From Owner to Exit: How to 10X Your STR Value

There was about 300 that manage 300 or more properties. We had one seller at one point that had a yacht that he ran through his business. 7 things happened in this same year. If one of those would've happened in one year, that would've been big news for the industry. If you start getting below 15%, it's a pretty tough game to run a profitable company. You don't want to be a nonprofit. If a company can build something relatively scalable and have a focus on having clean financials and growing their company, there's going to be a line of buyers looking for them.

There's no better ins— insight into what makes a short-term rental business profitable than talking with a lot of short-term rental business owners, a lot of property managers. Our guest today does just that, but not just that, he actually helps them sell their business and he helps buyers buy property management businesses. So you better believe he knows exactly what makes a short-term rental business profitable. Today we've got Jacoby on from C2G Advisors. He's helped close over $750 million in transactions for short-term rental businesses. You're not going to want to miss today's show. There's a lot of insight, a lot of details that are going to help you make your business more profitable. Catch the whole episode to find out the details. Well, welcome back to the Short-Term Rental Riches podcast. I'm happy you're here again. There's a lot of activity out in the short-term rental world. I just got back from a conference. A lot of talk these days is about growing a property management business and selling it. And I have just the man on our show today because he's been doing this for a long time. He knows all the ins and outs. He is the owner of C2G Advisors. Jacoby, welcome to the show.

Thanks, Tim. Happy to be here.

Yeah, I'm excited to have you here. There really is a lot going on, you know, at least from my perspective. I go to a lot of conferences. We of course manage properties ourselves. I'm in lots of management groups and a lot of buzz out there about growing and selling. And I know you've been busy, but before we get into that, why don't you give us just a quick background and how you got to be where you are today?

Sure. Sure. So I'm probably one of the unique ones, Tim. I was actually born and raised in this crazy pirate industry in the late '80s. Grew up as a kid in the '90s. Stripping beds, taking trashes out, probably breaking some child labor laws. My father was kind of a big name in this industry in the '90s and early 2000s. So my brothers and I, we were tangentially involved in this industry really before Airbnb. I mean, VRBO was VRBO. Got a younger sister. She was the smart one of the bunch and never got involved in this industry, but really grew up in and around it. I went off in various directions. I got into the restaurant industry in 2011. 7 and had a restaurant for 7 years in Nashville. My brothers and I, we all got sucked back into the industry around the same time in 2017. So I came back in the industry. My father had the company called C2G Advisors. He was semi-retired and it was just him doing some consulting work and some subject matter expert work for a couple companies. And yeah, I came in, I, he mentored me for about a year. And then I really started, I saw the need for professionalizing the M&A side. And honestly, at that time as well, the lease arbitrage players, they were in the middle of raising hundreds of millions of dollars. So I started reaching out to them and created really a service to help them scale. And to assist them with finding new apartment buildings in urban metropolitan areas, talking with landlords, negotiating full building master leases, stuff of that nature. Really, really just like hustling. And it was a fun time. It was short. Once 2020 happened, most of those either went BK or kind of found some lifelines or pivoted to other sectors. But yeah, so we were helping those companies grow. And then in tandem, started like a buy-side deal origination business for the buyers out there in 2018. There weren't many at that time. And so for a couple years we were helping them find sellers across the country and helping negotiate those deals on the buyer's behalf. And then 2020 happened, which I think everyone knows what happened then. At that time, all deals paused for about 6 months. So it actually gave me a little bit of time to think about what do I want to build C2G into when it grows up and decided at that time to really pivot and change our business model to really help sellers to work on their behalf, to help them find the right partner in deals and also to help them get that most amount of money they, they could get in a transaction. So 2020 going forward to now was really, really switching our business model to the sell side. And then since then, just building out the team, building out the systems and processes, and really trying to go as deep as possible within the industry.

Awesome. Well, thanks for the background, and I know you guys have been busy. I know you've successfully handled dozens and dozens of deals. From my records, over $750 million worth, and maybe that number's much higher now because things are moving quickly. But that's no small undertaking. And I know, you know, I talk with property managers all the time and they're all set up. There's a lot of configurations, you know, they're set up differently. Their books aren't always in line. They have different commission models, you know, all types of different setups. So I guess before we get into how much property management companies can be worth, can you talk a little bit about how you would value a short-term rental property management business.

