Airbnb Property Investor

How A Deal From Down Under Almost Went Sideways

The Situation

Greg B and Amy M were partners that split time between California and Sydney, Australia. Greg earned an engineering degree from the University of New South Wales in Sydney, Australia, while Amy was a tech executive at a major tech firm that specialized in engineering software. Greg eventually sold his engineering company in Australia, as he and Amy were keen to expand their real estate investments. In the years following, they built and sold 50 single-family residential properties in their native Australia.

As time passed, they decided to shift their investment strategy and focus on building new properties for short-term rentals, which could be marketed on Airbnb and other booking websites in the exploding short-term rental market. They soon realized that the United States held great potential for generating a healthy ROI from nightly or short-term rentals.

“Many of the markets we considered—including Australia—viewed Airbnb as a source of budget accommodations,” says Greg. “But we found that consumers in America would pay well for desirable properties.”

Having little experience in the United States, Greg and Amy did a deep dive into some data acquired from AirDNA. They looked for trends and patterns in the data, and eventually spotted what appeared to be a very attractive anomaly: Private lots inside Yosemite National Park that were available for new construction.

Greg and Amy’s short-term rental property in Yosemite

The Opportunity

“Yosemite was getting more than four million visitors a year,” says Greg. “But, other than campsites, there were only 380 residences that were available for short-term vacation rentals inside the park. There was undeniable potential.”

In 2019, Amy used her funds to buy five lots. However, their broker soon found the approvals and hurdles of building within the US National Park system to be something that most lenders did not welcome — with one exception. Patch Lending was intrigued by the team’s vision. The goal of building upscale single-family properties that would rent for $1,000+ a night seemed very attractive. 

A deal was struck to fund 70% of the estimated value of the first two properties, and Greg and Amy soon began building their dream projects. 

That’s when things changed. COVID hit during the early stages of the build, and the project was dealt a series of setbacks that no one could have predicted.

The contractor could not find enough workers to put together a construction crew. Greg was unable to travel from Australia to the United States. Tourism in the US came to a standstill, throwing their potential short-term ROI into question. To top it off, the US National Parks Services shut down many locations — including Yosemite.

The Challenge

That’s when things changed. COVID hit during the early stages of the build, and the project was dealt a series of setbacks that no one could have predicted. 

The contractor could not find enough workers to put together a construction crew. Greg was unable to travel from Australia to the United States. Tourism in the US came to a standstill, throwing their potential short-term ROI into question. To top it off, the US National Parks Services shut down many locations — including Yosemite.

Interior of Greg and Amy’s short-term rental property
We even had to find a new construction firm mid-project. But Patch was there for us. We worked out a refinance, which was a lifeline.

Greg B.

The Solution

Unable to move forward, and with a loan that had matured, Greg and Amy eventually found themselves facing the possibility of foreclosure. Many lenders might have called in the loan. But not Patch. 

“Things went sideways with COVID. Construction stalled, and our Construction Loan with Patch had matured. We were in technical default” says Greg. “We even had to find a new construction firm mid-project. But Patch was there for us. We worked out a refinance with Patch which was a lifeline.” “Patch worked with us, refinanced at a lower rate. Any lender could have taken advantage of the situation, but not Patch. They treated us with compassion and understood the unique situation”.

Patch Lending loan officer Marc Himmel believed in the property’s potential and worked diligently to renegotiate terms that would enable Greg and Amy to move forward. 

“When I first started speaking with Greg and Amy, I knew they were the kind of investors that I wanted to work with,” says Marc Himmel. “They were both foreign nationals, which was not an issue for us, especially since they had tons of prior experience building SFRs in Australia. They also had great liquidity and they were just such genuine people. They’re no longer just clients for me; I really feel like they’ve become good friends.” 

Interior of Greg and Amy’s short-term rental property

As COVID conditions eased, Greg and Amy were able to quickly get their projects back on track. One of the projects has since been completed, and the other two are close to completion.

“The first project which we refinanced is exceeding expectations. It is renting at over 80% occupancy at $1,000+ USD a night,” says Greg. “The next two should be completed within a few months. We have two additional duplex projects in the area that we want to start in August. We plan to work with Patch to obtain long-term funding for those as well.” 

With the success of their initial properties, Greg and Amy are now looking at further expanding their property portfolio in the broader Yosemite area as well as other US locations. And as they move forward, they do so knowing that they have Patch in their corner.

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Investor Profile

Greg B. and Amy M. 

Market:  Australia and US

Investment Strategy:  After initially building and selling homes, they decided to focus on new, upscale SFR and Duplex properties for the short-term rental market. 

Investment Goals: To continue to grow their portfolio by developing additional properties in the US, where they have found attractive ROI from short-term rentals.

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