STR-based GRM

[Non Sequitur]

Is the nightly/weekly "rent" for an STR really rent? Or is it business revenue? If it is really revenue rather than "rent," is a GRM analysis a valid approach?
I would not touch doing an STR on a 1007 with a GRM with a 200' laser. YMMV.

I agree.

IMO STRs are basically ran like motels and their revenue streams should be analyzed like motel revenue.

 

[Surf Cat]

tame your inherent need to be bombastic and rude

Oh, come on....it wasn't that bad....dual at high noon it is...let's go

Since when do the subject's rents have an impact on the Opinion of Rental Value

Whatever you're doing with your scope (it seems you have one foot in the traditional, long term GRM route and one foot in the projected STR income) the subject’s past income is your primary anchor point/market evidence. You use it to test against the market. Without analyzing the subject's actual income and expenses, any "market rent" conclusion for an STR is just guessing.

Also, we are just guessing because we don't know what the assignment conditions / scope you're working with is.

If I were tasked to value the STR like a motel....I wouldn't be able to without guidance from a CG.



My apologies for being rude...

 

[Airstream]

I have tried to do these ARbnbs. . You might find some property managers, but then they have to get permission to release the data. I just have never had very good luck. But these should be valued like a condotel income and not SFR rental with tenant. There are no tenant rights. So comparing them to SFR with month to month or longer leases just doesn't seem the right approach. And the reason I say that is I worked in a big recreational market with a lot of ARBNBs. People will make far more rental revenue than a month to month rental. HOWEVER, they may not have as much income due to all the fixed costs such as management fees, cleaning fees, utilities, etc. In fact it was a joke in our area among appraisers that the people trying to make money on Arbnb's would be better off putting that money into a Treasury. Less headache. More money. Sure when real estate values were exploding they made out. But now? This is why the approach to Arbnb's should be like a condotel. But finding Arbnb's that later sell AS Arbnab's is like finding a needle in the haystack.

 

[ZZGAMAZZ]

Is the nightly/weekly "rent" for an STR really rent? Or is it business revenue? If it is really revenue rather than "rent," is a GRM analysis a valid approach?
I would not touch doing an STR on a 1007 with a GRM with a 200' laser. YMMV.

There is a specific short term rental 2-page form comprised of a grid similar to but very different from the 1007 form. What is confusing IMO --unsure if it is a industry standard or specific to the software provider...but the appraiser's narrative at the bottom of the grid is carried over word-for-word into the 1004 income Approach where the market rent is multiple by the GRM to obtain the IA opinion of value--the reason I asked if the concept of Short-term-reltal gross rent mulutiplier exists.

 

[Airstream]

There is a specific short term rental 2-page form comprised of a grid similar to but very different from the 1007 form. What is confusing IMO --unsure if it is a industry standard or specific to the software provider...but the appraiser's narrative at the bottom of the grid is carried over word-for-word into the 1004 income Approach where the market rent is multiple by the GRM to obtain the IA opinion of value--the reason I asked if the concept of Short-term-reltal gross rent mulutiplier exists.

Technically you should use a NOI approach with a cap rate IMHO.

 

[Dublin ohio]

But finding Arbnb's that later sell AS Arbnab's is like finding a needle in the haystack.

For the most part around here it is the same. No rights to use as an STR go with the property, the licensing is held by the owner/operator. I've seen one that actually sold based on STR income. It never made sense since one could have bought a similar property for much less and turned it into an STR. Same procedure whether a property was a former STR or not.