Yeah, I know it was funny hearing you say like different business models, different ways of setting things up. One of our core values at CTG is curiosity and just always being curious. If we're going to try to be a trusted brand within the industry, we always have to be kind of reading everything daily, listening, really getting our ears as close to the industry as possible because it is iterating and evolving. So fast and which is fun, which is exciting. So every time we meet a new potential seller or client, like that's the fun part about this industry. They're all going to run things slightly differently. There's not a college for short-term rentals. There's 27,000 different resources that all give different advice and ways of doing things. It is definitely an industry with a lot of different business models, a lot of different ways that people do things, and it's very entrepreneurial. Most everyone that runs these businesses are entrepreneurs, But the negative of that is they can be pretty siloed. So they have their way of doing things and they think it's right. There aren't great, like best practices around the industry. Your question was around like, how do we value sellers? Was that right? Yeah.

Yeah. With all the models out there, I mean, what are some of the fundamental things that you guys look at to determine the potential value of a company?

Yeah. So like in the end, it does come down to the financials and how the company is operating. So we'll request from the sellers a set of their financials, most of Most of these sellers or companies are operating on QuickBooks Online or one of those accounting softwares. And so we'll look at the last 3 years of their financials and then the PMSs that the sellers are on can be any number of a dozen of them. We'll go through and run their reservation level reports so we can see what each individual property's contributing to the company. And then we'll kind of validate or verify their financials to the booking reports and see, make sure that those are being recorded properly. In the end, buyers are, the majority of deals, buyers are going to pay a multiple of a company's profits. So we'll go through their profit and loss statement and we'll help normalize that to how it should look day one post-close. And so a lot of sellers, they run things through their business. We are not the IRS, so it's, It's fine. I'm a small business owner. I definitely run some personal stuff through my business as well. I mean, we had one seller at one point that had a yacht that he ran through his business, which was pretty exciting. But so we'll go through there and we'll look at their general ledgers and we'll take out certain like personal expenses or one-time non-recurring expenses and really kind of normalize that business to what it should look like on the go forward. And then, and then apply a multiple to that. And we'll go over that multiple that's applied to that is based on the quality of the company. And that's where it's a little bit more subjective. So we'll go through and we'll look at what does the team look like? How much key man risk does the seller have? What about the quality of the inventory? How is the company pacing with their peak season versus their peak season last year? What market are they in? There are just inherently some markets that are more attractive to buyers than others. And so it's a mixture of some like objective and subjective analysis that we do. And then some companies are just not profitable, which is fine. And for those, we look at those more on like a price for a contract that a buyer would be paying. And so those are more based on what those individual properties are bringing in, like top line as a gross booking value.

Okay. Some interesting things there. Yachts aren't short-term rentals also, right? You know, if you can fit it in, then fit it in.

There are some companies in and around like Mexico that do some like yacht rentals as well, which can be a pretty good business as well.

Yeah, for sure. For sure. Well, I think a lot of our audience might not be familiar with EBITDA and this multiple valuing system. Can you explain for those that maybe don't know just kind of what that is and what those multiples actually mean?

Yeah.

Yeah.

EBITDA can definitely be a mouthful. And I feel like my life is talking in acronyms. It's just an acronym for earnings, which is your net income at the bottom of your profit and loss statement. Before is the B in EBITDA, interest, taxes, depreciation, and amortization. So those other, those components may be on your P&L as expenses, and if they are, then we would remove those expenses. So that would kind of increase your net income. From those expenses that are removed. And then we go through and so we find an adjusted EBITDA is what we find. So first we would remove those, the ITDA in EBITDA, and then we would go through and remove personal expenses, non-recurring, one-time. Maybe you switch from one PMS to another and the new PMS is charging you a $10,000 onboarding fee. Like that expense would not continue in the future, so we'd be able to remove that specific expense. And so it's a collaborative process because we obviously don't know the business as good as you may, Tim Hubbard, your own business. So we'll go through and we'll make adjustments, some assumptions on them, and then we'll, we'll have a discussion with you and say, hey, here's what we see. Are there any others that we're missing? Are any that we, we think are some correct or incorrect? Because what we're trying to do with the seller is to present a picture to them before any buyer looks at them. And that way a seller can say like, oh wow, this is cool. This is kind of how my, the value of my company today. And they may say, oh, I'm worth $1 million today. I really want to get to $3 million. And then we can say, okay, well let's work on X, Y, and Z over the next year or two or three years, and then you can get there. But you always, as a seller, you want to know someone like an advisor hold a mirror up to your business before any buyer looks at you because they can find any skeletons or red flags early. So I guess going back to it, once you kind of get to this adjusted EBITDA, there's different thresholds of how multiples work to it. A buyer will, they'll pay a multiple of that adjusted EBITDA, and essentially you can think about is whatever the multiple is, is the number of years in the future they're paying for your adjusted EBITDA. So if they paid, if your adjusted EBITDA was $500,000 and they paid a 4 multiple, that'd be $2 million. So they're paying 4 years of that, which can be cool, but it is also structured in most cases. It's, this is an ongoing business. Yeah. Most of these business, this is a relationship business. And so a buyer's not going to hand you $2 million cash at close and then tomorrow you can go down to Jamaica, sip in Mai Tais for the rest of your life. Generally they may structure it and pay in this $2 million scenario, they may pay $1 million or $1.5 million cash at close and then pay the other 500,000 or a million a year later, put like a contingency on there saying like, hey, if you had 50 properties or 100 properties under management, there needs to be that many under management a year later. Or tie it to like revenue. If you delivered $2 million of revenue to us, there needs to be at least $2 million a year later as well.

