First Short Term Rental: Self Manage or Hire Management?

Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes

Hi,

I’m currently in escrow on my first short term rental in Joshua Tree. I’ve been helping other Los Angelenos buy out there and thought it was time for me to get my first short term rental. I’ve been debating on self-managing or hiring a management company at about 20-25% management fees. I’m pretty sure I could manage on my own, but I’m not sure I want to take on another job right now. Any tips and advice would be greatly appreciated.

Thanks,

Robert

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Quote from @Robert Reynolds:

You'll hear some people say you can manage a STR with just a few minutes a month, but that's bunk. I do believe you can do it with just a couple hours a week. The question is, can you handle the interruptions to your ordinary schedule? STR requires a responsive host and people won't wait three hours for you to return a call, email, or text. When guests are checking in and can't get the lock to work or can't find the TV remote, you need to pick up the phone.

Run your numbers with management in place, but try it on your own. If it works, you'll net more. If it doesn't work out, you'll still make it.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Robert Reynolds:

I’m currently in escrow on my first short term rental in Joshua Tree. I’ve been helping other Los Angelenos buy out there and thought it was time for me to get my first short term rental. I’ve been debating on self-managing or hiring a management company at about 20-25% management fees. I’m pretty sure I could manage on my own, but I’m not sure I want to take on another job right now. Any tips and advice would be greatly appreciated.
You'll hear some people say you can manage a STR with just a few minutes a month, but that's bunk. I do believe you can do it with just a couple hours a week. The question is, can you handle the interruptions to your ordinary schedule? STR requires a responsive host and people won't wait three hours for you to return a call, email, or text. When guests are checking in and can't get the lock to work or can't find the TV remote, you need to pick up the phone.
Run your numbers with management in place, but try it on your own. If it works, you'll net more. If it doesn't work out, you'll still make it.
The DIY Landlord Book4.7248 Reviews
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Justin BeasleyPro Member
Pigeon Forge, TN · Member since 2020 · 102 posts · 69 votes
4y
Self managing maximizes profitability but it isn't for everyone. It you are lazy, have horrible people skills, and couldn't care less about the experience you provide for your guest...you will probably struggle ;)
[email protected]
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Nathan Gesner:

I agree with this. We self manage and even do our own cleaning. But our places are local.
It is not that difficult, but you need great people skills and some accounting skills. But it is very doable if you are prepared to spend at least a few hours every week. The extra $$ you will make is usually worth it though. IMO.
3 Reply
Jon KellyPro Member
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
4y
@Robert Reynolds try it yourself and see how it goes. I would also network with Property Managers who can take over if/when you decide to switch. You don't want to be in a position where you are desperate for help and don't know where to turn.
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Robert Reynolds
OP
Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
4y
Thanks for all the replies. Definitely leaning towards self managing. Any advice on software or technology used to help manage your Short Term Rentals?
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Robert Reynolds:

Thanks for all the replies. Definitely leaning towards self managing. Any advice on software or technology used to help manage your Short Term Rentals?

You won't need much. The VRBO and AIR apps sync with each other so you don't get duplicate bookings. Everything else is there already. Don't make this more complicated than it should be....
1 Reply
Joshua MessingerBusiness Member
Property Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
4y
Hey @Robert Reynolds!
Given this is your first STR and you are located around the area you are buying I would recommend self-managing. 20%-25% management fees really can take a ton of cashflow away from you if you really don't need a PM. Save your money, then continue reinvesting until you get a couple properties then I would consider having a management company take over.
If you have any other questions don't hesitate to reach out!
All the best,
Josh
[email protected]484-986-5012
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
4y
Manage it yourself and see what it takes to run a airbnb operation. I'm a firm believer that you should know how every leg in your business runs, don't have to be the best, but at least know how it works. This way you can easily vet your PM's and know what to look for
1 Reply
Sergey A. Petrov
Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
4y
Quote from @Robert Reynolds:

