Learn how you can excel at mergers and acquisitions in 2023 from our newest webinar.
Today’s short term rental landscape is drastically different than it was two years or even six months ago.
If you were selling a short term rental portfolio in 2021, you could typically choose from a large pool of cash flow buyers — ideal for sellers with high margins — and revenue buyers — ideal for sellers with low margins.
Since then, revenue buyers have all but disappeared from the equation.
“Gone are the days of the revenue buyers. They may come back at some point, but right now everybody is a cash flow buyer,” Jacobie explained.
“So if you have really bad margins and you just have high revenue and negative EBITDA, then you are going to either not have a buyer, or you’re going to be selling for pennies and nickels on the dollar.”
More than ever, today’s buyers are focused on purchasing state-of-the-art inventory. Sellers with properties that need renovations or lack certain amenities are going to have a much harder time finding a buyer than they might have in the past.
For that reason, there’s a powerful use case for Nectar among people looking to sell their portfolios. You can use Nectar financing — which is based only on your existing cash flow — to upgrade your properties and ensure you can sell your portfolio for top dollar.
Even if you’re not planning to sell in the near future, investing in the right amenities and renovations can significantly increase your exit margins.
And if you’re instead looking to acquire new properties or purchase a management company, you can use Nectar financing for your down payment.
Nectar financing model is purpose-built for rental investors, so we’re able to offer a level of flexibility that other funding sources do not.
Take Small Business Administration loans, for example.
“[The SBA] has very rigid rules. They want to see things very specifically. They want to see that you have your business set up a certain way and you have tax returns going back several years that show something consistent. And if this year you’re a lot bigger than last year, they’re just not going to like that,” Derrick explained. “With Nectar, you connect your bank account, you connect your accounting software, send us your P&Ls, and that’s really our process.”
We look solely at your existing cash flow. And unlike a traditional loan, we’re providing you with an advance on your portfolio’s future cash flow. If you’d like to find out how much you can qualify for, apply today and submit your trailing 24-month P&L.
If you want to make an appealing offer on a portfolio or management company, you need to understand the seller’s goals.
Some people are just looking for an easy exit, while others are interested in finding someone to take over operations and make their lives easier, Jacobie explained. But almost everyone he’s worked with shares one goal: They want to make sure their team will be taken care of during the acquisition process.
“Make sure during due diligence the buyer and seller are collaboratively communicating on how that three month transition is going to look,” Jacobie advised.
If you’re interested in learning more about how Nectar financing can help you succeed at selling or acquiring a portfolio, let’s connect! Head to app.usenectar.com and create an account to get started.