Yeah. Awesome. Okay. Well, so yeah, good idea to work with an advisor, get your numbers in line, basically make the best presentation possible, right? But even then, there are some requirements many times after the sale where maybe the owner's staying on, maybe there's management that's staying on, and this is all up for negotiation, right? You mentioned a 4x multiple. I'm curious, I've heard a lot of numbers out there recently and some of them are quite high. Could you give me just a, or give us an idea of the range of potential here, maybe from the lowest to highest, and then what might make them higher?

Exactly. So sometimes you will hear, or you will just hear sellers throw out multiples, and sometimes sellers don't even fully understand what multiple a buyer paid for them because the buyer may say, hey, we'll pay you $1 million, but if you stay on for a year and you crush it for that next year, we'll pay you another million dollars or something. So then a seller will take that $2 million and then say that was the amount the buyer paid at closing, whereas really Actually a million. And then if they do better, so like there's some goofiness there for sure. But the thresholds that we're seeing right now in the market is if a seller is between $250,000 and $750,000 of adjusted EBITDA, typically a buyer's going to pay around a 3 to 5 multiple for that. In that case where I said $500,000 for multiple of $2 million, And some of the reasons why they'll pay that, why it's a little bit lower of a multiple is typically at this size, this seller may be around 50 properties, maybe 75 properties. It depends on the quality of the inventory that they're managing. And the seller's going to be very involved in most cases. They're going to have a very small team, if any. The seller's going to be very, going to have a lot of key man risk there. Like the relationships with the homeowners are probably with the seller. There's probably not a lot of like systems and processes built out, and the buyer's gonna need the seller to stay on for a longer period of time to kind of help with the transition. As the company gets bigger in terms of adjusted EBITDA between like $750,000 and $1.5 million, this is starting to become more of like an actual business versus like a, a small mom and pop. And at that size, generally there's going to be a general manager that's not the seller. There's going to be a decent team built out and there's going to be some professional benchmarking and measuring of your company. And so once you get to that size, typically 5's going to be the floor of what a buyer will pay. And it could go up to like a 6.5, somewhere in that range, 5, 6, 6.5 multiple. Once you get above $1.5 million of EBITDA, that's the actual TAM of these sellers, very small amount. So there's around 30,000 property managers in the United States. Short-term rental managers. Of that, there's about 300 that manage 300 or more properties. So there's about 1% of those manage 300 or more properties, and the average EBITDA per property is around $6,000. So if you do 6,000 times 300, that's $1.8 million. So there's only 300 companies in the US that have an EBITDA above $1.8 million. So at that size, there's much more buyers than sellers at that size. And so the sellers start to have leverage there. And that's where the multiples can really get pretty, pretty attractive. And really like 6.5 is going to be your, like your bottom floor. And it can, it can obviously go up from there. While I'm just talking about EBITDA, typically like indirectly with EBITDA as it's growing means that the company's getting more sophisticated and more professional. They have teams built out, they're scaled, stuff of that nature. So it's not like, oh, let's just get to the EBITDA. It's a lot harder to get there unless you're kind of building this foundation. So those are really the various buckets there. If a company is less than $250,000 of profit or is like unprofitable, and let's say they're at 27 units in Gatlinburg, Tennessee, and you listen to a TikTok influencer that said it's a passive industry and super easy to get into, you got to 27 7 units, but you're just like burnt out. You're like, get me outta here. In most markets there's willing buyers for your company, but even if you're unprofitable, typically at that point they'll pay around, they'll look at your commissions that your units bring in and they'll pay around like a 1.5 multiple of your commissions is generally how that looks. And then it'll be structured as well.