Hi,
I’m currently in escrow on my first short term rental in Joshua Tree. I’ve been helping other Los Angelenos buy out there and thought it was time for me to get my first short term rental. I’ve been debating on self-managing or hiring a management company at about 20-25% management fees. I’m pretty sure I could manage on my own, but I’m not sure I want to take on another job right now. Any tips and advice would be greatly appreciated.
Thanks,
Robert

Are you buying to invest or are you buying to create a job for yourself? If trying to create a job and you’ll be “making” a few hundred bucks by not paying a management company, does it fairly represent the value of your time? I am better off committing my few hours a week to something else for a few hundred bucks. And unless you know what you are doing very well your property may significantly underperform. An experienced short term rental manager will maximize the revenue (and minimize risk, expenses, etc) and more than pay for their own fees. I am honest to myself and have 20+ years of experience with a variety of long term rentals and investments but having seen many many short term rental managers do what they do I know I’d fail and it certainly wouldn’t be a lifestyle I would enjoy.
1 Reply
Joseph R. Smith
Rental Property Investor · Carthage, NY · Member since 2019 · 72 posts · 47 votes
4y
20-25%! Wow, and I thought 10% on LTR was steep, which can now push 15%. I'd just run a few quick #'s on just how it can Really cut into the cash flow, which can in turn really cut into valuations, which can really cut into BRRRefinanceR amounts, for reinvestment, etc.
I only understand/recommend outsourcing property management for investors who are very afraid of handling tenants or evictions etc themselves, like when its the stumbling block for entering real estate investing for them.
Lets take just valuations for a quick sec. : Suppose a multi unit LTR property rents for $3000/month and has a valuation of $300,000. (1% rule, oversimplification). If one can raise rents just 10% by total $300/month to $3300/month-Supposing net operating expenses remain the same, Doesn't that new valuation increase by perhaps $30,000 when its time to refi or cash out! I view operating expenses this way and strive to cut them, to in source wherever at all possible. Now view 20-25%. Is my just another opinion.
1 other thing. I am not extremely familiar with STRs. But I only wonder IF/When there is some sort of market correction, how many of properties that are making sense now-when one can easily afford to outsource various costs, and not have too stringent investing perimeters. -When if many of those deals would no longer make sense. Just another thing I'd consider when striving to cut operating costs now.
2 Reply
Sergey A. Petrov
Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
4y
20-25% is on the low end…other things to consider - who pays to resupply the toilet paper, laundry detergent, and all the other “consumable” things one might expect to find in a vacation rental? If your manager does, 20-25% is most definitely on the very low end. If you do, the numbers might start looking a bit different.
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James CarlsonBusiness Member
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
4y
@Robert Reynolds

Totally depends on your priorities. Do you value your time or the money more? And what does that balancing act look like?

I will say that we recommend our STR investor clients in Colorado manage the Airbnb themselves to start. Spend some time interviewing cleaners and make sure they understand the last-minute, quick turnaround times required of short-term rentals. Find a good handy person who you can call on when guests need help. And set up dynamic pricing and auto-emails through Airbnb (or VRBO or your chosen platform) to streamline things.

I have one client who owns an STR in Denver and another STR in Colorado Springs. He has a full-time job in finance and two small kids. He manages them himself and says it's a few hours a week (like @Nathan Gesner said). It's totally possible.
But again, there's no shame in hiring a manager. Sometimes this site focuses too much on personal sacrifice for the bottom dollar. There are other lifestyle choices that might come in to play. Good luck!
[email protected]720-460-1770
James Carlson Real Estate
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Robin Searle
Real Estate Agent · Colorado Springs, CO · Member since 2017 · 224 posts · 201 votes
4y
I agree it depends on your goals and work situation. For me, it would have cost me in lost time on my real estate business if I tried to manage my 3 in Colorado Springs myself. I got a wonderful, responsive management company who I'm very happy with. One thing to keep in mind is that if you ever do decide to leave a management company, you will lose all of your reviews and standing on the Airbnb and VRBO platforms. I'm looking at possibly buying an STR near my second home in Florida and have been reading a lot about co-hosting where you work with someone who does everything a management company does but you keep the listing (and therefore reviews) under your own name so may consider going that route next time! Best of luck to you! My STR's have been more successful than I could have imagined and hopefully will continue - but you should always have a back up plan!
1 Reply
Mary Jay
Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
4y
Quote from @Robin Searle:

