1
The income approach for short-term rental properties requires different data than traditional residential appraisals. Instead of long-term rental comparables, you need actual performance data from comparable STR properties — their trailing twelve month revenue, occupancy, and average daily rates. Highest and Best Use determination may support STR use if the data shows significantly higher returns than long-term rental.
GRM
Expenses
Cap Rate
Income Approach Steps:
1. Pull comparable STR listings with TTM performance data
2. Build comparable income table (revenue, occupancy, ADR)
3. Calculate Gross Rent Multiplier from sales data
4. Estimate NOI with appropriate expense ratios
5. Apply cap rate for income-based value indication
6. Reconcile with sales comparison approach
2
Call GET /listings/comparables with the subject property's location and specifications. This returns up to 25 comparable STR properties ranked by similarity, each with full trailing twelve month performance data.
Postman
1. Create a new GET request in Postman 2. URL: https://api.airroi.com/listings/comparables 3. Headers: X-API-KEY: YOUR_API_KEY 4. Query Parameters: latitude = 36.1627 longitude = -86.7816 bedrooms = 3 baths = 2 guests = 6 5. Click "Send" 6. The response contains up to 25 comparable STR listings ranked by similarity to the subject property. Key fields per comparable: - listing_id - ttm_revenue - ttm_occupancy - ttm_avg_rate (ADR) - bedrooms, baths - property_type - latitude, longitude
3
From each comparable listing, extract the key income metrics: ttm_revenue, ttm_occupancy, and ttm_avg_rate. Build a comparable income table with summary statistics (mean, median, range) that supports the income approach.
Postman
From the /listings/comparables response, build this table: # | Listing ID | TTM Revenue | TTM Occ | TTM ADR | Beds | Type ----|-------------|-------------|---------|---------|------|---------- 1 | 48291037 | $92,400 | 78% | $245 | 3 | House 2 | 51038274 | $84,200 | 72% | $218 | 3 | House 3 | 49172836 | $78,900 | 69% | $205 | 3 | Condo 4 | 52847193 | $88,100 | 75% | $232 | 3 | House 5 | 47829361 | $71,500 | 65% | $198 | 3 | Apt ... Summary Statistics: Mean Revenue: $82,400 Median Revenue: $84,200 Revenue Range: $61,800 - $104,600 Mean Occupancy: 72% Mean ADR: $221
4
Gross Rent Multiplier = Sale Price / Annual Gross Income. If you have sale prices for some comparable properties from MLS data, calculate the GRM for each and derive a market GRM. Then apply it to the subject property's projected income to estimate value. Typical STR GRM range is 8-15x depending on the market.
| Comp | Sale Price | Revenue | GRM |
|---|---|---|---|
| Comp 1 | $685,000 | $92,400 | 7.4x |
| Comp 2 | $720,000 | $84,200 | 8.6x |
| Comp 3 | $650,000 | $78,900 | 8.2x |
| Comp 4 | $710,000 | $88,100 | 8.1x |
| Comp 5 | $590,000 | $71,500 | 8.3x |
| Average GRM | 8.1x | ||
Postman
GRM Calculation (Manual): Gross Rent Multiplier = Sale Price / Annual Gross Income If you know sale prices from MLS for some comps: Comp | Sale Price | Annual Revenue | GRM -------|------------|----------------|------ Comp 1 | $685,000 | $92,400 | 7.4x Comp 2 | $720,000 | $84,200 | 8.6x Comp 3 | $650,000 | $78,900 | 8.2x Comp 4 | $710,000 | $88,100 | 8.1x Comp 5 | $590,000 | $71,500 | 8.3x Average GRM: 8.1x Typical STR GRM range: 8-15x Subject Property Estimated Value: Subject Revenue (P50): $85,000 Market GRM: 8.1x Estimated Value: $85,000 x 8.1 = $688,500
5
Calculate Net Operating Income by subtracting operating expenses from gross revenue. STR expense ratios typically range from 25-40% of gross revenue depending on the management model: self-managed (~25%), professionally managed (~35-40%). Include cleaning, maintenance, utilities, insurance, property tax, platform fees, and management fees.
| Management Model | Expense Ratio | Expenses | NOI |
|---|---|---|---|
| Self-Managed | 25% | $21,250 | $63,750 |
| Pro Managed | 35% | $29,750 | $55,250 |
| Full Service | 40% | $34,000 | $51,000 |
Postman
NOI Estimation: Gross Revenue (from API): $85,000 Operating Expenses: Cleaning (per turnover): -$8,500 (10%) Property Management: -$17,000 (20% if professionally managed) Maintenance & Repairs: -$3,400 (4%) Insurance: -$2,400 Property Tax: -$6,000 Utilities: -$3,600 Platform Fees (Airbnb 3%): -$2,550 Supplies & Linens: -$1,700 (2%) Total Expenses: -$45,150 (53% expense ratio) NOI = $85,000 - $45,150 = $39,850 Note: Expense ratios vary by management model Self-managed: ~25-30% of gross Professionally managed: ~35-40% of gross Full-service (above): ~50-55% of gross
6
Value = NOI / Cap Rate. STR cap rates vary by market, typically ranging from 5-10%. Source cap rates from local STR transactions. Show the calculation and reconcile with the GRM approach for a well-supported value indication.
