Buying a co-hosting book: four units, $18k for the handoff, every contract cancels at 30 days

What does the $18,000 actually buy here? If the contracts cancel at 30 days and the permits belong to the owners, the thing being sold is an introduction plus whatever operating history sits in the listings. Is there anything in writing that he's obligated to hand over besides the owner names?

Your fee base is doing quiet work in that number, so pin it down before anything else. Is 15% of gross calculated on nightly rate only, or on nightly plus cleaning fee plus pet fee? On $286k of bookings the cleaning fees might be $34k of it. If his contracts say gross booking revenue including cleaning collected, and you write yours on net of cleaning, you've cut your own top line by five figures before you start.

Second thing. $17,000 of margin on four units at your assumed labor cost is a 40% operating margin on fee revenue, which is high for this size and tells me the labor number is too low rather than the business being good. 20 hours a week of messaging across four units with 61% occupancy means roughly one turnover conversation per day per unit plus arrival issues. Fine in shoulder season. In a mountain town in February with a hot tub and a snowstorm you're not covering it at 20 hours.

Run it at $34k of loaded labor instead and you're at $6,400 before your own time. Then the $18,000 is nearly three years of margin. That's the version of the math I'd bring to him.

Ask him for twelve months of maintenance and repair invoices per unit, and walk all four with a camera before you sign anything. Inherited furniture is where the scope creep lives. A three-year-old mountain condo running 61% occupancy has had somewhere north of 400 guest nights on the mattresses and the sofa, and the owner who has been getting the prior guy's reports has no idea the reviews are about to slide.

What happens the first time you tell an owner the sectional needs replacing at $2,800 and they say the last manager never mentioned it? You own that conversation now. I'd want a written condition note per unit signed by the owner at handover so the baseline is documented and it isn't your word against three years of nobody saying anything.

The unpermitted studio I'd just leave with him.

Four units is not a business, it's a job you paid $18,000 for. I hit this wall at eleven doors on the long-term side and the shape is the same. Your fixed cost of being a professional operator, the software, the insurance, the bookkeeping, the person who answers at 2am, doesn't scale down. You need somewhere between twelve and twenty short-term units before the ops hire pays for itself and you stop being the escalation path yourself.

So the real question isn't whether the four units clear $17k. It's whether these four get you to twelve. Two of them are in a capped permit market, which means new supply there is limited and existing permitted owners are exactly the people you want as clients. If the mountain condos are your door into that owner group, the payment starts to make sense as marketing spend rather than as a purchase of cash flow. If they're just four random units in two towns, you're buying a treadmill.

Who owns the cleaner relationship? That's the asset in this deal, and your post doesn't say.

Nobody has asked what working capital you need on day one. When I priced out my first deal the purchase number was the easy part and the float killed me.

On this one, guest payouts arrive after check-in, cleaners want paying weekly, and if a water heater dies on a Friday in a unit whose owner is on a cruise, you're advancing it. What does your owner agreement say about a reserve? I'd want $1,500 to $2,000 per unit held by you, replenished monthly out of payouts, before you take on the responsibility of authorizing repairs. Otherwise you're a lender at 0% to four people you just met.

Also, does the $18,000 come out of your pocket or out of the first year's fees? That difference is the whole risk profile.

Read the owner agreements before you value them. Three things I'd expect to find and you should confirm.

Assignability. Most owner management agreements I've read have no assignment clause at all, or they prohibit assignment without written owner consent. If so, he cannot sell you those contracts. He can only introduce you and you sign fresh ones, which means the $18,000 buys four phone numbers and a recommendation.

Platform access. On Airbnb a co-host is added to a listing that lives under the owner's account, or the listing sits under his account and the owner has no ownership of it. Those are completely different handovers. If the listings are under his account, the review history and the superhost status stay with him and every unit restarts cold on a new listing. That's a revenue event, not a formality, and you should model a soft first 60 to 90 days if it's the case.

Licensing. In some states, managing property for a fee for someone else can trigger a real estate broker or property management license, and short-term rental co-hosting is treated differently state to state and sometimes city to city. Confirm that with a licensed attorney in the state before you sign, because the answer changes what you can legally charge and how you can hold owner funds.

