How to I set price to sell my STR?

8 Replies

I own a lucrative STR double (license requires homeowner to live in one side). Property has been generating $45k net income/yr. The weird thing is that appraisers will only value the house at market value and not take the business income into account

What your ideas about how to position/market this house for max value? I'm a broker so I'm the one to come up with the listing language and price.

  Do 7x the average net income for the last 7 years listed based upon that portion in your last 7 years tax returns.  It gives the buyer room to negotiate down to 6 or 5.

Unfortunately if it's not a commercial property then you don't get to use NOI to figure out your value/price. You can only use residential comps and simply have 'notes' about the success and numbers as an STR to try and entice more buyers. This all rolls downhill, because if the property is only worth say $200k from local comps, that is all it would get appraised for, therefore even if you had a buyer willing to offer more because of the STR success, they wouldn't get the appraisal they needed for the loan.

Originally posted by @Julie Groth :

I own a lucrative STR double (license requires homeowner to live in one side). Property has been generating $45k net income/yr. The weird thing is that appraisers will only value the house at market value and not take the business income into account

What your ideas about how to position/market this house for max value? I'm a broker so I'm the one to come up with the listing language and price.

Unfortunately income has nothing to do with its value as it is not a commercial property  

@Julie Groth , @Nick C. is exactly right. It is just a place and it will be valued as the real estate and not based on projected or previous income.

It is like when you see any advertisement about REIT's or mutual funds. Past performance doesn't guarantee future results.

@Julie Groth

I’m going to agree with @Paul Sandhu here. Everyone else is assuming only people using financing and unable to cover an appraisal gap are going to be interested.

I could sell an owner occupied STR in about 30 seconds in my market. You have a unique property there, see what you can get for it. Worst case, you drop the price later.