So for an unprofitable company, still opportunity to sell. But basically the more systems in place and the more a buyer coming in knows that things aren't going to fall apart when, when the name changes or maybe the name doesn't change, you know, that stays on the back end, but that adds a lot more value. And in the grand scheme of things, I'm trying to just recap a little bit. You're, you know, because there's a lot of good nuggets there, but basically only a few hundred companies in the US that have achieved that high scale, at least in terms of property count and and EBITDA. So we, we also see an interesting thing happening where companies can roll up together. And if one company is, you know, maybe operating 50 units and their friend's also operating 50 units, and maybe if they were to join forces, now they're at 100 and they're starting to get some of these scale. Are you coming across this more? And can you tell us a little bit about this idea of, of roll-ups if you have come across it?

Sure. So historically, private equity entered this industry They really, like a small one entered this industry in 2016, but they really entered this industry in the last like 3 to 4 to 5 years. And so like the traditional private equity play is they buy one brand at a time, maybe, maybe two brands at a time. And the seller, the private equity group, they do this house of brands play. They keep the brand, the seller may sell all their company, but they roll over a portion of the purchase price into equity of of the actual holding company. And then the private equity group then owns 20 or 30 brands around the US. And then all these sellers have a small ownership of this kind of holding company. That's like the typical private equity play. And there's a couple groups in here doing it, doing a good job in, in the industry. About a year ago was when a group called Stakeholders kind of came out and started doing their circuit and, and talking to, talking to a lot of sellers and really, really saying, hey, let's, let's kind of like accelerate this private equity play and let's get some of the best names and the brands and people to all like come together at once instead of one acquisition at a time. And let's, and granted, I'm speaking a little bit out of turn. It's not my company, but from my understanding, they're like, let's all kind of come together and join forces. And then we'll get a private equity company to come and kind of buy us all or a portion of all of us. And that way we'll have like a collection of the best brands around the country. I think they've done a great job. I have a lot of respect for what they built so far, and I think probably this year it'll be announced who kind of their partner is and will be pretty cool to see that. They got like, I don't know, 20 or 30+ companies to kind of come together all at the same time, which I had never seen in this industry before, which was pretty exciting. But kind of falling out from that, Over the last 6 to 9 months, we've had countless conversations with groups saying, hey, we want to do something like that, but much smaller scale. Or like, hey, I've got 50 units, like you said, and my buddy's got 50 units. Like, what would it look like for us to just like join forces? And for all of that, I'm like, yeah, that's awesome. That, that all sounds great. However, you just have to be very thoughtful if, if you're going to say, hey, I've got 50 properties or I've got 100 properties. My friend's got 100 properties. Let's combine. In a best-case scenario, in like a bull case, yeah, one and one can make five. It could be great. A couple things you want to just understand is if you're 100% owner of your company and your colleague's 100% owner of their company, you're now going to become partners. And partners in any business, it's similar to being married, but sometimes you're even more involved with your business partner. So you want to make sure both people have a similar kind of philosophy and ethos and culture with, with the companies. You really want to be thoughtful about what is this going to look like going forward? Like, are y'all going to create one brand that both brands are going to roll into? Are y'all going to keep two separate brands? Is one brand going to kind of eat the other brand? What about the, the staff? How do you communicate this to the homeowners? What is the reasoning to do this? Like, are you going to actually be able to save on cost? Will you get some purchasing power with some of the software vendors to where you can negotiate better rates? And so like, it is a great idea. It's a, it's a lot harder to execute this kind of like merger type of play. And especially the more groups you get involved, the more hands in the cookie jar, the more complicated it gets. But what I would say is if, let's say you're able to do all of that and, and you're all agreeing on everything, just because you've kind of integrated two companies, it's not really going to move the needle a ton on day one from a buyer's perspective, because the buyer is going to say, show me that one-on-one, that you guys are better together than apart. So what I would say is like, once doing it, show a 12 months of together that the financials together are better and you're able to grow more and whatever other, other KPIs are better together. And if you're able to show that, then yes, you're going to get a you will get a premium multiple. You will get better and it'll be a better outcome for everyone. It is harder said than done, but I love the ideas for people wanting to do it.

