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1007 question - Short term rentals

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bluechip

bluechip

Junior Member
Joined
Dec 20, 2007
Professional Status
Licensed Appraiser
State
Georgia
How do you fill in this form when the subject property is a SFR being utilized as a AIRBNB/VRBO?
Many of my associates do not have this knowledge.

Any help would be greatly appreciated.

BC
 
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The 1007 is about your rental comparables. Not about the subject property. You then use the comparable rentals to develop an opinion of the subject's monthly market rent.
 
sputnam said:
The 1007 is about your rental comparables. Not about the subject property. You then use the comparable rentals to develop an opinion of the subject's monthly market rent.
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The 1007 does reflect information about the subject and it's monthly rent. As you are aware AIRBNB and VRBO values fluctuate. These daily rates change with the season, holiday, location etc... So how do I determine their monthly values? To get these rentals would I scour AIRBNB and VRBO. There are also several other management companies as well. How exactly do you verify all this data to be factual if it's in flux?
 
bluechip said:
How do you fill in this form when the subject property is an AIRBNB/VRBO?
Many of my associates do not have this knowledge.

Any help would be greatly appreciated.

BC
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You don't the 1007 is based what a dwelling will rent for to a normal tenant AIRBNB is a Business, and each one has different amounts of business revenue. Go find regular rental comparables, not Boarding Houses or Air-BNB. :)
 
bluechip said:
The 1007 does reflect information about the subject and it's monthly rent. As you are aware AIRBNB and VRBO values fluctuate. These daily rates change with the season, holiday, location etc... So how do I determine their monthly values? To get these rentals would I scour AIRBNB and VRBO. There are also several other management companies as well. How exactly do you verify all this data to be factual if it's in flux?
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The subject information on the 1007 is just that.. information. If you are doing a market value appraisal AND you have determined that the Highest and Best Use of the property is a single family dwelling.... then how the subject is being used not very relevant to your valuation analysis. The form does not drive your appraisal. Use the form in any way you want to.. as long as you are careful to not be misleading. I can think of several approaches.... 1- annualize the subject's gross income then convert to average monthly rent. 2- Just write in 'See Comments'... and then explain.

If you determine that the HABU is for short term rentals... then you are appraising a tiny motel and the 1007 (and the 1004) are probably not appropriate forms.

As stated above... an AirBNB/VRBO is a business... if you are appraising the business.. fine. But then, you shouldn't be using the 1004 or 1007.
 
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We sold a Resort home two years ago which we had rented for $3,000 a month for years to a couple. When they moved out the new owners turned it into a AIR BNB- Dont know if manager is telling truth but she said they grossed $65,000 to $75,000 using it as AIR BNB. If I used that as rental income the property would be over inflated by double or more , on a income approach - Whats funny is AIR BNB Buyers never purchase at high prices but use regular rentals as their basis of a purchase price, then when they go to refinance or sell they try to inflated prices. ALSO AIR BNB wear and tear is like crazy as you may have as many as 30 to 40 tenants a year coming and going.
 
bluechip said:
How do you fill in this form when the subject property is an AIRBNB/VRBO?
Many of my associates do not have this knowledge.

Any help would be greatly appreciated.

BC
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This subject has been discussed in prior thread so you might want to search for them. You already got a couple of good responses here

When you say the subject rpoperty IS an Airbnb/Vrbo, what you really mean is the subject is USED as an Airbnb- which is a value in use , rather than a market value

Be very careful with this, check with your client, though a client may have no problem trying to persuade an appraiser to do something that can create problems later - airbnb is similar to a hotel use and residential loans are not based on hotel , they are for residential lease assumption which typically is an annual or month to month longer term duration.
 
Not supposed to use short term rentals for a 1007. I have always been asked to provide yearly rentals, not short term or seasonal. They do not reflect the rental market.
 
bluechip said:
How do you fill in this form when the subject property is an AIRBNB/VRBO?
Many of my associates do not have this knowledge.

Any help would be greatly appreciated.

BC
Click to expand...
When you say the subject property is an AIRBNB/VRBO, that is not correct

The subject is a condo, or a townhouse or a single family house, (or other ).

The owner might be renting it as an Airbnb , but that does not mean you should be analyzing it as an Airbnb business , which wold mean comparing to other properties rented for air bnb income - which is problematical for reasons noted in this and prior threads
 
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