The "Gut Reaction" Method of Comping a Property

Navigating the vibrant yet challenging terrain of short-term rental (STR) investment, both rookies and veterans often encounter the tricky task of comping a property accurately.

‍

A swift dive into the digital realm unveils a plethora of tools vowing to aid this quest. Indeed, a significant number of these resources serve as commendable launchpads. However, comping effectively typically involves a fusion of analytical rigor and creative insight - science meets art. For the adept comper, concrete data waltzes with intuitive estimates, marrying mathematics with imagination. On the imaginative spectrum, one tool that I love is the Gut Reaction Method, affectionately dubbed so by my wife and me.

‍

This approach kicks in when you catch yourself thinking, “I can do better,” while sizing up a potential investment against the market backdrop.

‍

Our journey to owning our initial property led us to a beloved market in Western Virginia, a magnet for visitors from Washington DC, Richmond, and Virginia Beach, among others. Our research illuminated a diverse revenue landscape: some properties thriving, others barely scraping by, and still others outright failing.

‍

In our quest to evaluate a few prospects, we dissected countless Airbnb and VRBO listings, crafting wishlists for swift competition comparison. A recurring mantra as we delved deeper was, “we can do better!”

‍

This conviction wasn’t born of arrogance but a clear pattern we observed: many properties seemed worn, dated, and uninspiring. The photographs lacked professionalism, and the listing copy was terse and lacking. Convinced that even the best listings had room for improvement, we saw our path to generating at least marginal profit as a worst-case scenario.

‍

My wife, with a design flair rivaling that of celebrated HGTV stars, envisioned transformations that would make our offerings the proverbial red roses among sepia tones. She planned to introduce contemporary furnishings, vibrant color splashes, trendy paints, and those subtle design nuances that enhance photographic appeal.

‍

I spotted chances for straightforward, budget-friendly upgrades to refresh a property’s ambiance. Think swapping laminate for granite, upgrading vanities, and replacing dingy electrical fixtures with pristine white counterparts.Ultimately, our strategy bore fruit, setting a market benchmark with updates and captivating listings. Our approach consistently outperforms the market.

‍

A word to the wise: the Gut Reaction Method, while invaluable, isn’t a one-size-fits-all solution. In markets such as Orlando and Joshua Tree, where design and amenities set an exceptionally high bar, surpassing the pinnacle might be a Herculean task. This doesn't mean success is out of reach, but the Gut Reaction Method might not be the deciding factor in determining whether to purchase in these markets.

‍

Moreover, assess your capabilities and resources. The gut might signal a green light, but ensuring you have the means, time, and expertise to realize your vision is crucial. In our case, a blend of design acumen and renovation savvy played to our strengths. Others might need to factor in the cost of outsourcing these skills into their property analysis.

‍

To sum up, when eyeing a market or specific property, the Gut Reaction Method offers a layer of reassurance, supplementing hard facts with a gut-check indicator of potential success.

‍

Here's to fruitful comping!

‍

‍