Most deal analyses I get sent are one screenshot. An address, a projected annual revenue, and a purchase price, with the implied question: does this work?
Usually I cannot tell, and neither can the person who sent it. Not because the deal is bad, but because that screenshot is the last step of the analysis presented as the first. There are 30,000+ markets to choose from and roughly a dozen tools that will each hand you a confident number for any address you type in. Feed the same property to five of them and you can get five different answers. More data does not settle it. A sequence does.
Here is the order I run a deal in, and the reason each filter sits where it does.
Filter 1: Treat the revenue estimate as a floor, not a forecast
The number a tool gives you for an address is almost always the median performance of that market. Not a ceiling. Not a promise. The middle.
Every property has a range around that midpoint, and the range is wide. The bottom 10% of comparable listings can earn far less than the estimate you are looking at, while the top quartile can be earning six figures more at the same address. Same street, same square footage, same guest pool. What separates them is design, amenities, and positioning, not the pin on the map.
So the estimate is useful, but only as a baseline. If a deal only pencils when you assume you will land in the top 10% of the market on day one, you do not have a deal. You have a hope. Underwrite to the median and let the upside be upside.
Filter 2: Throw out most of your comps
The estimate gets more honest the moment you clean up what is feeding it. Most comp sets are full of listings that should never have been in there: properties with four reviews, properties sitting at 4.2 stars for a reason, properties that went live in June and were dark the rest of the year.
The filters I use, and they are strict on purpose:
- Within a 5-mile radius of the subject property
- At least 15 reviews
- 4 stars minimum
- Active for at least three quarters of the year
That usually cuts a comp set of forty listings down to eight or ten. It looks less impressive and it is far more useful. Ten properties that actually ran a full season at a rating guests trust will tell you the truth about a market. Forty listings including half-year experiments will tell you whatever you were hoping to hear.
Filter 3: Revenue is only half of a ratio
The "best STR markets" lists that circulate every January almost all rank on one metric: total revenue. That is half of a fraction with the denominator missing.
A market where the top properties clear $800,000 a year often comes with a $5 million entry price to match. The revenue is real. The return may not be. Meanwhile a thinner market with less demand might need $250,000 to get in the door instead of $800,000 and produce a stronger cash-on-cash number than the market everyone is posting about.
Profitable properties exist in far more places than the popular lists suggest. The lists are also self-defeating: everyone reads the same article, bids on the same handful of deals, and the entry price absorbs the advantage. If your screen starts with revenue divided by purchase price rather than revenue alone, a lot of "boring" markets get interesting fast. We found the same thing when we scored five property types against each other, where the unglamorous suburban pool house won.
Filter 4: Now bring in why you are buying
Conventional advice says start here. I put it fourth on purpose.
There are four reasons people buy short-term rentals: cash flow, wealth building, tax write-offs, and memories. Most buyers want more than one, and almost nobody wants them equally.
Run this first and it becomes the story you tell yourself to justify a property you already fell for. Run it after the numbers and it does real work as a tiebreaker. An investor buying primarily for tax treatment can accept a property that roughly breaks even, as long as it qualifies for the deductions they are after. Someone buying for pure cash flow has to be willing to walk away from the cabin they love. And if "memories" is genuinely in your top two, say so out loud and price it, because a week of family use in peak season is not free. It is the most expensive week on your calendar.
Rank the four before you make an offer. Written down, in order. It takes two minutes and it prevents the most common mistake in this business, which is buying a lifestyle and calling it a strategy.
Filter 5: The half of the deal that happens after closing
Here is the pattern I have watched play out more times than I can count. Someone buys well, furnishes the place in three weekends, lists it, and lands almost exactly on the median. Then they conclude the market was oversold.
Furniture is the floor, not the ceiling. Getting a property furnished makes it bookable. It does not make it competitive. What moves a listing into the top 25% is deliberate design, the right amenities for the guest you are targeting, and a listing that positions the property as something specific rather than something available.
Sometimes it is structural. One investor converted an underused space into an additional bedroom, taking a five-bedroom property earning around $150,000 a year to a six-bedroom earning $210,000. The renovation paid for itself inside the first year. A pool, a genuine pet-friendly setup, a workable bunk room: these are underwriting inputs, not decorating decisions, and they belong in the model before you close, not in a wish list afterwards. If you are unsure which ones pay in your market, we broke down how to choose amenities with the same logic.
The order, in one place
- Pull the estimate and treat it as the median it is.
- Clean the comps: 5 miles, 15+ reviews, 4 stars, active three quarters of the year.
- Divide revenue by purchase price, then compare markets.
- Rank your four reasons and use them to break ties.
- Model what you will do to the property after closing, and underwrite that too.
Evaluating a deal well is not about finding a better tool or a secret market. It is about knowing what you are optimizing for, cutting the noise the moment the options pile up, and accepting that what you do after closing decides where inside that range you land.
If you are underwriting something now and want a second set of eyes on the comps or the after-closing plan, book a strategy call and we will walk the numbers with you.
This article was inspired by this episode of the Short-Term Rental Riches podcast.