3-unit STR prop/biz sale, valuation online rep (host status)

[Brandon Vukelich]

I'm a MF investor and broker but I don't transact STR properties and businesses. Looking to sell our 3-unit STR/MTR property and my partners and I are not quite in agreement on how to value the online rep/host status that we've built under our LLC name over six years. I planned to just list it at $1,395,000 for the property and furnishings but my biz partners believe there is a lot of value in our super host status, reviews, etc. built up over the last 6 years. I know buying the LLC, which would includes its assets (prop, furnishings, online rep), is an option but most buyers are likely going to use DSCR or conventional financing for just the property itself. Revenue is around $170,000/year with NOI $95-105k/year. Appreciate any input on how you'd approach the value of the property/biz if you were looking to acquire it?

[Andrew Steffens]

Hey @Brandon Vukelich I broker sales of performing STR assests monthly. Most buyers are mom and pop so cash or business loans are not likely and will be conventional or DSCR as you noted. The property should be valued as any other Real Estate property i.e. via the comparative sales approach, not income. I often see "premiums" paid for furnishings and upcoming bookings that will likely come with it and a sort of proof of concept. You can achieve this with an appraisal gap waiver. For example:

A house has an estimated fair market value of $500k.  The parties agree on this but agree to purchase the property for $550k fully furnished.  You put in the contract the buyer will pay cash up to $50,000 if appraised value comes lower that agreed upon purchase price.  The appraisal comes in at $510k.  $510k gets mortgaged under mortgage terms and an additional $40k is paid by buyer to complete the sale.