Why 10+ STR Units Is the First True Portfolio: A Data-Backed Approach to Short-Term Rental Wealth
By Gordon Cooper Real Estate Partners (GCREP)
Building scalable, recession-resistant hospitality portfolios.
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Introduction: STR Isn’t Real Estate — It’s Micro-Hospitality
Most investors think of short-term rentals (STRs) as “single-family homes with higher cashflow.”
But the truth is far deeper:
An STR portfolio isn’t residential real estate. It’s hospitality.
It behaves more like a boutique hotel than a SFR rental.
That means:
revenue is variable
expenses require systems
guest experience matters
operations determine margins
scale determines value
And because of this…
There is a critical threshold where an STR operation transforms from a collection of individual units into a valuable, sellable business.
That number is 10 units.
Below 10 units, you own STRs.
At 10+ units, you own a portfolio.
This blog breaks down exactly why 10 units matter—and how industry research supports this strategy.
1. Why Scale Matters: What Buyers, Funds, and Operators Actually Want
Institutional buyers, regional operators, and STR roll-ups all have the same priorities:
What they need before acquiring a portfolio:
predictable revenue
cost efficiencies
operational stability
diversified risk
brand consistency
clean financials
property management systems
replaceable processes
These factors cannot be proven with 1, 2, or even 4 STRs.
But they can be demonstrated at 10+ units.
A 10-unit portfolio:
smooths revenue volatility
stabilizes NOI
spreads operational risk
justifies management infrastructure
lets buyers model predictable returns
behaves like a small hotel
and qualifies for EBITDA-based valuation
This is why nearly every professional STR buyer sets 10 units as the floor for an offer.
2. What the Research Says (Citations Included)
Here are key third-party sources supporting the shift from “property valuation” to “business valuation” at scale.
🔹 Raincatcher (Lower-Middle-Market M&A Firm)
“STR businesses under $1M in EBITDA typically trade at 3-5× earnings.
Businesses with EBITDA over $1M can trade at 6× or more.”
(Source: Raincatcher, “Selling Your Short-Term Rental Business”)
This supports:
increasing multiples as STR operations scale
businesses being valued differently from real estate
EBITDA becoming meaningful only once revenue stabilizes
🔹 C2G Advisors (STR-Focused Brokerage)
“Valuations typically fall between 1.25× to 1.75× annual commissions for smaller STR operations.
For STR businesses with $250K–$1M EBITDA, expect 3×-5× EBITDA.
For $1M+ EBITDA, expect 5×+ EBITDA.”
(Source: C2G Advisors, “Valuation Benchmarking for STRs”)
Key point:
scale = better multiples
10–25 units is the range where EBITDA becomes consistent
🔹 BiggerPockets STR Case Studies
Case studies repeatedly show:
8–12 unit STR portfolios behave like hospitality
buyers underwrite them using commercial methods (cap rate + EBITDA)
operating history is essential
small portfolios (<10 units) don’t attract the same buyer pool
(Source: BiggerPockets STR Forums & Case Studies)
🔹 Vacation Rental Industry Research
Industry guides consistently state that STR assets are valued via:
NOI ÷ cap rate when sold as real estate
EBITDA × multiple when sold as a business
(Sources: HomeTeam Luxury Rentals, VRM intel)
And again, EBITDA only stabilizes at portfolio scale.
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3. Valuation Method #1: Real Estate Income (NOI ÷ Cap Rate)
If you sell the properties only (not the business), valuation follows commercial real estate logic:
Value = NOI ÷ Cap Rate
Examples:
$600K NOI at 7% cap → $8.57M
$600K NOI at 6% cap → $10M
This is the baseline valuation.
4. Valuation Method #2: Business Multiples (3–5× EBITDA)
Once you include:
brand
operations
systems
staff
reviews
listings
revenue management
occupancy optimization
You’re selling a business, not buildings.
Professional buyers will pay:
3–5× EBITDA for <$1M EBITDA
5–7× EBITDA for >$1M EBITDA
These multiples only become possible at 10+ units, where EBITDA becomes:
stable
predictable
transferable
5. Why These Valuations Only Unlock at 10+ Units
Below 10 units:
Revenue is too volatile
One bad month distorts NOI
One property going offline kills EBITDA
Insufficient operating history
Buyers see it as “STR risk” not “portfolio stability”
At 10+ units:
Revenue variance smooths
NOI stabilizes
Expenses become predictable
Seasonality is balanced
You can justify cleaning staff or a manager
Operational systems form
Buyers can underwrite the business
Scale = stability → stability = better multiple → better multiple = better exit.
6. Case Studies of 10–25 Unit Exits
Based on industry brokers & published case studies:
10–15 unit portfolios
sell at 6–8% cap rates
plus 3–4× EBITDA premiums
20–25 unit portfolios
sell at 5.5–7% cap rates
plus 5–6× EBITDA premiums
often to STR roll-ups and funds
These deals are usually $5M–$20M exits.
7. What Professional STR Buyers Want (and Why Ten Units Beats Four)
Professional Buyer Criteria:
10+ units
consistent booking history
RevPAR & ADR stability
4.7+ listing ratings
a credible operator in place
EBITDA margin of 30–40%
documented expenses
replaceable cleaning + operations
A 4-unit portfolio:
is too small
is too sensitive to downtime
cannot support a manager
is treated like “enhanced multifamily,” not hospitality
rarely qualifies for business multiples
But 10+ units check every box.
8. Why 10+ Units Is Perfect in DFW
Dallas–Fort Worth is:
year-round occupancy (no seasonality drop)
high tourism + convention demand
top relocation market
strong ADR + RevPAR stability
business and leisure mixed
regulatory-friendly
strong mid-term rental demand
strong redevelop/reposition market
This allows a 10-unit portfolio to:
stabilize faster
produce higher NOI
command better exit multiples
attract regional operators
Perfect conditions for GCREP’s strategy.
9. How GCREP Is Building a Scalable STR Portfolio for Exit
Gordon Cooper Real Estate Partners is targeting:
10-unit minimum portfolio
STR-optimized layouts
DFW submarkets with strong fundamentals
stabilized NOI ≥ $600K
EBITDA ≥ $300K–$450K
exit cap rate of 6–7%
target exit valuation: $8M–$12M
We are building the portfolio the way an institutional buyer would want to acquire it.
10. Conclusion: Ten Units Isn’t a Number — It’s a Threshold
Below 10 units, STR is a job.
At 10 units, STR becomes a business.
At 20+ units, STR becomes an asset class.
Your returns scale.
Your valuation improves.
Your buyer pool expands.
Your exit multiple increases.
This is why GCREP uses a 10-unit minimum as the foundation for our STR acquisition and development strategy.