STR's

[Tom D]

I was only talking about providing the str income analysis itself, instead of a 1007 form. After reading KH5445 comments, str analysis doesn't seem like a 'residential' rental income application. Just saying this to prevent some res newbie from even thinking about doing this str analysis. The real estate itself standing is a single family home. But you all, do as you like.

But, if i'm sitting on a state board, and you made some income/expenses str mistakes. I'm asking you for your commercial qualifications having done a str analysis instead of a sf rental analysis, right before i fine you death. And i'm a easy reviewer kind of person.

The USPAP instructor, a phd appraiser, said res don't do it, period. Maybe he's been thru some hearings about some res appraisers doing a str analysis.

 

[sputnam]

Again, it depends. I'm also a USPAP instructor and I disagree with your USPAP instructor. It all depends on what the Client is seeking. If it is the value of the property in it's use as an STR... then I agree. A Certified General is needed.

If the Client wants the value of the STR in it's role as an SFR.. it's not a problem (if that's also the Highest and Best Use). They may ask for the STR income to be surveyed but, there is no Income Analysis or attempt to derive a valuation from the STR income. They use it to help in loan qualification of the borrower. An experienced Certified Residential Appraiser should be able to handle it... although, they may not want to.

If the Client wants to specify that the valuation only consider long term rental, then it may be Value in Use.. not market value. Some residential appraisers would be competent. Some not.

 

[J Grant]

Earlier this year I had a STR owner tell me if someone pays cash, he pockets the money and then shows on his books that the reservation was cancelled and he retained the security deposit. Thus, reporting half or less of the actual income for that particular reservation.

There is no such thing as a STR owner.
There are people who own houses or condos and rent them out on a STR basis. It is important for appraisers to understand the difference.

Appraisers here have posted questions like " This is the first time I am appraising a house that is a STR...how do I handle it ? The first thing for them to recognize is that it is a SFR zoned and intended use house, regardless. The minute the owner stops renting it out STR, is the minute that use disappears.

A house that was a former STR becomes vacant. Despite its former use, the dwelling, now vacant, is still a single-family house.
IF a hotel owner walks away, the hotel, now vacant, is still a hotel.

 

[J Grant]

Part of HBU analysis is that it be legal use - and if an owner's house or condo is located in an area zoned for residential use, and they run it like a hotel room or SR renting out a bunch of rooms short term, they are in violation of zoning, which may not be enforced on some areas. Enforcement can change.

 

[DWiley]

Again, it depends. I'm also a USPAP instructor and I disagree with your USPAP instructor. It all depends on what the Client is seeking. If it is the value of the property in it's use as an STR... then I agree. A Certified General is needed.

Is it a matter of residential vs commercial? Or is it a matter of real estate valuation (SR 1 and 2) vs business valuation (SR 9 and 10)?

 

[Terrel L. Shields]

Even though STR's have been around for a while,

We used to call them bed and breakfasts. And the reason people bought them often was to get a larger home, treat it as a business and take business deductions for repairs, depreciation, and maintenance. They were more tax dodge than profit centers. I think the same applies with VRBO or Airbnb.

 

[J Grant]

A real bed and breakfast, with a license and usually a restaurant that serves....drumroll....breakfast- is a business, regardless of how profitable or not it is.

Whereas the Airbnb short-term rental phenomenon is relatively recent and typical of our fractured gig income society, in a way it is like UBER drivers using their personal cars for extra income.

 

[Surf Cat]

We used to call them bed and breakfasts. And the reason people bought them often was to get a larger home, treat it as a business and take business deductions for repairs, depreciation, and maintenance. They were more tax dodge than profit centers. I think the same applies with VRBO or Airbnb.

I don't know if bed and breakfasts were tax dodges. However, the host was always in the bed and breakfast providing services. It was a mellow atmosphere.

With the Airbnb, you have a lockbox and let yourself in. Self-serve with all the use of the amenities. Mix in some booze and recreational contraband.... you have the makings of a Airbnb Gone Wild....

Not only that, bed and breakfasts weren't scattered all throughout the neighborhood.

 

[alebrewer]

Not only that, bed and breakfasts weren't scattered all throughout the neighborhood.

A lot of municipalities in my area have started restricting STR use in R zoned areas. Fort Worth doesn't even allow STR in any residential zoned areas.

Think of the repercussions if a resi guy (or even a CG) assigns a business value of $X, and lender X loans money based on that valuation, then 6 months later STR use is banned by that municipality...

 

[J Grant]

I would be the worst hostess of a B & B- I hate mornings, am cranky, bad at baking muffins and other cutsey food - it would be a nightmare for me but I get why some people love it - many are couples, often retired or part retired, if they enjoy people it could be a way to combine fun and a business. I suspect the better places have loyal repeat customers.