Short term rental data

[Kalen mills]

New to the forum, and a new trainee also. Can anyone recommend a reliable source of short term rental data. There's a town near me that appears to have more short term rentals than any other type of housing. If someone is applying for a SFR conventional loan and the highest and best use looks like a short term rental based on its ability to generate income, but the market is also needing affordable housing, what would you do? I'm wondering if I am biased because I recognize a need for affordable housing. Right now I'm basically just entering data, but soon I'll be putting my name on these reports and I'd like to feel confident in my conclusions.

 

[Zoe]

New to the forum, and a new trainee also. Can anyone recommend a reliable source of short term rental data. There's a town near me that appears to have more short term rentals than any other type of housing. If someone is applying for a SFR conventional loan and the highest and best use looks like a short term rental based on its ability to generate income, but the market is also needing affordable housing, what would you do? I'm wondering if I am biased because I recognize a need for affordable housing. Right now I'm basically just entering data, but soon I'll be putting my name on these reports and I'd like to feel confident in my conclusions.

You'll have to dig through investors data, local management companies who specialize in rental housing, any other source like an MLS. You have some data that is supporting your "H&B use" preliminary analysis. Start there. The data is there on single family rentals for like a 6 month or 12 month lease or month to month. You just have to find it. Many times it takes phone calls to different sources and then doors open up. Appraisers are a good source of data. Real estate agents, etc, etc.

I would not jump to conclusions that rental property is H&B use on preliminary analysis.

 

[glenn walker]

New to the forum, and a new trainee also. Can anyone recommend a reliable source of short term rental data. There's a town near me that appears to have more short term rentals than any other type of housing. If someone is applying for a SFR conventional loan and the highest and best use looks like a short term rental based on its ability to generate income, but the market is also needing affordable housing, what would you do? I'm wondering if I am biased because I recognize a need for affordable housing. Right now I'm basically just entering data, but soon I'll be putting my name on these reports and I'd like to feel confident in my conclusions.

Actually Short term rentals are considered interim uses and often seasonal and are a business and not the same as a single family home rental. Therefore since we don't value a business I would not go down that trail. Also Fannie-Freddie-FHA-VA only use the value that is arrived at by the sales comparison Approach and the Underwriter is not going to consider short term interim rental income. As far as Highest & Best Use its still a Single Family Home no matter what the owner does with it so I would not go down that Rabbit Trail into Appraisals Hell.

 

[Zoe]

Actually Short term rentals are considered interim uses and often seasonal and are a business and not the same as a single family home rental. Therefore since we don't value a business I would not go down that trail. Also Fannie-Freddie-FHA-VA only use the value that is arrived at by the sales comparison Approach and the Underwriter is not going to consider short term interim rental income. As far as Highest & Best Use its still a Single Family Home no matter what the owner does with it so I would not go down that Rabbit Trail into Appraisals Hell.

Not necessarily interim use in the markets I work for investors. Fannie will lend with weight being given to income cap approach. I don't know op's market.

 

[Zoe]

If contract rent equals market rent, then things are different than if market rent is below or above contract rent. Then things get interesting on a fee simple appraisal, leasehold or leased fee appraisal with MV definition as defined by Fannie. Knowing the lease is short term, it could or could not have an impact on fee simple appraisal. Leases need to be analyzed on subject property and comparables as much as possible. I have no idea what data OP already has.

 

[glenn walker]

If contract rent equals market rent, then things are different than if market rent is below or above contract rent. Then things get interesting on a fee simple appraisal, leasehold or leased fee appraisal with MV definition as defined by Fannie. Knowing the lease is short term, it could or could not have an impact on fee simple appraisal. Leases need to be analyzed on subject property and comparables as much as possible.

Fannie Mae - Due to COVID-19, short term rental income may no longer be an eligible source of income.
Also when using the income approach on a SFR its only when the borrower is applying for a mortgage or refinancing an investment property not if being purchased or refinanced for owner occupancy.

 

[KONA]

If the rentals you are referring to are, say, daily, weekly, bi-monthly; you are dealing with a business enterprise. Please define, short-term rental!

 

[glenn walker]

If the rentals you are referring to are, say, daily, weekly, bi-monthly; you are dealing with a business enterprise. Please define, short-term rental

In general for Fannie-Freddie-anything that is being rented out for 30 days or less permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer online marketplace. Think Airbnb- Which are often weekly rentals-nobody knows what the income stream will be and during Covid-19 many Airbnb operators almost went broke. I think when dealing with Single Family homes the appraiser often confuses income with Highest & Best Use . YES on a real investrment property or commercial is all about income but on a SFR short term rentals rae really managing a business enterprise like a bed and breakfast or a boarding house -Worse its impossible to estimate what any individual house will generate per year based on seasonality and wear and tear on short term rentals is extremely costly. So personally I dont even get involved in using short term rentals I consider them a business enterprice which most Cities and Counties require owner to have a business license and insurance and often inspections to see if they meet H & S codes.

 

[Non Sequitur]

AirBnB is the same as traditional BnB, both income streams are business income. Since I’m a lowly resi appraiser, I don’t get involved in either.