Short-term rentals

[J Grant]

I wouldn't appraise a VRBO without doing an income approach.

Is the property a VRBO, when the property is a SFR and the VBRO use depends on the owner?

Example - two identical houses side by side, house A) is owner occupied, and houseB) is being used as a VBRO- same thing if house A was vacant,
They both are put up for sale. Why would a buyer pay more for house B, if they could buy the identical house A and after they close, rent it as a VBRO?

Not quite the since RE is fixed location, but there is some similarity wrt take two cars, identical Camry Toyotas one is used for UBER, the other is not - why would a buyer pay more for one car than theother? The use for UBER depends on the owner, not the vehicle ( nor the house )

 

[BRCJR]

I don't do assignments that include valuing the going concern.

Hospitality properties in particular. It's common for them to finance in a good year but fail outright if they run into a couple bad years. Plus on the smaller operations there's always 3 sets of books; one for the lender, one for the IRS and the real one which nobody has access to but the owners.

I don't get involved with the branded gas stations for the same reason.

One way to eliminate some of the creative bookkeeping for gas stations / C-Sores is by gallons of gas sold. that is a hard one to manipulate.

 

[BRCJR]

Is the property a VRBO, when the property is a SFR and the VBRO use depends on the owner?

Example - two identical houses side by side, house A) is owner occupied, and houseB) is being used as a VBRO- same thing if house A was vacant,
They both are put up for sale. Why would a buyer pay more for house B, if they could buy the identical house A and after they close, rent it as a VBRO?

Not quite the since RE is fixed location, but there is some similarity wrt take two cars, identical Camry Toyotas one is used for UBER, the other is not - why would a buyer pay more for one car than theother? The use for UBER depends on the owner, not the vehicle ( nor the house )

To answer your question there must be an assumption there is demand for two VRBO's side by side.
When there are now two options instead of one will you both get the same dollar volume on an annual basis that was used to value the first one?

 

[WestMichiganCG]

Is the property a VRBO, when the property is a SFR and the VBRO use depends on the owner?

Example - two identical houses side by side, house A) is owner occupied, and houseB) is being used as a VBRO- same thing if house A was vacant,
They both are put up for sale. Why would a buyer pay more for house B, if they could buy the identical house A and after they close, rent it as a VBRO?

Not quite the since RE is fixed location, but there is some similarity wrt take two cars, identical Camry Toyotas one is used for UBER, the other is not - why would a buyer pay more for one car than theother? The use for UBER depends on the owner, not the vehicle ( nor the house )

A VRBO isn't necessarily a single-family home. The most recent ones I have done were in commercial buildings and could have been sold as apartments or short-term rentals. Some have called these boutique hotels and list them on a company website, VRBO and AirBNB. The reason one might pay more for one over the other is the historical income stream. Some of these rentals have annual renters, families that return year after year. I would potentially pay more for a house that provided me with a strong income stream year after year, I would need proof of that income stream, and you have to know what you're looking at. The fact that I could rent as a VRBO is different than a home that has a history of being rented as a VRBO.

 

[George Hatch]

One time I appraised 3 gas stations with product agreements for a buyer whose day job was selling these for the oil companies. He told me that not even the oil companies could figure out what was going on with the properties unless they were directly involved with the transaction. The only outside parties who know what these properties are actually doing are the appraisers who specialize in them and who have their own database consisting of their past assignments on those properties. I had a couple of those appraisers in my classes before and they told me the same thing: they are constantly reusing sales that they previously appraised.

I hate the idea of being the last person to find something out that I should have known and/or would normally have been informed of if it was a different property type.

 

[J Grant]

A VRBO isn't necessarily a single-family home. The most recent ones I have done were in commercial buildings and could have been sold as apartments or short-term rentals. Some have called these boutique hotels and list them on a company website, VRBO and AirBNB. The reason one might pay more for one over the other is the historical income stream. Some of these rentals have annual renters, families that return year after year. I would potentially pay more for a house that provided me with a strong income stream year after year, I would need proof of that income stream, and you have to know what you're looking at. The fact that I could rent as a VRBO is different than a home that has a history of being rented as a VRBO.

I was using it as an example. Same thing would apply I assume to similar apartment buildings assuming no zoning or rent controls prevent the use in one vs another,

In a SFR or a condo, (and perhaps in other properties), the short term rental use can be vulnerable to a zoning change or petition by area residents or an HOA who are tired of short term transient people running in and out, partying etc.

 

[WestMichiganCG]

One time I appraised 3 gas stations with product agreements for a buyer whose day job was selling these for the oil companies. He told me that not even the oil companies could figure out what was going on with the properties unless they were directly involved with the transaction. The only outside parties who know what these properties are actually doing are the appraisers who specialize in them and who have their own database consisting of their past assignments on those properties. I had a couple of those appraisers in my classes before and they told me the same thing: they are constantly reusing sales that they previously appraised.

I hate the idea of being the last person to find something out that I should have known and/or would normally have been informed of if it was a different property type.

Gas stations are not the easiest. EBIDTA is critical. I do them occasionally.

 

[J Grant]

To answer your question there must be an assumption there is demand for two VRBO's side by side.
When there are now two options instead of one will you both get the same dollar volume on an annual basis that was used to value the first one?

The example is why would a buyer pay more for one than theother (not a buyer planning to buy both because they are side by side) The demand would be in the area, as with any property.

 

[BRCJR]

The example is why would a buyer pay more for one than theother (not a buyer planning to buy both because they are side by side) The demand would be in the area, as with any property.

I was not implying the buyer of property two is buying both.
My point was the first one now could have less revenue because of competition. The second one may not perform as well as the first one because of more supply and market demand does not increase.