How to Sell a Vacation Rental Business
If you’re tired of rentals or have better investment opportunities, you may be considering selling the business. Reaching a deal for one property is hard enough, but when it comes to several units and additional business assets, things get even more complicated. You’ll need to run a valuation to determine the fair price and make your offer stand out from alternatives. Then, negotiations, due diligence, and transfer.
This article on how to sell a vacation rental business takes you through the process. Read how to value the property and follow our step-by-step instructions to make a good deal and boost your revenue.
How to Value a Vacation Rental Business
Selling a vacation rental business is more complex than selling real estate. Potential buyers are interested in historical records, long-term profitability, and potential return on investment. Talk to them in numbers and provide a realistic property valuation. You usually shouldn’t do this yourself since the mistake can be expensive. We recommend hiring a certified business valuator who can provide an unbiased review of cash flow, cap rates, and other metrics.
A DIY rental valuation is still possible, although it’s a less favorable option. You’ll need to calculate the EBITDA by subtracting operating expenses from the revenue. The operating expenses don’t include interest, taxes, depreciation, and amortization costs.
Another way to know the business value is Net Operating Income (NOI). NOI equals the revenue without all expenses, including interest, taxes, depreciation, and amortization. NOI is usually lower than EBITDA and may not reflect the full earning potential of a vacation rental business. While NOI is better for evaluating property as a real estate investment, EBITDA focuses on the overall profitability of the vacation rental business.
Besides calculating EBITDA or NOI, also consider seasonality, demand fluctuations, and any regulatory limitations. Intangible assets, such as your existing customer database, Airbnb ranking, and the implementation of property management systems, direct booking websites, and guest verification software, also determine the cost of a rental business, among other factors.
What Affects the Value of a Vacation Rental Business
When you’re selling a vacation rental business, you need to understand the key factors that impact its value. This helps you set a balanced price and generate a fair profit from the future deal. The price depends on many factors, including:
- Revenue, occupancy rates, and other profitability metrics. Buyers want to know how your rentals have operated so far and will be asking about the ADR (average daily rate), RevPAR (revenue per available room/night), occupancy, and net operating income.
- Property location and seasonality. Location affects the demand for your listings and potential revenue. It also determines the duration and severity of low and high seasons, if there are any. A bad location usually means a lower property value.
- Property size and special features. More rooms in a property mean more guests and higher nightly rates. Access to a gym, swimming pool, or garden can increase the value of your business.
- Property management system. Rental businesses with a maintenance team, automated PMS software, and reliable STR damage protection services cost more compared to rentals without an established PMS system.
- Local market competition. Broader choice gives less flexibility in terms of pricing since potential buyers have more alternatives. Markets with a limited number of rentals allow for higher rates.
- Personal brand. A strong brand nurtures occupancy and customer loyalty, increasing the rental business value. High-traffic Facebook and Instagram accounts are an asset you can sell.
- Availability of direct bookings and the customer base. Rental businesses that support direct bookings have a higher margin, as you don’t pay Airbnb, Vrbo, and other OTA charges. They also have loyal customers and a strong online presence, which increases the value.
- Regulatory environment. Well-informed buyers will take local rental regulations into account, so should you. Strict limitations on occupancy and duration of stay may deter buyers who plan how to scale their Airbnb business and impact the cost of rental businesses in the area.
- Guest reviews. Positive reviews show that guests are happy with your place and willing to visit it again. They don’t increase the price much, but still make your offer a standout.
These factors are essential both to estimate the value of your rental business and promote it to potential buyers. After analyzing them, you’ll see what makes your rentals a rare find and what should be improved.
8 Steps to Sell a Vacation Rental Business
While many think about how to go from side hustle to full-time property management, others are seeking the best way to sell their business. If you’re one of them, here are the steps to follow:
Step 1. Analyze the current market
Market analysis helps you understand how to sell a vacation rental business and when’s the best time to do it. You’ll need to gather data on economic tendencies in your region, real estate price fluctuations, and the demand for vacation rentals. Such details are available at Zillow, Realtor.com, Redfin, and similar real estate platforms.
You should also analyze the historical data on your rental business and prepare clean records to make your offering more convincing for potential investors. Buyers will ask you for numbers, so you need to be able to provide them.
Metrics to Consider in Rental Business Valuation
- Gross Rental Income (Annual)
- Operating Expenses (Annual)
- Net Operating Income (NOI)
- Cap Rate (%)
- EBITDA
- Real Estate Market Value
- Intangible Assets Value (Permits, Reviews, Brand Image, etc.)
The best time to sell a vacation rental business is when interest rates are low and the rental market shows steady growth. The worst times are during a recession or when your rentals have low occupancy. This will be clear from the records and lower the price.
“Small landlords usually sell when appreciation outpaces cash flow, expenses rise, or better opportunities exist elsewhere. If the property still cash flows well and the market outlook is strong, holding often makes more sense. Tax strategy and local trends also weigh heavily in the decision.” — Stevan Stojakovic, Sr. Financing Consultant.
Step 2. Evaluate your rental portfolio
Once you’re sure it’s a good time to sell your business, get a valuation. We’ve described how to value a vacation rental business above, so you can use these guidelines to estimate the price.
Make sure to include all the assets that come with selling a vacation business, including a property management company, property rights, guest database, listings across OTA platforms, social media accounts, management contracts, branding, and a direct booking website. These can increase the cost of your rental business and make it more competitive.
