Independent feasibility analysis for purpose-built short-term rental communities, build-to-rent STR developments, cabin and vacation rental portfolios, and single-asset conversions, prepared for SBA, USDA, conventional and DSCR lenders. Part of our glamping and short-term rental feasibility study cluster.
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The question every STR lender asks first
An STR project is either an operating lodging business or a passive residential rental, and the answer decides which capital stack is available. SBA excludes businesses primarily engaged in owning real estate and leasing it, and treats rentals of residential space through an internet platform as eligible only where they comply with local law, zoning and association rules and where more than 50 percent of revenue comes from transients staying 30 days or less (SOP 50 10 8, Section A, Chapter 1, Paragraph E.3, pages 19 to 20; 13 CFR 120.110(c)). USDA excludes residential housing whose primary purpose is independent housing under 7 CFR 5001.118(a). DSCR and non-QM lenders write the opposite product: non-owner-occupied one to four unit investment property, up to 80 percent loan-to-value, with a 1.0x DSCR floor reported by third parties, and they do not publish terms for five-unit-plus communities on one parcel.
The study therefore opens with the ownership structure, not the market. The same eight homes financed as individually titled rentals through a manager and financed as one licensed lodging operation run by an operating company are two different credits.
| Structure | SBA 7(a) and 504 | USDA B&I | DSCR and conventional | Controlling provision |
|---|---|---|---|---|
| STR community under one operating company, licensed as transient lodging, with real operator control | Eligible if more than 50 percent transient revenue and zoning compliance; 504 occupancy rules apply | Eligible as a tourist facility if rural | Outside the published 1 to 4 unit box; bank construction-to-permanent on a case basis | SOP 50 10 8 p. 20; 5001.105(b)(8) |
| Individually titled homes rented through a manager | Ineligible as passive real estate | Ineligible as residential housing | Eligible per home up to 80 percent LTV | 13 CFR 120.110(c); 5001.118(a) |
| Third-party manager with sole discretion | Ineligible: the management agreement creates a passive business | n/a | n/a | SOP 50 10 8 management-agreement test |
| Single STR home | Generally ineligible | Ineligible | Eligible | SOP 50 10 8 p. 20 |
Classification under NAICS 531110 (lessors of residential buildings) has a $34.0 million size standard but is a passive activity for SBA purposes, so it signals ineligibility rather than fit.
Market evidence: supply is the variable
AirDNA's 2026 Midyear Outlook (July 8, 2026) forecasts US short-term rental occupancy of 57.4 percent, above the 57.0 percent pre-pandemic average, with demand and supply each growing 2.7 percent and RevPAR up 2.9 percent, and it places the strongest supply growth in small-city, rural and mid-size markets. Its December 2025 outlook had projected 4.6 percent listings growth, so the midyear revision cut expected supply by more than a third. The public market pages for the cabin and leisure markets where purpose-built STR communities are proposed show flat-to-softening occupancy and, in several, falling ADR:
| Market (AirDNA public page, 2026) | Active listings | Occupancy | ADR | Revenue per listing | Trend |
|---|---|---|---|---|---|
| Gatlinburg TN | 7,032 | 53% | $347 | $46.4K | Listings -7.7%, occupancy -2.8% |
| Pigeon Forge TN | 3,120 | 56% | $344 | $65.2K | Listings -26.9%, ADR -4.8% |
| Broken Bow OK | 4,464 | 44% | $452 | $51.1K | Listings +8% |
| Blue Ridge GA | 2,247 | 48% | $353 | $42.4K | Occupancy -4.3% |
| Joshua Tree CA | 2,655 | 53% | $300 | $53.7K | Occupancy +4.2% |
| Big Bear Lake CA | 2,686 | 36% | $398 | $44.8K | n/a |
| Fredericksburg TX | 2,617 | 42% | $328 | $46.8K | ADR -10.3%, RevPAR -13.9% |
| Asheville NC | 5,262 | 54% | $229 | $41.2K | Western NC lost more than 1,400 units after Hurricane Helene, active listings -21 percent 2025 versus 2024 |
Two cautions the study applies. First, vendor pages redefine market boundaries without notice: Pigeon Forge shows revenue per listing up 32.7 percent in the same period that RevPAR fell 2.1 percent and listings fell 26.9 percent, which is listing attrition, not per-unit growth. Second, vendors disagree: Fredericksburg occupancy is 42 percent on AirDNA and 32.6 percent on AirROI for overlapping periods, a nine-point spread that is itself a sensitivity range. The study pulls dated extracts from two vendors and reconciles them before a figure enters the pro forma.