The 3% tail on the mountain condos bothers me more than the $18,000. Twelve months on maybe $130k of bookings is roughly $3,900 off the top of the two units you most want, and it does nothing for you. What's his argument for that on top of the purchase price?

I'm starting from zero so this may be obvious to everyone else, but what does the 20 hours a week actually consist of? I've been assuming co-hosting was mostly automated messages and a cleaning calendar, and @ledger's answer suggests it's a lot more hands-on than that. Is the time going to guest questions before booking, or to problems during stays?

Pay nothing up front. I've bought two small books of business in a different service line and the only structure that survived contact with reality was an earnout on collected fees.

Offer him 40% of the management fees you actually collect from these four owners over the next eighteen months, capped at $18,000, paid monthly as they come in. If an owner fires you in month three, he gets paid for three months, which is exactly what he delivered. If all four stay and you push the fee to 19%, he gets his full number and you paid it out of money that showed up. His answer to that offer tells you what he privately thinks the churn risk is.

And drop the 3% tail entirely. He's asking to be paid twice for the same two owners.

@keystone I don't buy the marketing spend framing. You can knock on permitted owners' doors in that town for free, the permit lists are usually public record where a cap exists.

Three years of operating and he's selling the whole thing for less than half a year of gross bookings. That price is the review.

Before the structure, the diligence. I'd want to know why he's out, and I'd want it from someone other than him.

Ask for the monthly gross by unit for 36 months, not a trailing twelve total. Four units and three years is a small enough dataset to eyeball, and what you're looking for is whether 2024 and 2025 look the same. If the mountain condos peaked two years ago and have been drifting down 8% a year on RevPAR while the cap was tightening, then his exit is a supply and demand story and you're catching a falling book.

Also ask how many owners he has lost. Four current clients after three years could mean four clients ever, or it could mean nine, five of whom left. He'll answer that question honestly if you ask it plainly, and if he won't answer it, that's your answer.

@orchard the price being low can also just mean he needs to be done. Cheap and bad look identical from the outside until you get the monthlies.

Is anything like this financeable? Genuinely asking. A book of cancellable service contracts with no collateral behind it looks unlendable to me, which makes @flint's earnout the only structure available rather than the clever one.

I'll ask the dumb one. What is the goodwill here made of? In other businesses I understand it as a brand and a customer habit. In co-hosting the guest belongs to Airbnb, the permit belongs to the owner, the cleaner belongs to whoever pays them fastest, and the contract ends in 30 days. So what part of the value can he hand you at all?

If the answer is his systems, his message templates, his pricing rules, his vendor list, then I'd want to see those documents before agreeing on a number, because that's the only thing in the pile with a spine.

Sit in the owner's chair for a second, because I'm the kind of person who hires people like you. I want income without a second job, and the single thing that would make me leave is finding out my manager changed and my fee went up in the same email.

If you come to me in month one with a fee increase, I start pricing other co-hosts that afternoon. If you come in month seven with a report showing my RevPAR up 12% since you took over and then ask for 18%, I'll probably say yes without much fuss. Sequencing costs you nothing and it's the difference between four owners and two.

Also tell me about the cleaning coordination fee in plain money. Say it's $28 a turn, not a percentage of something I have to go work out.

Does the review history actually transfer? @fathom raised it and I think that's the biggest number in the thread and nobody has priced it.

A mountain condo with 180 reviews at 4.9 and a Superhost badge converts at a completely different rate than the same unit with zero reviews in January. If the listings sit under his account and you have to relist, your first quarter of bookings comes from discounting into a market where you're an unknown. I'd model 20 to 30% below trailing for the first 60 days and see whether the deal still works, because that shortfall lands on the owners' income and they will call you about it.

Separately, whose damage policy applies now? If he had a security deposit workflow through the platform and you change it, you should know what you're changing before a guest breaks something.

