MF STRs and NOI / CAP Property Valuation

[Shane Crockett]

Are there hard and fast rules around valuation math for STRs? Some like standard NOI and CAP, others believe it's a hybrid approach which also requires comps, others believe it's still just comps (which I personally dont agree with).

But regardless what I believe or have heard, I am curious what the community is seeing or hearing about how to value STRs, what investors are looking for from an STR perspective, formuals used, etc. Are single family STRs valued using NOI and CAP, or does it need to be a MF STR? Are investors looking for individual STRs of either flavor, or is the appetite for larger portfolios of multiple STR assets? I am eager to understand the perspective of others with more experience in this space, so anything is helpful and appreciated!

[Zach Edelman]

It is a risky idea to buy SFR STRs based on Cap rather than sales comps. If you are seeking financing, you risk getting burned on the appraisal as the appraiser will be valuating the SFR, a residential asset, based on sales comps of other SFRs, not how much the property can make as an STR.