 

[ZZGAMAZZ]

What exactly were the assignment conditions, just rental data on a 1007(per Fannie ) or developing an income approach based on an analysis of STR analysis. If it's the latter, it very well be outside of your wheelhouse

Assignment conditions via an AMC were:

--Forms: CONV 1004 + STR [...and the assignment included the STR form and the following instructions:

Lender Guidelines​

SHORT TERM RENTAL GUIDANCE​

• The client requires an STR analysis WHEN an STR is the subject's highest and best use. Acceptable Data Sources are: AirDNA, Rabbu, Public Records, MLS, AirBNB, VRBO, other property management sites, and/or verbal confirmation from property managers that handle STRs. If one is not competent to complete a short-term rental analysis, they can obtain the competency during the assignment. If they are not willing to obtain the competency, then they should inform the client of such and decline the assignment. The analysis should be performed on either an Alternative STR form (Check your software provider) or on a supplemental text addendum as a narrative within the appraisal report commentary. PropertyRate has a STR form for your use should you prefer to utilize our form.
• STR analysis must include:
• - Average daily rates
• - Occupancy percentages
• - Yearly and monthly potential income averages
• - Support for conclusions in the form of at least 3 comparables
• Note: Comparables on these platforms are usually listings that are often identified by a registration number or a nickname
• STR Form: <u><font color="#007ac1">https://s3fs-www.propertyrate.com/appraiser/Short_Term_Rental_Form_Fillable_2025.pdf</font></u

 

[Airstream]

For the most part around here it is the same. No rights to use as an STR go with the property, the licensing is held by the owner/operator. I've seen one that actually sold based on STR income. It never made sense since one could have bought a similar property for much less and turned it into an STR. Same procedure whether a property was a former STR or not.

Yep. I have done a lot of condotels. We never do the income approach because the rental requirements are so different and varied among condotels it is hard to find that data to even develop a cap rate. Also the owners simply used the rental aspect to pay for cost of ownership. Condotels at least come with property ownership. But they are a terrible investment. Thus people really don't buy them as investment properties. In large measure that is my opinion of Arbnbs.

 

[Airstream]

Assignment conditions via an AMC were:

--Forms: CONV 1004 + STR [...and the assignment included the STR form and the following instructions:

Lender Guidelines​

SHORT TERM RENTAL GUIDANCE​

• The client requires an STR analysis WHEN an STR is the subject's highest and best use. Acceptable Data Sources are: AirDNA, Rabbu, Public Records, MLS, AirBNB, VRBO, other property management sites, and/or verbal confirmation from property managers that handle STRs. If one is not competent to complete a short-term rental analysis, they can obtain the competency during the assignment. If they are not willing to obtain the competency, then they should inform the client of such and decline the assignment. The analysis should be performed on either an Alternative STR form (Check your software provider) or on a supplemental text addendum as a narrative within the appraisal report commentary. PropertyRate has a STR form for your use should you prefer to utilize our form.
• STR analysis must include:
• - Average daily rates
• - Occupancy percentages
• - Yearly and monthly potential income averages
• - Support for conclusions in the form of at least 3 comparables
• Note: Comparables on these platforms are usually listings that are often identified by a registration number or a nickname
• STR Form: <u><font color="#007ac1">https://s3fs-www.propertyrate.com/appraiser/Short_Term_Rental_Form_Fillable_2025.pdf</font></u

I hope you are getting a fortune to do this.

 

[ZZGAMAZZ]

I think the rent/income and expenses would be taken from a tax return. If no STR history, we would base our LTV on the value of the real property as a single unit residential (non STR). If located in an environment, where adequate data exists, with comparable sales we would look at the market rent/income/expenses provided by an appraisal.

I guess my answer is, it depends.

Reviewing the FNMA 3.6 supplement, the Short Term Rental chapter how a lender must determine the borrower's qualifications, either from tax returns or an analsys of the subject's STR recent history and ST market rents. [IN THAT RESPECT I AM BOUND TO APOLOGIZE FOR EARLIER COMMENTS ABOUT SUBJECT RENTS. IN TERMS OF OBTAINING COMPETENCY DURING THE COURSE OF THE ASSIGNMENT, I RELIED ON CHATGPT TO DIG INTO AIRDNA, ETC., FOR COMP INFORMATION RATHER THAN BRING IT TO THE ATTENTION OF THE AF becaues for once I was guy shy...but still dont know if the market rental rates, vacancy rates, etc., etc., should reflect the Effective Date, or an annualized rate for properties in markets strongly affected by seasonal tourism.. So all things considered, this probably was the one job that I should not have acccepted...