I agree it depends on your goals and work situation. For me, it would have cost me in lost time on my real estate business if I tried to manage my 3 in Colorado Springs myself. I got a wonderful, responsive management company who I'm very happy with. One thing to keep in mind is that if you ever do decide to leave a management company, you will lose all of your reviews and standing on the Airbnb and VRBO platforms. I'm looking at possibly buying an STR near my second home in Florida and have been reading a lot about co-hosting where you work with someone who does everything a management company does but you keep the listing (and therefore reviews) under your own name so may consider going that route next time! Best of luck to you! My STR's have been more successful than I could have imagined and hopefully will continue - but you should always have a back up plan!

if you dont mind me asking, where are your STR? Colorado?
0 Reply
James Barrett
Member since 2021 · 5 posts · 1 vote
4y
Robert, I'll just add that as you get systems in place, it takes less and less time per week. What started out with my obsessing over pricing and watching cameras has definitely evolved into less than an hour a week as I answer a couple of questions and pay the cleaners. So that's now earning $250/hr for my time, which isn't too shabby.
1 Reply
Chris Jeub
Property Manager · Monument, CO · Member since 2021 · 38 posts · 41 votes
4y
You will learn SO SO SO much managing your first rental yourself, I'd encourage you to jump in and do it solo. Once you master processes, then hire to fill them. You'll know the job and know how to monitor the hire later.
0 Reply
Robert Reynolds
OP
Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
4y
Quote from @Robin Searle:

I agree it depends on your goals and work situation. For me, it would have cost me in lost time on my real estate business if I tried to manage my 3 in Colorado Springs myself. I got a wonderful, responsive management company who I'm very happy with. One thing to keep in mind is that if you ever do decide to leave a management company, you will lose all of your reviews and standing on the Airbnb and VRBO platforms. I'm looking at possibly buying an STR near my second home in Florida and have been reading a lot about co-hosting where you work with someone who does everything a management company does but you keep the listing (and therefore reviews) under your own name so may consider going that route next time! Best of luck to you! My STR's have been more successful than I could have imagined and hopefully will continue - but you should always have a back up plan!

Thanks, Co-Hosting is a great idea. I'm glad to here your Colorado Springs AIRBNB's have been great, and I hear a lot of people are looking in Florida. Which part of Florida are you looking?
0 Reply
Robert Reynolds
OP
Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
4y
Quote from @Chris Jeub:

You will learn SO SO SO much managing your first rental yourself, I'd encourage you to jump in and do it solo. Once you master processes, then hire to fill them. You'll know the job and know how to monitor the hire later.

Thanks, I am leaning towards self managing, everyone's been so encouraging, and especially since I am buying in the slow season of Joshua Tree, my cash flow will get eaten up with management fees.
0 Reply
Robin Searle
Real Estate Agent · Colorado Springs, CO · Member since 2017 · 224 posts · 201 votes
4y
@Robert Reynolds I bought a vacation home in Venice Florida on the gulf and love that area but Sarasota County has short term restrictions as well as my HOA. I'd probably look a little bit south along the coast if I do decide to invest there. Amazingly my STR's in Colorado are pretty much solidly booked year round. They have always booked up last minute but even in the winter they stay busy. I'd need to research Florida in the summer and how busy they stay. It's pretty hot and humid there now which is why I'm happily staying in Colorado for the summer!
0 Reply
Account Closed
Realtor · Colorado Springs, CO · Member since 2021 · 13 posts · 12 votes
4y
I think one of the benefits to self-managing first is that you can identify the headache areas of STR's and if/when the time comes you decide to utilize a property manager you have some ammo to see how they would handle those situations! If you don't like their responses, it may tell you to look for another company!
1 Reply
Robert Reynolds
OP
Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
4y
Quote from @Robin Searle:

