All Forum Posts by: Bret Ceren

Hey @Bret Ceren, I did a survey last year (I think) where I spoke with 10 lenders. Banks, Credit Unions, direct lenders, portfolio..pretty much the full mix of of lenders any of us would use.

They all said the same thing. A working STR is worth what other homes (just homes, not STRs) are worth in the area. IE-Comps. There is no additional valuation for the STR business.

In the end, past performance is not an indicator of future success.

It sounds like you have an "estimated" revenue and not actual revenue going back a few years? Just because Rabbu or AirDNA say that it will make X doesn't mean it will. There is so much that goes into a successful STR beyond the very basics.

Now, projections can help for people using a DSCR loan. I don't have a lot of info on what lenders do for that but I am betting a noob that wants to start a STR will have a more difficult time than someone like @John Underwood and @Collin Hays would have.

Two thoughts:

-- To your direct question ... I tell my Colorado STR clients they want to see annual STR revenues that are at least 10% of the purchase price. And that's a starting point.

-- You're really asking about pricing a home ... and like John said, it's all about the comps. 

I see Colorado sellers try to get a premium for a turnkey vacation rental. It just doesn't really work. Shocking, I know, but people don't want to pay more than the sales comps say a property is worth.

Good luck with the sale.

If I was buying a property for a short-term rental, regardless of what it is currently used for, I would never pay more than 8X my annual projected rents.

Hey @Bret Ceren, welcome to the BP Forum! I would recommend you talk to @McKenzie Stouffer - she knows a lot about STR strategy!

This house is only worth what comparable sales say it is worth.

This is how it will be appraised. Potential or actual STR revenue has no bearing on what it's worth.