AirDNA also reported home price declines of 7 percent in Gatlinburg, 8 percent in Broken Bow and 5 to 6 percent in Joshua Tree, which bears on exit value and on refinancing a DSCR loan.
The regulatory map
STR projects are underwritten to the ordinance in force and to the risk it changes. The state and local record divides into preemption and restriction.
Preemption states. Arizona's 2016 statute (SB 1350) provides that a city or town may not prohibit vacation rentals or short-term rentals, with a parallel bar on counties and a local fee cap of $250. Florida's §509.032(7)(b) bars local bans and duration or frequency limits, grandfathering ordinances adopted on or before June 1, 2011, and requires a state DBPR licence. Idaho HB 583, signed March 16, 2026 and effective July 1, 2026, bars local governments from requiring a licence, fee, permit, certification or registration to operate an STR. Indiana HEA 1210 (Public Law 157), effective July 1, 2026, bars cities and counties from capping residential rentals, short-term included. Preemption removes the licensing risk but not the zoning risk for a multi-unit resort use.
Restriction regimes. New York City Local Law 18 limits STRs to host-present stays of two guests with platform verification of registration. Maui Ordinance 5909 (December 15, 2025) removes transient vacation rental use from apartment districts, phasing out West Maui on January 1, 2029 and the rest of the county on January 1, 2031. New York's Real Property Law Article 12-D created county STR registries with platform verification from 2025, and state sales tax has applied to STR occupancy since March 1, 2025. San Bernardino County, California (Joshua Tree, unincorporated Big Bear) limits each owner to two permits and 12 occupants. Summit County, Colorado caps licences by basin and limits neighbourhood-zone units to 35 bookings a year. Sevier County, Tennessee requires an annual fire-marshal STR permit since January 1, 2024 at $250 for 12 occupants or fewer, with sprinklers for larger units built after February 1, 2016. Buncombe County, North Carolina tabled proposed caps after Helene. Hochatown, Oklahoma licenses STRs at $300 a year with a 4 percent town lodging tax. Massachusetts requires state registration, and unregistered listings are blocked.
Lodging taxes. The stack is state sales and lodging tax plus county and municipal occupancy taxes, from no state lodging tax in California and Alaska to 15 percent in Connecticut; Hawaii's transient accommodations tax rose to 11 percent on January 1, 2026. Airbnb collects state taxes in every state except Hawaii, with local-only coverage in Alaska and partial coverage in California, and marketplace collection does not cover every county hotel tax, for example in Tennessee. The study maps the stack and the remittance responsibility for the parcel.
Property tax reclassification. Sevier County, Tennessee reassessed about 10,215 overnight rentals from the 25 percent residential ratio to the 40 percent commercial ratio from October 2023 bills. An STR community modelled at residential assessment in a county that classifies STRs as commercial is mis-costed from day one.
Distribution cost in force
Airbnb's host-only fee is 15.5 percent, mandatory for software-connected hosts since October 27, 2025 and for remaining non-EU independent hosts from September 15, 2026. Vrbo moves to a single 12 percent commission on October 29, 2026, replacing 5 percent plus 3 percent processing. Hipcamp charges 15 percent to private hosts and 12.5 percent to parks with integrated property management software. The study models each channel at the fee on the study date and prices the migration to direct bookings; a pro forma built on a 3 percent host fee is a year out of date.
What failed, and what the study tests for
The STR failures of 2025 were leased-unit and franchise models whose fixed obligations did not adjust when revenue fell. Sonder Holdings, with about 7,500 rooms, stopped operations on November 10, 2025 after Marriott ended its licensing agreement and filed Chapter 7 on November 14. Sextant Stays (Roami), managing more than 500 units, filed Chapter 11 on May 27, 2025 with $15.9 million of liabilities against $5 million of assets and assigned its leases to another operator under a plan confirmed March 19, 2026. IPG Franchising, a vacation rental franchisor, filed Chapter 11 on August 8, 2025. The study therefore tests fixed lease and management obligations against a revenue decline of the size the market has already shown, and it tests the ordinance-change case separately.