Example Calculation:
NOI: $39,850 (using 53% expense ratio for full-service mgmt)
Cap Rate: 7.0% (Nashville STR market)
Value = $39,850 / 0.07 = $569,286
GRM Value: $688,500 (from Step 4)
Cap Rate Value: $569,286
Reconciled Midpoint: $628,893
Postman
Cap Rate Valuation: Value = NOI / Cap Rate STR cap rates vary by market, typically 5-10%. Example calculations: NOI: $39,850 Cap Rate | Estimated Value ---------|---------------- 5.0% | $797,000 6.0% | $664,167 7.0% | $569,286 8.0% | $498,125 9.0% | $427,778 10.0% | $398,500 Using a 7% cap rate for this Nashville market: Value = $39,850 / 0.07 = $569,286 Cross-check with GRM approach: GRM Value: $688,500 Cap Rate Value: $569,286 Midpoint: $628,893
7
Properly cite API data sources in the appraisal report. Include the data retrieval date, methodology note, comparable properties table, and a narrative explanation supporting the income approach.
Recommended Citation:
"Revenue projections sourced from AirROI Enterprise API (airroi.com), a third-party STR analytics platform tracking 20M+ properties across 190+ countries. Trailing twelve month (TTM) performance metrics retrieved on [date]."
Postman
How to cite AirROI API data in an appraisal report: CITATION FORMAT: "Revenue projections sourced from AirROI Enterprise API (airroi.com), a third-party STR analytics platform tracking 20M+ properties across 190+ countries." REQUIRED INCLUSIONS: 1. Data retrieval date 2. Methodology note: "Trailing twelve month (TTM) performance metrics from comparable active STR listings within [radius] of subject property." 3. Comparable properties table with: - Listing IDs (anonymized if preferred) - TTM Revenue - TTM Occupancy - TTM ADR - Bedrooms / Property Type - Distance from subject 4. Statistical summary (mean, median, range) 5. Income approach calculation with clear assumptions SAMPLE NARRATIVE: "The income approach was supported by TTM performance data from [N] comparable short-term rental properties sourced from AirROI Enterprise API. The median annual revenue of comparable properties was $[X], with a range of $[min] to $[max]. After applying a [X]% expense ratio for [self/ professional] management, the indicated NOI is $[X]. Applying a [X]% capitalization rate derived from local STR transactions, the indicated value is $[X]."
Keep exploring the AirROI API with these related tutorials.
Yes, increasingly so. As STR properties become more common, appraisers need reliable income data sources. AirROI provides verifiable, transparent data from 20M+ actual listings. The key is proper citation, methodology documentation, and using the data to support (not replace) the appraiser's own analysis and judgment.
USPAP (Uniform Standards of Professional Appraisal Practice) requires appraisers to use credible data and disclose their sources. AirROI API data meets this standard as a verifiable third-party data source with transparent methodology. Appraisers should cite the data source, retrieval date, and methodology in their reports, and apply their own professional judgment in interpreting the data.
STR income includes both real estate value (the property itself) and business value (management, brand, reviews, furnishings). To isolate real estate value, use market-level averages rather than top-performer data, apply standard management expense ratios (35-40%), and exclude FF&E (furniture, fixtures, equipment) value. The AirROI API provides market percentiles that help identify the real estate contribution vs. operator skill.
FF&E should be valued separately from the real estate. For a fully furnished STR, FF&E typically ranges from $15,000-$50,000 depending on property size and quality. Deduct FF&E value from the total indicated value to arrive at the real estate-only value. Some appraisers include a separate FF&E addendum.
AirROI data is updated on a rolling basis. Listing-level TTM (trailing twelve month) metrics reflect the most recent 12 months of booking and rate data. Each API call returns current data, so there is no stale cache to worry about. For appraisal reports, always note the date of data retrieval.
Yes. Include a narrative explanation of the data source, methodology, and how the data supports your income approach. A sample narrative: "The income approach was supported by TTM performance data from [N] comparable short-term rental properties sourced from AirROI Enterprise API, a third-party analytics platform tracking 20M+ properties. The median annual revenue was $[X] with occupancy of [X]%."
Use both and reconcile. The sales comparison approach uses traditional sales comps and is the primary approach. The income approach using STR data is a supporting approach that can be given significant weight when: (1) the property is in a market where STR use is the Highest and Best Use, (2) buyers are primarily investors purchasing for STR income, and (3) there are insufficient traditional sales comps. The AirROI API supports the income approach with real performance data.
A market rent analysis determines the rental income a property could reasonably generate in the current market. For STR properties, this means analyzing comparable STR listings' actual performance data rather than long-term rental comparables. It is required when: the appraisal uses an income approach, the lender requires documentation of STR income potential, or Highest and Best Use analysis considers STR as an alternative use.
Stay ahead of the curve
Join our newsletter for exclusive insights and updates. No spam ever.