Exit planning for a real estate business starts with one uncomfortable question: if you disappeared for 30 days, what would still be running when you got back? John Schierman, who has founded, run or sold 19 businesses and now builds valuation tools through Exit Intelligence, ran that test literally — he spent a month in Puerto Rico and came back with a list of what held and what didn’t.
His rental operation ran fine. The advertising and marketing division did not. That split is the point of this article, because most investors are running two businesses at once — a portfolio, which is transferable, and an operating company, which usually isn’t.
Below: how to run the unplug test, how to spot owner-dependent revenue before a buyer does, what actually raises the price (data, systems, a real second-in-command), and why the planning window is three to five years, not three to five months.
Key takeaways
- Run the unplug test before you run a valuation — leave for two to four weeks and grade every division red, yellow or green based on what needed you.
- Schierman’s month away showed his rentals held (property managers, guest keepers, code-scan check-in, cameras, digital guest books) while onboarding and referral follow-up broke down.
- If your client, tenant, contractor or seller relationships live in a spreadsheet and your own head, a buyer is purchasing a customer list, not a business — and will pay accordingly.
- Roughly 6 million businesses will change hands from baby boomers over the next decade and about 5 million of those off-market, with no broker, no M&A firm and no comps to anchor the price.
- Plan on a three-to-five-year exit ramp: get a baseline valuation now, identify what makes the business less saleable, then work the gap toward your retirement number.
From the Real Estate Pros Show
This article draws on an interview with John Schierman of Exit Intelligence on the Real Estate Pros Show, hosted by Quentin Edmonds.
Why ‘Never Start a Business Without an Exit Plan’ Matters More for Investors
Schierman’s tagline is blunt: never start a business without an exit plan. He learned it about halfway through 19 businesses, and when he says it out loud, roughly a quarter of owners nod along, a quarter say they’d never considered it, and about half think it’s a waste of energy.
The real estate version of this problem is that you own two different sale assets and most people only plan for one. The portfolio has comps, appraisals and a well-worn transaction process. The operating company — your marketing, your acquisitions function, your management arm — has none of that.
The scale of the coming transfer is the reason it matters now. Schierman’s figure: about 6 million businesses will be sold over the next 10 years by baby boomers alone, and roughly 5 million of those will sell off-market. No business broker. No M&A firm. No groomed son or daughter taking over.
Off-market means the seller is negotiating blind. His analogy is the one every investor already understands: with a house, you can pull Zillow, pull comps, bring in three agents and have them tell you what the neighborhood is doing. There is no MLS for operating businesses — no record of what sold last year, whether multiples are trending up or down, or how many comparable companies are competing for the same buyer pool.
That information gap is where value quietly leaks. A buyer who has bought twelve companies knows exactly what a spreadsheet-based client list is worth. An owner selling once in a lifetime does not. The fix isn’t a better negotiator at closing — it’s building something that prices well before you ever have the conversation.
The 30-Day Unplug Test: What Broke and What Didn’t
The test Schierman kept encountering across podcasts, books and other exit tools was the same each time: take two weeks off, leave your phone behind, and see what you come back to. The question it answers is whether you built a business or bought yourself a job.
He did a version of it last spring — a month in Puerto Rico. He admits he brought his phone and spoke with his VP nearly every weekday, so it wasn’t a clean experiment. It still worked, because he treated it as a diagnostic: what is already capable of running on autopilot, and what isn’t?
What held — the rental side. Short-term and long-term both ran without him. Property managers and guest keepers handled the humans. The tech handled the rest: scan-a-code check-in that triggers a welcome message, cameras on site, and a digital guest book that rides along on the guest’s phone with what’s open and where to go. He notes he also got lucky on timing — no move-outs, no missed rent during the window.
What broke — advertising and marketing. Gaps in onboarding processes. Gaps in working the referral network. In his words, red flag, red flag, yellow flag, yellow flag.
Run this on your own operation with the same grading. Pick a window of two to four weeks, decide in advance which functions you’re testing, and mark each one red, yellow or green when you return. The red items are your owner-dependency list, and they are also the list a buyer will eventually price against you.
You do not have to physically leave to start. Schierman points out the exercise works mentally — walk each division forward 30 days with you removed and be honest about where it stalls.
Without him, there’s no guarantee that those people are going to stay. That was my eye-opener to this whole thing of you better have a plan — because otherwise I’m buying a customer list.
— John Schierman, Exit Intelligence
Owner-Dependent Revenue Sells for Less: The Insurance Agency Lesson
Schierman’s relative built one of the largest Harley-Davidson motorcycle insurance books in the country by finding a niche — despite being, by Schierman’s description, an analytical, balding man who would never get on a motorcycle. He knew his time was finite, so he brought his younger brother in and got him licensed in life, accident and health plus property and casualty. The plan was for the brother to build a book and eventually buy him out.
Then Schierman asked how the transfer would actually work. The answer: all the client records were in a spreadsheet, and a MailChimp newsletter went out monthly. That was the infrastructure holding together the relationships behind the revenue.
The realization, which Schierman calls his eye-opener 15 to 20 years ago, was that without the founder in the chair, nothing guaranteed those clients would stay. A buyer in that position isn’t acquiring a business. They’re buying a customer list, and they’ll price it like one.
The investor translations are direct:
- Off-market seller pipeline that lives in your phone’s contact list and your memory of who called in 2022.
- Referral sources — the probate attorney, the wholesaler who sends you her leftovers — who deal with you personally and have no relationship with anyone else on your team.
- Contractor bench priced off a decade of your goodwill, where a new owner gets new numbers on day one.
- Tenant relationships where renewals happen because they know you, not because a process runs.