Tax treatment that drives investor demand
Under Treasury Regulation 1.469-1T(e)(3)(ii)(A), an activity with an average customer-use period of seven days or less is not a rental activity; its losses are nonpassive where the owner materially participates under 1.469-5T(a), and average use is measured per property. Public Law 119-21 (July 4, 2025) permanently restored 100 percent bonus depreciation for property acquired and placed in service after January 19, 2025, and the 2026 Section 179 limit is $2,560,000. Lodging buildings rented more than 50 percent to transients are 39-year nonresidential real property; site improvements are 15-year; furnishings are 5- or 7-year. The study reports pre-tax DSCR for the lender and after-tax returns for the equity separately, and it notes that a monthly-let unit mix defeats the seven-day rule.
What the STR feasibility study includes
- Ownership and eligibility analysis: the structure that fits each programme, with the controlling provision cited.
- Regulatory pathway: zoning for a multi-unit lodging use, the STR ordinance, permit caps, occupancy limits, the lodging tax stack and the property tax classification, with a dated citation for each.
- Market analysis from dated AirDNA and Key Data extracts reconciled across vendors, official visitation and event counts, drive-time population and a named competitive set with rates sampled on peak, shoulder and off-season nights.
- Development cost from local construction cost evidence, pools and spas, septic, water connection fees and utility extension tariffs, plus land from dated listings and sales.
- Operating costs from BLS wage data, utility rates, insurance availability, published management fee norms, cleaning cost norms and channel fees in force.
- Financing: DSCR product terms, construction loan norms, or the SBA and USDA structure where the project qualifies.
- A ten-year pro forma with DSCR by year and for the weakest three consecutive months, break-even occupancy, and sensitivities on revenue per listing, ordinance change, insurance and construction cost.
- A determination: as proposed, or as resized or restructured. See our methodology.
Model case study
Related pages
Programme eligibility in full: SBA 7(a) and 504 for glamping and cabin resorts and USDA B&I financing for glamping resorts and campgrounds. Format pages: tiny home, park model and microcabin villages and treehouse and A-frame resorts. See also our San Francisco short-term rental market analysis, the hotel feasibility study, the multifamily feasibility study for build-to-rent that does not operate as lodging, and where we work.
Frequently asked questions
Can I get an SBA loan for a short-term rental community?
Only if an operating company runs it as transient lodging with real control, more than 50 percent of revenue from stays of 30 days or less, and zoning compliance. Individually titled homes rented through a manager are a passive business and are not eligible.
Can USDA B&I finance an STR community?
As a tourist facility in a rural area, yes, provided it is not residential housing whose primary purpose is independent housing under 7 CFR 5001.118(a). The operating model and the licence decide.
What do DSCR lenders accept?
Published products cover non-owner-occupied one to four unit property at up to 80 percent loan-to-value with a 1.0x floor. Five-unit-plus communities on one parcel are outside the published box and are financed on a case basis.
What occupancy should I assume?
The market's dated figure from two reconciled vendors, not a national average. The leisure markets above run 36 to 56 percent, and AirDNA's 2026 US forecast is 57.4 percent.
How does the study handle ordinance risk?
As a separate sensitivity: permit caps, occupancy limits, registration regimes and phase-outs are modelled against the pro forma, and the determination states whether the project survives the ordinance in force and the one being proposed.
Does the seven-day rule apply to a community?
Per property, and only where the average stay is seven days or less and the owner materially participates. A mixed nightly and monthly model needs a separate calculation for each property.
Prepared by Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute. Studies are prepared under USPAP discipline, aligned with SBA SOP 50 10 8.1 and 7 CFR Part 5001. A senior analyst responds to proposal requests within 12 business hours from the firm's San Francisco office at 27 Maiden Lane, Suite 625.
Where we work
The same study, prepared to the lender requirements of the state the project sits in.