Yeah, great insight. And that makes sense. You know, merging two businesses sounds difficult. Merging a third or fourth or a fifth just grows in complexity. So I'm curious, you know, part of what buyers are looking for is stability, right? When they buy a business to know that they're not going to buy it and all the owners are going to walk away because Now maybe it's under a new company or brand. Can you tell us a little bit, and I'm not sure how involved you are in after the transaction, but do you have any sort of idea on what like the typical churn rates are when someone does buy a company? And then also a side note, maybe we can tackle this next, but us at Coarsely, we're really excited about all the technology in the space and the opportunity to run a large portfolio with lower costs by being more efficient with AI and stuff. So I'd love to hear just your, your point on both those things.

Yeah, so on the, on the first one, We at C2G, we don't do post-merger integration. We don't do PMI work post-close. What I would say is like churn post-close, it is very buyer dependent for sure on how, who the buyer is. It's also dependent on the seller, like where they are in their process as well, or in their, in their journey. I would say most, most companies that we've seen recently, this was, this was worse earlier on 5 to 7 years ago, but I would say recently most of them are, are at 90+% of retention within the first year. And then like the win-win is where like not just looking at retention, but like what the net amount of units is at the end of the year. So if there's a net growth greater than, than what was delivered, then that's kind of the win-win there. And so like if we're working with a seller, we're trying to structure those deals that if there is a performance contingency where the unit count has to be the same, and if it's lower than the purchase price is reduced by that percentage, we'll put in clauses that like if the seller adds properties post-close or properties come on post-close, this could replace properties that may churn. And so with the ultimate goal that like there's at least the amount of properties, if not more post-close, and we see that actually in many scenarios. And the positive thing is like both parties are aligned. Like the buyer, they're paying money, they want to buy properties and obviously the business, but they also want that business to grow in the future. And the seller doesn't want properties to leave because they've had these relationships for so long. So it's a good thing that both parties want the same outcome and it's then like, okay, let's put our heads together. I'm like, how do we actually strategize to make that outcome happen?

You know, we're focused a lot on just becoming as efficient as possible and adopting AI as possible. And so the higher someone's EBITDA is, right? I mean, the AI and technology can translate into a higher net income for a company. And so So do you see some of these buyers coming in anticipating some savings in terms of operational efficiencies and things like that, or has that not quite made it into the picture?

Yeah, so buyers will generally do this thing called like a value creation throughout due diligence, and some buyers just do it internally and don't share it with the seller. Some buyers are collaborative with the seller. They kind of go, go through like, hey, what is the seller paying for all these various vendors? What will it look like on, on our, with our rates? What about employees? Where is their overlap? What, what rates are they charging the homeowners? Are they doing 4 rates a year or how are their dynamic pricing going? What is their actual like other ancillary fees they charge in addition and how does that stack up to what we charge? So they'll, they'll go through historically, like that's a normal process that buyers are going through. They're immediately looking for what are going to be levers that we can pull day one post-close, and it's lowering expenses and then it's increasing revenues is kind of their thoughts. The easy low-hanging fruit is typically the purchasing power for softwares. So if the seller's on a PMS and they have 50 units, like they're not going to have a ton of negotiation with that PMS. But if the buyer has 2,000 units with that PMS and they're adding in another 50, they're going to be able to get it at the rate that their 2,050 units are now on. So they'll find those savings immediately. On the AI side, I still think we are a little early on that in terms of like we haven't seen a ton of buyers discuss like what the AI savings are going to be. I think that like internally with us as C2G, like we made a wholesale switch over to Claude at the end of last year and it seems like we've seen a pretty big like step function in terms of what it can do internally for our our business. And really one of the things that for us is it's made us be able to handle much more kind of inflow than we would normally have been able to handle with, without having to call it like hire more people. And so I think that's only going to kind of expand. And I think right now there's definitely a lot of work being done on like the guest communication side of AI. It's going to be interesting to see how that kind of flows into revenue management and kind of other, other things that can be done.

Yeah. I mean, it basically is working its way into everything. And, you know, our vision of the future is that, you know, one person with a good on-the-ground team, of course, you know, that's foundational, but the core operations could be managed with a, with a lot fewer people and consistency.

