How much are dozens of 5-star reviews worth???

Question

Hey, I’m considering buying a specific property that is being run currently as an STR. The Airbnb and VRBO listings have dozens of 5-star reviews and very high ratings. As part of my offer, I requested that they transfer those listings to me at closing. When the sellers saw that request, they bumped up their asking price significantly. So I ask you this: what is the monetary value of buying great Airbnb and VRBO listings? How much extra would you pay for a house IF it comes with stellar Airbnb and VRBO listings? These listings should significantly increase first year revenue, right? I mean, you should be able to get a lot of bookings from Day 1 compared to creating a listing from scratch. So seems like there’s quite a bit of value in buying these listings, even at a high price tag? Like, a property that earns $50k per year might only earn $30k in year 1 if you have to delete and recreate the Airbnb and VRBO listings, right? In that case, the online listings are essentially worth $20k, right?

Avery Carl · Answer

It’s not possible to transfer Airbnb and VRBO listings between owners. So that’s out from the get go. You’re going to have to start fresh either way with new listings. But to answer your question: reviews have no bearing on appraised real estate value. Hope this helps!

Paul Sandhu · Answer

I'd withdraw the initial offer. Ef 'em.

Avery Carl · Answer

I see your point @Ethan Cooke, but neither personal property (furniture) nor reviews have anything to do with the appraised value of a property. I do hundreds of furnished STR transactions a year, and the furniture must be put on a separate bill of sale, as lenders cannot lend on, and appraisers cannot appraise, that which is not real estate. The adding as a co-host thing also might not be a great idea because Airbnb and VRBO accounts are tied to bank accounts and tax ID's. VRBO has never allowed cohosting. Even if you did this on Airbnb you'd be stuck with some guy you bought a property from one time who has access to your entire business on Airbnb. I could be wrong about that, but that's definitely not something I'd do. I definitely agree that buyers may get more excited and be willing to pay more if they are able to obtain all these things, but the only instance in which that makes a difference if it's a cash deal with no appraisal, or unless the buyer was willing to pay cash above the appraised value. So if you have the extra in cash, you'd have to decide if it's worth it to throw it down. That will depend on the market. In a true vacation rental market where the economy relies on tourism, you wouldn't need to. You'll get booked quickly even as a new property. In a major metropolitan area, it's a different story and it might be worth throwing the extra cash at it. My point in all this if you're trying to finance the extra money for the reviews, you might hit snags.

Ethan Cooke · Answer

@Mark Miles - I think the best way to "transfer" a listing is to keep the original owner on the listing and have them add you as a Co-Host. Put this in the contract. High AirBnB/VRBO ratings and Superhost status definitely have monetary value along with the furniture, housewares and especially the time and money you save in setting up the place. I run a furnished rental business in the SF Bay Area with 20 units. If I were buying a “turnkey” 3BR/2BA AirBnB home in this area, it would bring in $6K a month in furnished rental revenue immediately. I would be happy to pay an extra $18K (3 months of AirBnB revenues) for the home, plus the value of the used furniture and housewares. And I would pay another 2 months of revenue if if it was my first furnished rental and the owners had very good systems and processes in place (communication templates, pricing guidelines, furniture and housewares list, cleaners, maintenance folks, etc.)

Michael Baum · Answer

@Mark Miles, what @Avery Carl said. Also, if the place is popular, folks will remember it and see it listed again. That should offset some of the hit. You are going to have to keep up that level of service that people expect. I would ding them for even trying to increase the price. 10k lower than your previous offer. :)

Caroline C. · Answer

@Mark Miles It is worth paying something extra for a unit that is completely ready to go - furnished properly and has all the right supplies in place, since that can be costly when you start a STR from scratch. It is not worth paying extra for the reviews since they can't be moved over. When I bought my first unit, it had STR history that could not be moved over, so for the first 6 months, I simply put a link in my listing to the old inactive listing so that people could read the reviews under the prior owner.

Donald Robers · Answer

@Mark MilesAs a customer of vacation STRs I would suggest that you put all of your funds and effort into improving upon the performance of the previous hosts rather than ride on their reputation. By upping the level of communication, amenities and follow through for your guests you will earn your own rating, and do it in a manner that gives you long term benefit instead of a mere initial bump.

Ethan Cooke · Answer

@Avery Carl - Yes, there are a few issues here. One is appraised value, and the other is business value. I agree 100% that there’s no change in appraised value if a place comes fully furnished with 5-star AirBNB reviews. And you’re right that you would need to really trust anyone who you Co-host with on AirBnB. I work with 3 different co-hosts, and it’s a great arrangement. Too bad it’s not offered yet on VRBO! From a business standpoint, there’s real value to saving a few weeks of planning and thousands of dollars on furniture and set-up by buying a proven turnkey AirBnB. Per @Meir Greenblatt, sounds like you can transfer an AirBNB listing to a new owner, which is definitely a better solution than my co-hosting idea. @Mark Miles - Ultimately if the sellers do not want to transfer the furnished rental listings to you, you can re-create a terrific furnished rental with great reviews in a few months. Good luck!

Meir Greenblatt · Answer

You can transfer Airbnb listings by changing the name on the listing and providing you with the check in info. There is only a small difference between 10 reviews and 100 reviews it's not worth $20k! Some times its better to start fresh because Airbnb will promote new listings in the beginning, there are ways (that I will not say here because it's probably not an approved way) that you can get 10 reviews once you open the new listings. Once the owner of the property's I managed tried selling the whole business as a turn key to an investor, appraised value was $140k, and he he wanted $260k . The investor was not able to secure financing so he just went and got a SFR fixed it up, and opened his own place he probably put around $110k in to it amd 2-4 month to get on track. I really like the YouTube channel "airbnb automated " it has a lot of good tips...

Account Closed · Answer

Don't pay a premium for that, just acquire the property.