Each of those is revenue that follows you out the door. Ask of every relationship your income depends on: does it belong to the company, or to me?
What Actually Raises the Price: Systems, Data, and a Second-in-Command
Schierman’s view is that the value has moved from the buildings to the data. His advice to anyone building a real estate operation meant to be worth more than the bricks: you have to have a system in place that captures it — data from renters, from lessees, from the neighborhood, from the comps around you.
He applies it to his own exit expectation. On Exit Intelligence, he anticipates a fintech acquirer three to five years out, and says plainly that it won’t be for the revenue — it’ll be for the data. If you accept that premise for your own business, then how you record a tenant application, a lease renewal, a rehab budget or a seller conversation stops being administrative and starts being asset construction.
On the operations side, he rates his systems higher than his leadership bench, and the method is deliberately unglamorous. Take the lowest-hanging fruit — repetitive, mundane, duplicatable tasks — and don’t just write an SOP or a KPI for it. Automate it. He uses AI for the data entry and the follow-up specifically, and is explicit that it isn’t replacing the person doing the work; it’s putting the work into a systematic approach. SOPs, KPIs and a handbook are the baseline, not the finish line.
Then there’s the succession piece. He brought his daughter in last January as VP of the advertising and marketing division and gave himself two to three years to get her ready to manage, grow, scale and make decisions — while retaining a board seat. That is the shape of a real handoff: a named successor, a multi-year runway, and a defined role for the founder that isn’t running the place.
Building the Timeline: Benchmark Now, Exit in Three to Five Years
The exit ramp for most companies, in Schierman’s experience, is three to five years. That’s the planning horizon — not the marketing period. Everything useful happens before a buyer is in the room.
His framing is a medical checkup, and the sequence follows from it:
- Get a baseline valuation. Take the pulse and the blood pressure. Know the number today, before you’ve changed anything.
- Identify what’s elevated. The factors making the business less saleable and worth less money — the equivalent of high cholesterol, and the same red and yellow flags the unplug test surfaced.
- Work the roadmap. Close the gap between the current number and the figure you actually need to sell and retire.
- Re-measure. Come back in three months, six months, a year, and compare against the baseline.
He notes the two reactions owners have to that first number. Some see more than expected and realize they can retire early. Many see the number and say, “that’s it?” — and that’s the group with three to five years of work ahead.
His own plan is staged by division rather than run as a single event: sell off some of the local holdings, hand the advertising and marketing company to family, license the Exit Intelligence software to brokerage networks, and expect an eventual acquirer for the data. Different assets, different buyers, different timelines.
There’s a residency component too. At 65 — two to three years out for him — he plans to spend six months plus a day a year in Puerto Rico to qualify under Acts 20, 22 and 60, and expects he’ll need to relocate an existing business, start one there, or buy one to access the tax treatment. That is his plan for his situation, not tax advice. Anything involving residency, entity structure or the tax treatment of a sale needs your own CPA and attorney.
Frequently asked questions
How far in advance should I start planning to sell my real estate business?
Three to five years, which Schierman describes as the typical exit ramp for most companies. That window exists because the things that raise your price — documented systems, captured data, a successor who can make decisions, revenue that isn’t tied to your personal relationships — all take years to build and can’t be manufactured during a due diligence period.
Start with a baseline valuation now even if you have no intention of selling soon. You need a starting number to measure progress against, and you need to know whether the gap between today’s value and your retirement number is a two-year project or a five-year one.
What’s the fastest way to tell whether I own a business or just a job?
Leave. The test Schierman found repeated across every source he studied is to take two weeks off, leave the phone behind, and see what you come back to. If the answer is a pile of decisions only you can make, you own a job.
You can also run it as a thought exercise: walk each division forward 30 days with yourself removed and mark every function red, yellow or green. Schierman’s own month away produced exactly that — green on rentals, red and yellow flags on onboarding and referral follow-up in the marketing division.
Why do off-market business sales put the seller at a disadvantage?
Because there’s no MLS for businesses. With a house you can pull Zillow, check comps, and bring in three agents who know the neighborhood and can tell you whether prices are trending up or down. With an operating company, none of that public record exists — no list of what similar businesses sold for last year, no read on how many comparable sellers you’re competing with.
That matters at scale: of the roughly 6 million businesses Schierman expects baby boomers to sell over the next decade, about 5 million will trade off-market with no broker and no M&A firm involved. The buyer has usually done this before. The seller almost never has.
What makes a rental portfolio easier to sell than an operating company?
A portfolio has an established valuation method and a transferable asset at the center of it. Comps exist, income is documented in leases, and the property doesn’t stop producing when ownership changes hands. Schierman’s rentals ran fine during his month away precisely because the value sat in the assets plus the managers and tech running them, not in him.
An operating company is different. Its value often sits in relationships, judgment and undocumented process, all of which can walk out with the founder. That’s why the operating side usually needs the multi-year cleanup work, and the portfolio usually doesn’t.
How do I bring a family member in as successor without stalling the business?
Give them a real title over a real division, a defined multi-year runway, and a specific standard to hit. Schierman brought his daughter in as vice president of the advertising and marketing division and gave himself two to three years to get her ready to manage, grow, scale and make decisions — while keeping a board seat rather than an operating one.
The contrast is the insurance agency, where the successor got licensed but the client base still lived in the founder’s spreadsheet and his personal relationships. Licensing the successor isn’t succession. Transferring the relationships and the systems that hold them is.
The bottom line
Pick your two to four weeks, put it on the calendar, and grade what breaks — that list is your exit plan’s first draft, and it’s more honest than any valuation you’ll get before you’ve run it.
