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Category: Off-Topic & Lounge
By: James Wu
Reply by Kevin O'Brien:
Sold 2 STR properties last year. Learned a lot I wish I'd known earlier. On pricing — you can sell an STR two ways: as a home (traditional comp-based) or as a business (income-based). The income-based approach adds a premium. My $350K home (by comps) sold for $395K because the buyer was purchasing a turnkey cash-flowing STR generating $50K/year. The $45K premium was basically 9 months of gross revenue baked into the sale price. To unlock that premium, you need to sell TO another STR investor, not a regular homebuyer. Reviews and booking history absolutely increase value, but again only for STR buyer. A 4.8+ star listing with 100+ reviews has a real algorithm advantage. 3+ years of booking data proves the income (not just projections). I made a "property prospectus" showing 3 years of monthly revenue screenshots from Airbnb, occupancy trends, ADR growth, net income after expenses, and guest demographics. That document is what sells the premium over comp pricing. Sell furnished and turnkey if you're targeting STR buyers. The furnishing itself might be worth $5-15K, but the turnkey premium — they can literally start hosting the day they close — is worth $15-30K depending on the market. List on the normal MLS but also hit Roofstock, BiggerPockets marketplace, and the Facebook "STR Properties for Sale" groups. The buyer who pays the most is almost always an STR investor. Best time to list: January through March. Investors are planning spring/summer season purchases and want properties ready for peak. Showcase your peak season revenue in the prospectus even if you're listing in winter. Never let someone see your off-season numbers in isolation. For taxes beyond 1031 — installment sales let you spread capital gains across multiple years (lower bracket each year). Opportunity zone investments can defer and potentially reduce gains if held 10+ years. The primary residence conversion trick: if you can live in the property 2 of the last 5 years before selling, you get the $250K exclusion ($500K married) on capital gains. Some investors "move in" to their best-performing STR 2 years before a planned sale. Charitable Remainder Trusts exist for really large gains but you need an estate attorney for that one. More exit planning at https://strspecialist.com/blog.
Reply by Megan O'Connor:
One thing to consider before selling: **have you fully depreciated the property?** If you've been taking depreciation (and you should have been), selling triggers "depreciation recapture" — the IRS taxes you at 25% on all the depreciation you've claimed. Example: - Bought for $300K, building value $240K - 4 years of depreciation: $240K / 27.5 = $8,727/year × 4 = $34,909 total depreciation claimed - Your adjusted basis is now $265,091 - Sell for $395K - Depreciation recapture: $34,909 × 25% = **$8,727 in taxes** (on top of regular capital gains) This is why 1031 exchanges are SO popular — they defer depreciation recapture too. **If you've done cost segregation and accelerated $60-100K in depreciation in year 1, the recapture can be ENORMOUS.** Another reason to plan your exit strategy early and consult a CPA before listing. Don't sell an STR without running the full tax projection first. The surprise tax bill can eat 30-40% of your "profit." Track your depreciation schedule carefully using Stessa (https://stessa.com) or your CPA's records.