and it's good that we're having discussions on it. The lender won't be knowing about it though ;)Thanks for a great post!

Aug 01, 2015 01:26 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Very well done!  Love your separation of primary, secondary and possible Airbnb properties.  Most folks on a whim make decisions to rent out their home without all the facts!  I e-mailed the lister of an BnB in Florida property and was directed to his company site to contact him there.  Once there, he e-mailed me back stating to check out his VRBO listing, seeming to show it as legitimate.  He then asked for 50% down up front for next summer's vaca, not through AirBnB.  Can you say scam!  I've read of the other scams, folks in the UK doing similiar things and now in the US!

Aug 01, 2015 01:30 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Great post! I'm using this to educate my clients with a re-post. I think you raised some great points and questions. So many folks dive into the hype and forget the fact...and consequences of their lack of due diligence. Well done.

Aug 01, 2015 01:52 AM
Greg Mona
eXp Realty - Scottsdale, AZ
Professional Real Estate Representation for YOU!

Rob Spinosa Great and clever post, Rob!  I learned some new things after reading it, which I always appreciate.  I recall when the Super Bowl was here this past February and folks were thinking of renting their homes here in Scottsdale for $10,000 or more for  the week.  There is a LOT more to it than meets the eye, and in many of the HOA's here there are minimal rental length time periods and a maximum of different people you can rent to in a year.  It is all spelled out in the CC&R's for their particular HOA, but since most people don't like to read they plow ahead unaware of any of this.

Aug 01, 2015 02:25 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Interesting post, yet too complicated for me to comprehend. 

Aug 01, 2015 05:37 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

I know lots of homeowner who are renting out to make ends meet. I even know some folks who are renting an apartment and renting it out via Airbnb. Wonder how the landlord will feel about that?

Aug 01, 2015 12:13 PM
Thomas F. Scanlon
Borgida & Company P. C., CPA's - Manchester, CT

Rob Spinosa - Well done. Many folks get attracted to what looks like easy money. BTW I would like to see the alleged market value of the privately held companies listed above.



Aug 02, 2015 09:41 AM
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

As in so many other areas of life, technology changes much faster than the laws/guidelines can keep up with.

Aug 02, 2015 11:47 PM
Bob Bloom
Cuzitmatters - Vancouver, WA
Agent Mentor & Coach

Was that "bed bugs" you say???? Hmmmm, might not make much extra money fo you have to feed the bed bugs too...

Aug 05, 2015 03:59 PM
Janice Zaltman
United Realty Group - Boca Raton, FL
South Florida Residential Real Estate

Thanks Rob. Clients who have purchased a condo/hotel have told me that they are  making significantly more income with Air BNB than with the in house vendor. They also use a Realtor to manage the property. It is a win/win for them. Heard that in New York,  it might be banned as who wants to start having lots of transient visitors in your apartment building. 

Aug 05, 2015 09:15 PM
Karen Luke
South Metro Property Management, LLC - McDonough, GA
Henry County Real Estate

Its only a matter of time before horror stories about air bnb hit the headlines like uber stories and craigslist stories. Local governments will begin banning. 

Aug 06, 2015 09:59 PM
Brandon Jordan
ERA American Real Estate - Crestview, FL

 Tiny Houses



Jan 30, 2016 07:52 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

This has become a hot topic in San Diego. The city wants their piece, just like hotel taxes! 

Apr 01, 2016 09:34 AM
Winston Heverly
Winston Realty, Inc. - Atlantis, FL

A very helpful post, Im glad I came across it in the AR's data base.

Aug 09, 2016 11:28 AM
Lynn B. Friedman CRS Atlanta, GA 404-939-2727
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Rob Spinosa 
Always something to learn when reading your posts! Cannot count the number of times I have told people that Primary Home Loans are for PRIMARY homes only ...
All the best - Lynn

Feb 27, 2017 08:06 AM