They don’t factor in the quality of renovations or unique property features, which are critical when determining a true ARV.

Action Steps to Start Building Passive IncomeResearch Your Market: Determine whether your area is better suited for short-term or long-term rentals.

As a savings of a few thousand dollars on furniture, could determine if your occupancy rate is 65% versus 70%...If the revenue is $50,000/yr that's $2,500 in one year (which could be the breakeven for that specific line-item expense).To determine you total breakeven point occupancy rate, and not just related to the furniture, take your operating expenses plus your debt service and divide it by your effective gross income.

The biggest determining factors for STRs in the area are purchase or build price (and associated mortgage) vs rental expectations, that will help you determine net cash flow.

This will help determine who is out of the park or honest and accurate. 

How do you go about determining market rate?

Before getting started, I’d recommend focusing on three key areas:Strategy Selection – Understand the different investment strategies (BRRRR, short-term rentals, etc.) and determine which aligns best with your goals.Market Research – Study the market you want to invest in, including property values, rental demand, and economic trends.Laying the Foundation – Take proactive steps now that will set you up for success later.

You’ll want your cpa to help determine which hours count and which hours don’t count. 

How do you get accurate numbers to determine ROI? 

If you're using a DSCR loan to purchase the home, most lenders use the lower of the lease agreement or 100% of the market rent from the appraisal form 1007 to determine the DSCR.