Thinking of selling your STR business?
Understand what drives its value—and explore what a sale could look like for you.
Select Operators partners with established operators in your market to acquire short-term rental management businesses, holding a minority stake in every deal. Calls are with Martin Mullany. No obligation, and nothing on this page is an offer.
Thinking of selling your STR business? Book a call to discuss.
Book a call with MartinDo you own a job, or do you own a company? Both have value.
Building a management business from nothing is an achievement. You signed the owners, set the standards and carried the phone. A business like that can have real, saleable value. The question a buyer asks is a narrower one: how much of its income and its operation will still be there once you leave?
Most owner-operators have never had to answer that, because they have never left. So start with two tests.
If you were suddenly unable to work tomorrow, would your business keep running?
Could you step away for 90 days without owner relationships, guest service or profitability suffering?
A screening prompt, not a rule
If you manage fewer than about 150 properties, or your annual EBITDA is below $500,000, look particularly closely at owner dependence. At that scale the owner usually is the operation. These are prompts for the assessment below, not valuation thresholds.
Size doesn’t decide it
A 40-property business with a manager who runs the day, documented procedures and owners who deal with the company can be an easier transfer than a 300-property business that still routes every decision through its founder.
EBITDA, in plain English
Earnings before interest, taxes, depreciation and amortisation: the cash profit your management company makes from fees after paying its operating costs, before financing and tax, and before any non-cash charges. It excludes rental money that belongs to your homeowners.
Some of your homeowners will leave when you do.
A share of homeowners simply don’t like change. However well the hand-over is run, some will walk once the business changes hands, and every experienced buyer prices that in before they make an offer. It shows up as a lower headline price, a holdback released as owners stay through the first year or two, a clawback if retention falls short, or part of the price paid in instalments. If a buyer doesn’t raise it, they are either inexperienced or planning to raise it later. A buyer will always assume that churn after the sale will be equal to or higher than your historical turnover, so expect a thorough review of every owner you have lost in recent years and why. The better you can evidence that owners deal with the company rather than with you, the smaller that discount tends to be.
Three profiles. None of them is a price.
These describe how a business operates, not what it is worth. Where you sit on the spectrum shapes what a buyer has to take over, and that shapes how they think about value.
Owner-operated portfolio
The owner performs much of the work. There may be value in the contracts, relationships, earnings and local presence, but the buyer must take over or replace that work.
Partial management independence
A team and systems are in place, but the owner still holds important operational responsibilities or relationships.
Independent management
Day-to-day operations run through an accountable team. The owner mainly provides director-level oversight, and earnings can continue without their daily involvement.
Within an owner-operated portfolio
For most buyers of a Profile A business, your EBITDA is close to irrelevant. They will be replacing every function you perform with their own people and systems, so what the business has cost you to run tells them little. What drives their number is what it costs them to absorb your portfolio into theirs. For that reason these businesses are nearly always priced as a multiple of commission income rather than of profit.
That multiple moves with three things, and there is a sliding scale within each:
- Number of properties. Fewer properties limit the income available and the buyer’s appetite; more properties support a higher multiple when the contracts are durable and the cost of servicing them is under control.
- Commission income. Revenue per property, retention, geographic density and service obligations all sit behind the headline rate. Property count and commission percentage alone are not enough.
- Whether the buyer sees upside in your contracts. This is the one that surprises owners. A buyer pays more when they believe they can lift the income: raise occupancy, push nightly rates, add fees or move owners to a stronger commission. If you already run the best occupancies, the highest rates and a strong commission, there is nowhere for that income to go but down, and a well-run book can end up priced at a lower multiple of commission than a weaker one with obvious room to improve.
For a more independent business
What would it cost to replace everything you do?
The strongest position is a business that keeps running with the owner providing only occasional oversight. Value weakens when replacing the owner’s several responsibilities would consume most of the reported profit.
The earnings that remain after your work has been paid for.
A buyer looks at your reported EBITDA and then asks what it would be once someone else is doing what you do. Two things matter: whether you already pay yourself a salary through the business, and what it would really cost to cover your responsibilities. A salary that is already an expense is different from dividends or distributions you take out of profit.
Figures are invented for illustration. They are not a valuation of any business.
Don’t double-count. If your salary is already in the accounts, only the gap between it and the real replacement cost comes off. And several responsibilities are often covered by one capable general manager plus part-time specialists, so don’t add a full-time salary for every task on the list.
A buyer needs to understand the earnings that remain after the work you do has been paid for.
Your properties are where they are. Your buyer’s economics matter.
A buyer isn’t valuing “an STR business”. They are valuing the specific markets, property portfolio and operating footprint they would be taking on, and asking what impact it would have on the bottom line of their own operation.
Entering a market
Is the business profitable and independently managed enough to justify setting up a presence there? What local staff, infrastructure and oversight would the buyer have to put in place from day one?
Adding to an existing operation
Can an operator already in the area absorb the properties with existing staff and systems? Or would the acquisition tip them into hiring more managers and support staff, or taking on more space?
Incremental contribution
The additional profit the acquired portfolio brings after the additional costs of serving it. This, not your reported EBITDA, is what the buyer is really buying.
Spare capacity
Room within the buyer’s existing operation to take on more properties without adding people or premises.
Step-fixed costs
Overhead that jumps when the combined operation passes its current capacity: another ops manager, a second vehicle, a larger laundry.
| Line | Buyer entering the market | Buyer with a local operation |
|---|---|---|
| Management revenue acquired | $900,000 | $900,000 |
| Field cost to service the properties | −$450,000 | −$430,000 |
| Local manager and office (new) | −$160,000 | $0 (spare capacity) |
| Step-fixed cost triggered | $0 | −$45,000 (one extra coordinator) |
| Software, insurance, admin | −$70,000 | −$25,000 |
| Incremental contribution | $220,000 | $400,000 |
Invented figures. The point is the shape: identical properties, two different answers, because each buyer’s starting position is different.
You won’t usually know a buyer’s internal capacity or cost base, but those differences influence what they can offer. A buyer-specific saving doesn’t automatically belong to either side. The negotiated price decides how that value is shared.
A successful sale needs to work for both sides.
You built the contracts, the reputation and the earnings. A purchaser has to pay for them, then fund the transition, replace the management you provided, invest in what comes next and carry the risk that owners or staff leave. They need to see enough opportunity left after all of that. Understanding that arithmetic puts you in a stronger position in the conversation, not a weaker one.
Why buy your business, rather than something else?
Every buyer has other uses for the same money. Take an operator who already runs a business in your market and is weighing your portfolio as an addition to theirs. Why would they pay $1 million for your business, take on the hand-over, the homeowners who may leave and the work of running your properties, when they could put the same $1 million into a short-term rental property they manage themselves? They already have a business, so any growth after the purchase comes from their own effort, not from the price they paid you. Your business has to beat that alternative on return, on risk, or on both. That comparison, more than any formula, is what sets the ceiling on what a buyer will offer.
Thinking of selling your STR business? Book a call to discuss.
Book a call with MartinWhat does the business depend on you for?
Three short steps, then an indicative profile with the reasoning shown. Nothing you enter leaves this page and no email address is required to see the result. It is not a valuation and not an offer.
Fees and other income you keep. Exclude rental proceeds that belong to homeowners.
For each function, who actually does the work today? Pick the closest answer.
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martin@selectoperators.fund
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