Step 3. Prepare the business for sale
Have at least 2-3 years of financial statements to show the earning potential and 12-month booking performance records. Summarize the KPIs and put them into an easy-to-read report.
Besides the financials, you should prepare the properties for sale. Refresh interiors by painting walls and replacing worn-out furniture or appliances. Add nice details that make vacation rentals cozier and more attractive. Although it may seem like an extra expense, these small changes will boost your property value and improve your chances of making a good deal.
“Clean up EVERYTHING, especially windows and appliances. Hire help if needed, it’s money well spent. Example: A buyer may think a dirty stove will have to be replaced; which they will mentally subtract from what they’ll pay for the property.
Paint anything that’s really tired looking, if possible, especially ceilings, outside doors and outside railings. No visible water stains or holes in drywall.” — advice Sarah Becker, landlord.
You should also double-check whether all licenses and permits are valid and keep the documentation in order. If you own a property, be able to provide deeds and mortgage statements. If you lease, make sure you can transfer the contracts. These steps will make a future deal smoother and prevent cases where a potential buyer disengages at the last moment because the property isn’t ready for sale.
Ways to Prepare Vacation Rentals For Sale
- Professional interior cleaning
- Fresh paint in neutral tones
- Replaced worn or outdated furniture and decor
- No plumbing leaks, electrical issues, or other flaws
- Outdoor spaces (e.g., swimming pool) are ready for showcase
- Smoke and carbon monoxide detectors
- Updated short-term rental permits
- Inventory list and logs of maintenance records
Step 4. List your business to find buyers
When you’re done with the records and property upgrades, start looking for buyers. Create a concise but informative business description, including the name, type of business, location(s), years in operation, revenue model, performance highlights, unique selling points (e.g., proximity to the beach, strong online brand, etc.), and the price. No need to provide the private details. Just make sure your listing looks credible and explains your offer.
Here are some core options for listing a vacation rental business:
- Brokerage platforms: Revnest, Vrolio, and Rabbu.
- Real estate marketplaces: Zillow, Redfin, LoopNet, and Crexi.
- Business-for-sale marketplaces: BizBuySell, BusinessesForSale.com, and Flippa.
- Direct outreach. Reach out to larger vacation rental companies in your area to explore acquisition opportunities.
Step 5. Screen potential buyers
Now that everyone knows you’re selling a vacation rental business, you’ll start getting first requests. Don’t get too excited. Take time to check the financial capability and the seriousness of their intent. People who are ready to buy a business have specific goals and are less likely to waste your time. You may ask for proof of funds to ensure a potential buyer can afford the deal.
Ideal buyers include local property management companies looking to scale their business, private equity firms focusing on short-term rentals, and families seeking to invest in vacation rental property for additional cash flow.
Some sellers also consider vacation rental franchises as potential buyers, especially if you’ve built systems and processes that could be replicated across multiple locations.
Step 6. Negotiate the terms of agreement
You need a draft agreement as a foundation to negotiate further details with a buyer. The terms need to specify how the sale will happen, what assets are included, responsibilities of both parties, obligations, the due diligence period, and dispute resolution.
The most common deal type is an asset sale, where you transfer ownership of contracts, branding, websites, and other assets, rather than selling your company outright. The process of selling a company requires a stock sale type of contract when a buyer acquires your legal entity.
It’s better to have a legal advisor to go through this stage and reach a favorable and transparent agreement.
Step 7. Run due diligence
Due diligence takes place after the buyer signs a preliminary agreement. It’s a thorough investigation that a buyer requests from a third-party vendor before buying a vacation rental business. The process confirms your financial records are accurate and includes physical property inspections. This ensures the rental business information is correct and the rentals are legally compliant, ready to operate, and have a solid market position. The main goal is to minimize investment risks for a buyer.
Here’s what a rental business owner should have for due diligence:
- 2-3 years of financial records
- Balance sheets and cash flow statements
- Booking performance across channels
- Property contracts
- Licensing and permits documentation
- Tax filings and returns
- Maintenance staff and contractor agreements
- Property condition reports
- Marketing and branding resources
The due diligence process usually takes 30-90 days, depending on the complexity of the case. You’ll negotiate the duration of due diligence before signing a preliminary agreement.
Step 8. Finalize the sale and transfer the property
If the results of the due diligence are satisfactory, you can finalize the agreement and start transferring the assets. You’ll need to update all legal records, provide access to property management software and tools for property damage protection and guest ID verification, transfer domain names, trademarks, and social media accounts, and introduce the buyer to maintenance teams.
The transfer happens according to the previously agreed terms and may include a transition period during which you support the buyer with running a newly acquired business.
Ready to Sell Your Rental Business
Selling a vacation rental business takes 4-12 months of careful preparation. You’ll need clean financial records, well-maintained properties, and the right timing to get top dollar. But here’s something many sellers overlook: maintaining protection during the sale process.
Buyers want to see you’ve built a risk-managed operation. Guest Screening and Damage Protection aren’t just operational tools — they’re proof you run a professional business. They show potential buyers you’ve protected the assets they’re considering purchasing, which can justify your asking price and speed up negotiations.
Whether you’re selling to reinvest or move on to your next opportunity, don’t let preventable guest incidents damage your business value during the transition.
Protect your investment until the deal closes
Get Guest Screening and Damage Protection to maintain property condition while you sell.
