is there a mismatch between housing market prices and STR income?

[Paul Haney]

I'm making offers on homes near a resort, where a large fraction of homes serve as STRs. As I crunch the numbers for how much net income can be expected from STRs there, it seems that the housing market prices do not reflect the STR income. They are priced too cheap, by a lot! For expected gross income, I'm looking at data from airdna and getting corroborating info from real estate agents / individual research. I'm adding a factor of 0.7 to account for other expenses, and getting easily over 10% cash on cash return. Am I missing something? Is the market not valuing STRs properly?

Thanks  -Paul

[John Underwood]

10% ? That seems pretty low.