Brokers and agents used to protect this data as a closely-held trade secret, which made doing the calculations on your own nearly impossible. The standard home valuation process relies heavily on recent comparable sales of similar properties in your neighborhood. Every property is unique, for better or worse! They won’t all agree and of course your particular property might sell for much less, quite a bit more, or not at all. This is the easy and obvious way to value a residential property and any decent real estate agent or broker can come up with a number fairly easily. This vacation rental valuation exercise will also help you figure out the best marketing strategy to deploy when you do decide to sell. You’ll want to run the numbers both ways and then compare the results to arrive at an accurate valuation for your property. If your rental is in a rapidly gentrifying area, the next buyer might be willing to pay more for it to move in and live there rather than to acquire an operating business. Just because you’ve decided to pursue short-term rental income, doesn’t mean that’s necessarily the most lucrative use for the property. Note that it’s the “next buyer” that holds the key here, not your current preference to use the asset as a vacation rental. They then compare the results and arrive at a single final value based on what they determine to be the highest and best use for the property for a likely next buyer. Appraisers typically tackle this tension by deploying different methods of calculation to arrive at separate valuations for each use case. A single-family home or condo can serve as a residence, a long-term rental property, a short-term rental property, or even a source of raw materials. It’s not always obvious because any one real estate asset can be deployed in different ways. What Would an Appraiser Do?Īppraisers have been grappling with the proper way to value real estate assets for decades. We’ll also help you sort out how to approach selling a short-term rental property when the time is right. In this detailed post, we apply universally accepted principles of appraisal and commercial property valuation to show you the proper way to put a current value on your short-term rental asset. A lot of real estate agents don’t know how to do a proper Airbnb valuation and even experienced investors disagree on how best to approach the exercise. The fact that very few real estate agents specialize in marketing and selling short-term rentals further muddies the scene. Ask a typical Airbnb host how to do a vacation rental valuation, and they’ll probably start talking about what other houses or condos in the neighborhood are selling for, even if those comps aren’t vacation rentals. In our experience, very few vacation rental property owners know how to calculate the true value of their property.
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