The permit tied to the owner and the unit is the most durable thing in this deal and it isn't yours. Where caps exist, transfer on sale of the property is usually restricted and the rules differ by city and state, so read the actual ordinance rather than a summary. Two consequences. One, if a mountain owner sells, your contract may effectively die with the permit. Two, the cap means the owners you want are a closed list, and you can find that list.

The unpermitted studio is a different animal. Operating without a required permit is exposure for the owner, and once you're the manager, you're the one running the listing that proves it. Ask a local attorney what your position is there before you touch it.

Why is this a purchase at all? Ask him to sub you in as the operator on all four for 90 days at, say, 60% of the fees, with him staying on the owner calls. You learn the units in a real season, the owners meet you with his endorsement still attached, and at the end you either sign them direct or you walk having lost nothing but time. Then you price the book with three months of your own data instead of his.

Take the two owners who'll meet you, sign them direct, pay him a finder's fee per signed owner and skip the rest. It's the version that works.

I built the churn table because I can't help myself. Assume fee revenue of $42,900 gross, so roughly $10,700 per unit averaged, though the house is closer to $18k and the studio maybe $4k.

If all four stay 24 months and you pay $18,000, that's about 21% of one year's fee revenue. Tolerable.

If two leave at month six, the $18,000 got you roughly $21,000 of collected fees in the first year against $22,900 of labor you still had to carry. You paid to buy negative margin.

If the studio also has to come off for the permit issue, you're paying $18,000 for three units, one of which is 42% of the book on its own. Your concentration is worse than the headline. The house leaving is a business-ending event and it costs that owner one email.

@flint's earnout removes exactly this risk and that's why he won't take it, or he'll take it and you'll have learned something either way.

I inherited two units mid-season from an operator who was leaving the market and the thing that ate me alive was expectations, not operations. The previous guy had told one owner she'd clear $52k that year. She was on pace for $38k when I took over, and every single conversation for four months was me explaining that a rate I never set wasn't achievable.

Get each owner's written revenue expectation for the next twelve months before you sign, in their words, and if it's fantasy, correct it while you're still the person who can walk away. Also find out what he promised them verbally about fee increases, because they will quote it back at you in month two.

On the lending question @sable raised. A lender looking at this sees no collateral and four cancellable contracts, so anything advanced is underwritten against you personally, and small business acquisition lending for service books usually wants a personal guarantee and often something real behind it. Mechanics and terms vary, so get any quote in writing from the lender before you plan around it. Seller paper over eighteen months is the cheaper capital here and it also puts him at risk alongside you, which is worth more than the interest rate.

Mountain units in winter carry costs nobody puts in the model. Snow removal contracts, hot tub chemistry and service, freeze protection when a unit sits empty for four days at 10 degrees. Who's paying and who's calling? If the owner agreements say the manager coordinates and the owner reimburses, you're going to be advancing money in January and chasing it in March.

I'd also ask what the hot tub service history looks like on those condos. A tub that hasn't had its cover replaced is a guest complaint and a heat bill at the same time, and you'll be the one refunding a night over it.

Pushing back on @ledger a little. The labor number isn't just too low, it's the wrong shape. You can't buy 24/7 coverage at 20 hours a week from one person, so either you're the after-hours line or you pay for a service that answers overnight. Price both. If you're the line, then your $17,000 of margin is compensation for being on call 365 nights and you should say that out loud before you decide it's a good deal.

What would move me on this is fee capacity rather than cost cutting. At 20% plus $28 a turn on the same book you're near $60k of fee revenue, and suddenly the labor question is affordable. So the deal hinges on whether these four owners will pay a market rate to someone new. That's a conversation you can have this week for free.

I've been keeping a list of small management books in my own market for a year and I've never seen one priced on anything but a percentage of trailing fee revenue, usually well under a year of it, and always with a clawback if owners leave inside twelve months. $18,000 flat with a 3% tail on top is a price for a business with sticky contracts, and this one has 30-day outs.

What I'd actually do with your situation, in order. Get the monthlies by unit for 36 months. Get the owner agreements and find out if they're even assignable. Meet all four owners with him in the room. Then offer an earnout with a clawback and no tail.

Come back and tell us what he says to the earnout. His reaction is worth more than the diligence.