Okay, short term rental. All your weight needs to be on rental multiplier or income cap approach.
You have explained the motivation of the buyers.
You have also explained motivations of seller. Your right on track with MV definition of value on real property rights.
Not really. If I use market long term rentals I would still be appraising a residential property
In 1998 I appraised a funeral home and its business. I used the Handbook os Small Business Valuation Formulas and Rules of Thumb
The RE appraised $800000 and the business $1,200,000 for a total of $2,000,000
I required from the client an Income and Expense Summary and a Balance Sheet for the past three years
You do not touch the improvements those were valued separately
So the business valuation does not depend on the improvements but only on income produced
In the example below I used MNR Monthly Net Revenue multiplier and OCR Owners Cash Flow Multiplier I will include a sample of the first one and you may see that real estate is nowhere Only $$$$
Method 1: Monthly Net Revenue (MNR) Multiplier
As previously explained, the monthly net revenue of the subject's business is multiplied by the MNR Multiplier. For this particular type of business, the multiplier range is from 6.0 to 12.0. Since
Funeraria XXXX Inc. has a business volume above the market average, the appraisers will use the maximum range value for this particular case. The net revenue for last fiscal year was used for this analysis.
Following is the computation figures for this method:
Stabilized Net Revenue
(Fiscal Year end 1/31/97) $972,961
Monthly Net Revenue 81,080
MNR Multiplier x 12 972,960
Plus Current Assets
309,826 Current assets are Cash, Accounts receivable etc Not RE
Formula Assets Value 1,282,856
Fixed Assets and Intangibles Less Liabilities
92,896
Net Equity Value 1,189,960
Rounded to: $1,190,000.00
(ONE MILLION ONE HUNDRED NINETY THOUSAND DOLLARS)
