Valuation

Here's the uncomfortable truth about pricing an STR: your property has two values, and they can be $100K apart.

Comps value vs income value

• Comps value is what the house is worth as a house — what nearby sales of similar homes say. This is how appraisers, lenders, and family buyers see it.
• Income value is what the business is worth — your net operating income against the return an investor demands. An STR netting $50K/year, to a buyer wanting a 10% return on total capital, supports a very different number than one netting $25K.

When the income premium is real — and when it isn't

An operating STR commands a premium over comps when three things are true: documented revenue (not projections), a transferable right to operate, and performance that a new owner can plausibly repeat. Miss any one and investors will price you at comps — or below, discounting for their risk. And if your income value is lower than comps value (common in appreciating neighborhoods), your best buyer isn't an investor at all. Sell the house, not the business.

The two buyer pools price differently

• Investors buy the spreadsheet. They'll pay for proven cash flow, permits, and a turnkey handoff — and they'll discount hard for anything unverifiable.
• Primary-home and second-home families buy the lifestyle. They don't care about your ADR; they care about the kitchen, the view, the school district. In many markets they simply outbid investors.

Your listing price should be set by whichever pool values you higher — and the rest of this course shows you how to market to both at once.

Go deeper: How Investors Analyze STR Deals — read it as "how my buyer will underwrite me."

ACTION: Compute both numbers this week. Pull 3–5 recent comparable sales for comps value, then take your trailing-12-month net income and divide by 0.08 and 0.10 for a rough income-value range. Note which is higher — that's your primary buyer pool.

Next lesson: the documentation package that makes investors move fast — and the spreadsheet mistake that kills deals.