Three Reasons Why Airbnb Should Offer Hosts Mortgage Refis

Airbnb is valued at $25.5 Billion according to WSJ's Stock Tracker.

That means the startup unicorn is more valuable then Marriott and Hilton.

Airbnb has an awesome product (I'm writing this from an Airbnb in Oakland, CA, right now).

I've recently read a few articles that shed some light on a few growing pains and where some limiting factors may come in to the picture.

• Anyone having issues refinancing their Airbnb?
• Airbnb income: How it can mess with your mortgage refi
  
• Being an Airbnb Host Could Raise Your Interest Rate

Just read through the host comments and you'll see consistent refi issues.

What if Airbnb decided to offer financing options to hosts?

Here's three reasons why they should:

1. They already have a relationship with the hosts: and it’s probably way better than the relationship the hosts have with their bank. They've built a brand around trust in the community, communicate with them more often and truly understand their value. It's core to them. It could be a natural switch to go from market-maker to all-in-one platform. In short, Hosts would trust Airbnb to not screw them over.

2. They have all the data: about which properties rent the best in what area, the rates they rent at (cashflow), credit-worthiness tied to their ratings (25 ratings of 5+ means it’s an exceptional borrower, for instance). And much, much more. I actually think that their underwriting analysis metrics could be more accurate than traditional lending structures. Social Finance has proven that.

3. It would be good for the network. Hosts aren't able to keep an Airbnb operation going without funding. Airbnb wants more listings, hence their growth will be limited unless they do something about it.

There are many reasons why they won't do this: It's not a core competency and the business is different.

My argument is that it's not much of a change from a business standpoint to flip a funding switch. The challenges I see are mostly regulatory and compliance driven.

Current options from traditional funding structures are limiting and that probably won't change anytime soon.

There is an opportunity for an enlightened and well-positioned company to meet market demands (this goes for Tiny Homes too, which is another market that banks are scared to death of).

Banks think they don’t need the business. It's myopic in my view, but having worked for a Bank for 7-years I know: they don't understand it and mostly they don't care enough.

Banks are undervaluing the asset because they don't feel they can rely on the cashflow, they're scared of insurance and taxes and other legalities; and there's enough business out there for them that they don't need to try and understand it.

But the plethora of market refinance options won't last forever.

The most likely scenario (or at least fastest) if Airbnb were to get into this market, would be to partner with an established banking partner. It would get their foot in the door and they can leverage the partner's banking charter.

We'll see, maybe they're already doing this, maybe they never will. I know for me, if I ever decided to become an Airbnb host then I would be looking for an enlightened lender - and those are unicorns in a different sense.