November 4, 2016
The Pros and Cons of Hiring a Vacation Property Management Company vs. Managing a Rental Yourself
My parents always dreamed of owning a condo on South Padre Island, TX. As part of a midlife crisis/empty nester syndrome moment, they finally threw down the money, and our family invested in a fixer-upper in our favorite building. Little did we know the perils that would soon be coming.
In two years of managing the condo ourselves, we experienced unsatisfactory clients, low booking rates, mysteriously missing kitchenware, and even a missing glass shower door (worth more than $1,000… which we had to replace ourselves). After that fiasco, we decided to sign with a property management company on the island who could handle these things for us. Our experience has been breezy and pleasant ever since.
Whether you own a rental in hot and sunny Miami, FL, or the winter sports mecca of Aspen, CO, you’re tasked with managing that vacation rental property. We understand that this can be both time-consuming and logistically challenging. In fact, we’ve encountered lots of real estate investors who try to maintain and manage the property on their own in an attempt to maximize return on investment (ROI).
But while self-managing a vacation rental may be the most cost-effective option for many real estate investors, you may be surprised to learn that hiring a property management company to oversee your rental home can result in less hassle and higher profits. Of course, each case is unique, so to determine the best choice for your precise situation, we’ve come up with a list of some important pros and cons for you to consider.
Professional Property Management Pro: Improved Service and Response Time
If you live near your vacation rental year-round and have a flexible schedule, then you may find that you are more than capable of providing 24-7 assistance to your rental guests, with quick response times in the event that they require help at the property. But this, when combined with routine maintenance, can quickly add up to a significant time investment. According to HomeAway, owners spend an average of 8.4 hours per week tending to a property!
If you lack a flexible schedule or do not live locally year-round, which is common for a large portion of rental property owners, providing assistance and prompt service to your guests can prove to be a real hassle, if not impossible. Plus, you risk a poor experience for your guests. In this situation, turning to a vacation rental property management firm can be the better option. This can leave you free to tend to other matters, while simultaneously ensuring that your guests have a positive experience—a point that can result in improved ROI since you’ll be more likely to see repeat guests.
Property management service providers can also perform more frequent site visits than an owner who doesn’t live locally. Your rental can really benefit from regular visits because this can help you avoid serious property damage. For example, gusty winds during an afternoon thunderstorm can dislodge a roof tile, resulting in a small roof leak. This leak can quickly result in thousands of dollars in water damage, causing mold that grows at a rapid clip in the summer heat. Your property manager will likely notice this issue in short order, whereas if you left the property unattended for months at a time, you could check in to discover tens of thousands of dollars in damage.
Professional Property Management Con: More Challenging to Build Rapport
Some returning guests enjoy seeing the same caretaker or property manager when they arrive for their stay. If you live locally and deliver the keys to your guests personally, this allows you an opportunity to build a rapport with those individuals. This can add a little extra something to their visit, making them a bit more likely to return in the future. You’re also provided with an opportunity to remind them that you are available to assist in ways that can make their stay more comfortable or enjoyable. This is another way you can improve ROI by increasing the chances of seeing a return guest.
If you’re hiring a vacation rental management firm to oversee your property, it can be more challenging to establish this rapport because a different person may assist on every visit. That said, there are many property management firms that have experienced, long-term employees who are adept at building rapport with guests. So ultimately, it comes down to picking the right firm for your needs.
Professional Property Management Pro: Better Technology Resources
Many rental management firms deal exclusively in vacation properties. As a result, these firms are more likely to invest in technology that makes the rental process easier and more profitable.
There are many high-tech tools of the trade that are now in use by the top rental management companies. Examples include high-tech lockboxes to contain keys, sophisticated software programs for pricing, invoicing, and guest vetting, and the best dispatching apps to ensure that any and all repairs or problems are addressed promptly.
Use of this technology results in lower property management costs, combined with greater convenience for everyone involved, including the guests. That spells a higher ROI and more positive ratings and reviews for your rental.
Professional Property Management Con: Less Control Over Guests and Management
Some real estate investors struggle with the idea of giving up control over their property. The idea of allowing someone else to vet potential guests, perform repairs, or interact with your guests can be nerve-wracking and worrisome.
But this point only serves as a “con” if you fail to work with the right management firm. When you find the right rental management firm, then you’ll feel comfortable giving it control of your investment property. You’ll feel confident that your property will be managed it in a manner that is in line with your personal preferences and goals as a real estate investor.
What’s more, lots of rental management companies are happy to provide you with a custom service package in the event you’d like to maintain control over certain tasks.
Professional Property Management Pro: Better Marketing and Promotion
Unless you’re experienced in the area of online marketing, it can be super challenging to get the exposure you need to maximize your ROI. Many vacation rental property management companies offer advertising and marketing packages, using landing pages, social media, and listings on major rental websites.
Lots of property management companies also have a rental agency division that maintains contacts with hundreds or thousands of prospective guests, in addition to performing tasks such as vetting. Even without investing money in marketing and advertising, you could see a steady flow of visitors originating from your rental management company. That means higher profits!
Professional Property Management Pro: Reduced Risk
The right property management firm can go a long way toward reducing risk, particularly financial risk. Well-written contracts and rental agreements can release you from some forms of liability, while also giving you the power to pursue a guest for any damages that result.
You can also minimize risk by charging the right amount for damage and security deposits. For those who do charge a damage deposit, the system only works well if you have a property manager who can view the property immediately after a guest’s departure to identify any new damage.
There’s a reduction in terms of the financial risk, too. For example, Rented.com offers a guaranteed income model that can protect you from losses that would arise when your property is vacant.
By working with a property management firm that’s capable of overseeing bookings, you’re also more likely to keep your vacation home consistently occupied. And, you’re more likely to see the type of guests you’re seeking because your management company can use refined marketing strategies to match you to your preferred guest demographic.
Finding the Right Property Manager
When you find the perfect service provider to suit your needs, we think you’ll find there are far more pros than cons to working with a vacation rental property management company. The right company will meet your needs and manage the property just as you would (or better!) while boosting ROI and enhancing your guests’ visit.
So if your current rental management company has more cons than pros, keep looking. The right service provider is out there, you just need to find them. To get started, create a free private profile on Rented.com. Once you do that, you can compare rental management companies and choose one that best suits your style and meets your needs.
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