Determining market value of vacation rental? $6200 income in Nov

[Jack Tucker]

The question has come up in this string about what the market price may be on this property? I'm familiar with commercial and residential comp valuation for SFRs and MFs, but are vacation rentals a different animal? Is it still all about NOI and caps, or more about comps? Is it more like a par value for a business sale with a multiplier for the revenue/net based on stabilized performance?

I am unaware if we have many vacation rental places for sale in our market? Where would we look for such a venue? Loopnet? MLS? is there a site that specializes in VR? Thanks in advance.

The condo comps are just around $150k, but the cashflow is substantial.  3 stories and nearly 3000 sqft, a 5 bedroom, 4 bath that has been fully upgraded with new flooring, HVAC and kitchen plus granite countertops. Standard rent brings $1800/month. Vacation rental totals for Oct 2014 = $5500 and Nov 2014 = $6250.  Thus my question about how to put a price on this condo.this condo.

[Jack Tucker]

@Maura Paler 

I'm totally with you here.  Why would you give up such huge cashflow when you will get pennies if you sell.  The cashflow generated will pay for the property many times over for what you could get on the common market.

In our situation, we just bought and renovated the subject condo right next to another 5 bedroom unit we already owned and rent out "conventionally".  Based on the ridiculous success of our latest vacation rental experiment, we plan on converting the neighboring unit to vacation rental at the end of the tenant's lease in Aug 2015.  

Vacation rental here is definitely "highest and best". It blows the socks off of anything else in our portfolio. It's a desirable location and appreciating. It's a 8.3% cash flow property, which is way better than the coveted "2%" that everyone searches for.  Perhaps the best idea would be to buy all the surrounding large condos and specialize in vacation rental.

Based on the other  input from @Account Closed @Patrick L. and @Bill Gulley I believe the best way to play this is to hold and vacation rent until perhaps the revenues start to converge with the "conventional" rents... then consider selling.  Frankly, we are going to test the vacation market with other units in our portfolio due to the massive boost in revenues.  

Imagine if you could take your gross rents and multiply them by 4x or 5x!  Even if costs double, you are WAY ahead.  We may be sitting on a gold mine!