Vacation Rental Property Value?

[Chris Dudek]

Hello BP members. 

Does anyone out there have any advice or resources that would help determine the value of existing short term rentals or VRBO's? I was told a "general rule" was to never pay more than 10 times annual rents.  Thanks for your help.  

[Nayt Grochowski]

Hi @Chris Dudek

In my research to find VRBO properties to invest in I have a spreadsheet that focuses on what my cash on cash return is and make a decision based on that. 

Sounds like you have one that is an existing nightly rental property, so you can get the rate they charging for peak/off season along number of nights booked for each, which you need to figure out the return on your investment. You can also compare properties in VRBO.net to find out what similar places are renting for, how booked they are, how many are in the current market (for saturation) etc.

Don't forget to include costs for Debt Servicing (if any), HOA, Taxes, Insurance, Utilities, Property Mgt, and savings for Maintenance/CapEx.

Remember it really should always come down to the numbers - use conservative values, and if they don't work out, don't do the deal.

The spreadsheet I have doesn't copy/paste well into a post here, but here is a picture of a deal I have in escrow right now: