Quote from @Garrett Andersson:
@Luke Carl is absolutely right here. @Brad S. nailed it too.
One thing to consider is what market you're looking in. If a market is 99% owned by short term investors, the properties will transitively be valued by the rents. Sure, single family homes are based on sales comps but if all the transactions are investors theoretically, then the prices will move based on how investors value them.
If you're in an area where people buy primary homes too, and investors aren't the main source of the demand, then prices won't be as directly related. At the end of the day, residential property is valued by what someone will pay for the house next door. But to really break it down, you have to look at who makes up the demand of each individual market. In my area, (Boone, NC), short term rentals are incredibly popular. But so is moving to the area to work remote. Or being a celebrity and buying a monster 2nd, 3rd, 4th home and caring zero about the rental income. Or working at a super fast growing university.
This is what I am seeing as well. Scottsdale is a great example, more than 10,000 STRs and most are SFDs yet they get bought and sold based on NOI and CAP all day long, whereas rural town any state USA is mostly comps, even if the STR activity is strong.
If you know of any nationwide investors or networks with investor ties who evaluate STRs based on NOI and CAP regardless its location, I would love to meet them so I know who to call as I come across more lucrative investment opportunities.