Yeah. The normal margins in this industry are around 20 to 25%, like profit margins as a percentage of a company. Is net revenue. So like net revenue would be the commissions the company makes plus all their gross ancillary fees. So after the homeowners are paid their components, if buyers or even sellers, just companies are able to kind of increase those margins incrementally, that's just significantly increasing the value of your business. And I think that'll continue and we can all continue to have fun until AI and robots take over the world.

Well, Jacoby, you know, I mean, all the insights, I mean, I'm sure you can look pretty quickly at a deal and see a company that's been run well and one that's not running so well. Can you give us maybe just some of the top insights? Like what could people out there do to start making their business a little more profitable today? Or what are some of the things that you find?

Really, I think first off is actually having visibility into your financial statements, just understanding what's going on. We see so many businesses under 100 properties where the sellers like rarely look at their financial statements or might be their bookkeeper may provide those, like 6 months late. So they're literally just like very reactive, just working day in and day out on just what's going on in front of them and not being able to make like data-based decisions. So the first thing I always tell, tell people is like, hey, you, you don't have to be an accountant, but you sure as hell need to have somebody on your team that is, whether it's internal or external. It could be, it can be an internal bookkeeper. You can find an external strong team. There's a company called Howard Financial that is absolutely just crushing it right now in the industry and really making make sure that you schedule every month a meeting internally to solely go over the numbers for that month. And you want to go as granular as possible so you can quickly find if some outlier thing that could be happening. And so I think really like getting set up there. I mean, we see so many companies that they have one line item for revenue and that's just like a collection of, I don't know, commissions, cleaning fees, booking fees, limited damage waiver, whatever. But you don't even know what it is. And then they don't have any cost of those revenues. They don't have a COGS section, so you can't see what margins you're making on these. And then if so, it's just all thrown into expenses. So you just have no visibility into your actual financials to see if like, hey, does it make sense? I've been using this outsource, this vendor for our limited damage waiver, but like we're actually losing money on this. Like, does it make sense for me to just bring this in-house? And see how that works. Was it like, there's just so much, so much involved with the financial side that I think, I think people, people definitely miss there. And one thing I would say is like your take rate is an extremely important, important like metric to follow. And the take rate is based on what the guest is paying at booking, whether it's through Airbnb or through your website, how much of that dollar amount are you taking to your company's P&L? On average, the industry's take rate is around 35 to 40%. Of what the guest is booking. What I would do is this weekend, and it might take an hour, is go and do some secret shopping on your top 3 or 4 competitors. Do it on yourself first, but go and book some rentals on their websites for 4 different, for each season of the year. Go and book it on different unit sizes and then different stay lengths and see kind of what additional fees they're charging the and whether those fees are static or dynamic, whether they're percentage fees or flat rate fees, and then see how that stacks up to what you charge the guest. And some things will pop out there. Maybe the market charges a 5% booking fee and you don't charge anything, or you charge a 2% one. And at that time you can be like, wow, okay. You can either use that to either increase that rate or you can use that as like a marketing plan to get new You can, you can start, start reaching out to homeowners, let 'em know that, hey, our competitors are charging this. We don't charge this. We are, we are one flat rate, blah, blah, blah. So I, I think there's a lot of, a lot of information that can be, can be gleaned from there. The largest expense for a company is going to be, going to be the team, the staff. So on average, your team is around 20 to 25% of net revenue. And so keeping, keeping track of that is super important. So if you're, if you're looking and your team's 50% of net revenue, like like you either have to grow into that or you're overstaffed. And it's as simple as that.

Yeah, those are some great insights. So first of all, we need to know our numbers, right? If we don't know our numbers, then, you know, not much we can do. Need to look at our staff, a percentage of our costs from our team members. And I know that's harder for smaller managers, right? Because they have less properties, they have less commissions coming in. And so that's what we find, you know, a lot of small property managers, it's really stressed out because you're trying to do everything. Everything on their own. You mentioned a 35 to 40%, I believe, take rate. What percentage of that, that's all the money coming to the P&L for the property manager, including fees and maybe damage waivers and all those things. What would you say is the average commission rate that the people you work with are charging?

Yeah, good question. So the commissions are very market specific. What's more important to is seeing what the actual take rate is. And it's kind of funny actually, because you'll see in some of the like mountain markets, their commission rate may be 25 to 35%, but then they have very little like ancillary fees they charge. Whereas in like Myrtle Beach, their commission rate or the Outer Banks may be 12 to 15%, but they charge a hell of a lot of additional ancillary fees. So, so you're just taking more money from one side or the other, the owner or the guest. And then what we've seen urban markets, like those are younger than the more like leisure destinations. So most of those got built on the back of Airbnb. And we've just seen that tho— those are typically lower commission rates in some of the more vacation markets. So you might see 15% or so. Like I would just stress to people, if you start getting below 15%, like it's a pretty tough game to run a profitable company. Company, even at 15%, like you gotta get the money from someone. So you're going to have to charge additional fees to the guests. Like if you're just straight 15% commission, you're not going to be a profitable company unless you're taking on properties that are all doing north of $100,000 a year. You don't want to be a nonprofit. It's enough work. This is a very operationally intensive business.

Well, I know we're wrapping up on time already. Gosh, lots, lots of it could dig into. I mean, you've got the inside look at, you know, managers across the nation, so a lot to, a lot to learn from you. Just a couple quick questions. Would you say that commissions in general are going down, the commission rates that people are charging?

I, I think they have gone down in the, the last couple of years. I think they're probably in a relatively stable spot. This industry, like in most states, is pretty easy to start a company. Most states are not governed by the real estate commission. So like there's always going to be new groups coming in trying to kind of undercut the market or whatever. And then they may last for a year and then you realize, I can't run a profitable business at this. So then they sell and go away. But I think that 15% is probably going to be the low watermark there. It's just too challenging after that. I mean, long-term rentals is I think like 8 to 12%.

So what's the fastest sale you've closed from start to finish?

Oh my goodness. We've done a couple deals less than 30 days. They were really, really small. Really small. Call it call it 10 to 25 units. Our average transaction time from start to finish is 4 to 6 months. Our quickest $20 million deal was, we did one that was 50, 57 days from start to finish, which was pretty amazing. A lot of it honestly is on the seller. There's a lot that the buyers ask for and it's tough because the sellers are trying to run their own business and get the information for the buyers. So a lot of it is like the sellers are like, hey, I need a couple of weeks to gather the info.

Yeah. Okay. Some of those pretty quick though. And then, okay, one other quick question, I guess in general, how are the multiples trending? Are they going down? Are they going up? Are they stuck?

They're going up. They're going up. And I'll try to be quick here. Like we had the 2021, 2022, just like COVID froth craze. Everybody was having the best 12 months of their career. And then 2023, 2024, everything we kind of got on the backside of the mountain, everything was just slowly going down year over year metrics. Metrics in almost every market were down. It was pretty rough and expenses were going up. However, I don't know what went in the water in 2025 and just like a series of large M&A transactions all happened within like 90 days of each other. And so a company called Stayterra entered the market with a large acquisition of Prime Vacations, the largest private equity-backed group called Awayday. They traded hands to a company called Aries, the largest luxury private equity-backed called Nocturne. They traded hands to a company called Calera Capital. Costigo took Vacasa private, and then subsequently CTG, we helped them sell off the vast majority of the markets. And then just 2 weeks ago, TowneBank announced that they sold their vacation rental division to Alpine for $250 million. And this stakeholders group is probably going to, I'm sure we'll see an announcement at some point this year. So all of Those companies, if one of those would've happened in the year, that would've been big news for the industry. But like 7 things happened in this same year and the buyers of all those companies now need to 3 to 5x their investment over the next 3 to 5 years. So the buyers of those are now all highly acquisitive. And then in all of those processes, there were tons of people that came in 2nd, 3rd, 4th, 5th, 6th place, and they did a ton of research in the industry and they just lost out on the bid. Did. So they're all now looking for their first acquisition. So I think the next 3 years are going to be very ripe M&A-wise. So if a company can build something relatively scalable and have a focus on having clean financials and growing their company, like there's going to be a line of buyers looking for them. Awesome. Awesome.

Well, as much as I'd love to keep digging into the details, I think that's a good way to wrap up for anyone out there that's interested. There's a lot of opportunity on the horizon. Things are already happening. You gotta get your finances in place. I take note of what Jacoby said. Where can people find you and your company if this is something they think might make sense for them?

Yeah, sure. So our website, c2gadvisors.com. Feel free to email me, just my first name, Jacoby, at C2G Advisors. I'm on LinkedIn. We go to most industry conferences. We'd love to, even if you're not looking to sell, we'd love to still have a chat, talk through. We love talking shop. So if there's anything you have questions on, if we can't answer, we should be able to point you in the right direction. Well, thanks so much for coming on.

Love to have you on again in the future, and we'll talk to you soon.