@Robert Reynolds I bought a vacation home in Venice Florida on the gulf and love that area but Sarasota County has short term restrictions as well as my HOA. I'd probably look a little bit south along the coast if I do decide to invest there. Amazingly my STR's in Colorado are pretty much solidly booked year round. They have always booked up last minute but even in the winter they stay busy. I'd need to research Florida in the summer and how busy they stay. It's pretty hot and humid there now which is why I'm happily staying in Colorado for the summer!
Nice, my next STR after JT will probably be something a little further out and will have to Check out Colorado. I want something that is less seasonal and more consistent year round. Dream would be Hawaii, but Colorado may work. I'll look into it and get back to you. I chose JT because of it's proximity and I love the park. Also the numbers are still solid.
0 Reply
Jason Kudo
Real Estate Agent · Pasadena, CA · Member since 2017 · 274 posts · 255 votes
4y
Quote from @Robert Reynolds:

Quote from @Robin Searle:

@Robert Reynolds I bought a vacation home in Venice Florida on the gulf and love that area but Sarasota County has short term restrictions as well as my HOA. I'd probably look a little bit south along the coast if I do decide to invest there. Amazingly my STR's in Colorado are pretty much solidly booked year round. They have always booked up last minute but even in the winter they stay busy. I'd need to research Florida in the summer and how busy they stay. It's pretty hot and humid there now which is why I'm happily staying in Colorado for the summer!
Nice, my next STR after JT will probably be something a little further out and will have to Check out Colorado. I want something that is less seasonal and more consistent year round. Dream would be Hawaii, but Colorado may work. I'll look into it and get back to you. I chose JT because of it's proximity and I love the park. Also the numbers are still solid.

Make sure to review the STR ordinances in each island of Hawaii since they do differ and Oahu has outright banned STRs in all but the resort areas.
0 Reply
Robert Reynolds
OP
Real Estate Agent · Los Angeles, CA · Member since 2019 · 302 posts · 163 votes
4y
Quote from @Jason Kudo:

Quote from @Robert Reynolds:

Quote from @Robin Searle:

@Robert Reynolds I bought a vacation home in Venice Florida on the gulf and love that area but Sarasota County has short term restrictions as well as my HOA. I'd probably look a little bit south along the coast if I do decide to invest there. Amazingly my STR's in Colorado are pretty much solidly booked year round. They have always booked up last minute but even in the winter they stay busy. I'd need to research Florida in the summer and how busy they stay. It's pretty hot and humid there now which is why I'm happily staying in Colorado for the summer!
Nice, my next STR after JT will probably be something a little further out and will have to Check out Colorado. I want something that is less seasonal and more consistent year round. Dream would be Hawaii, but Colorado may work. I'll look into it and get back to you. I chose JT because of it's proximity and I love the park. Also the numbers are still solid.

Make sure to review the STR ordinances in each island of Hawaii since they do differ and Oahu has outright banned STRs in all but the resort areas.

@Jason Kudo I would buy at the Turtle Bay Resort condos once I can save the money. It’s my favorite place to visit and even if I could break even that would be a win for me

0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Robert Reynolds:

I hear what you're saying, but never settle for breaking even, it's a bad mindset....you're not doing this to go on vacation, you can do that anyway....you're doing this to make money, lots of money....
0 Reply
Allen DuanPro Member
Property Manager · Los Angeles, CA · Member since 2022 · 590 posts · 463 votes
4y
In regards to software, a dynamic pricing tool will more than pay for itself. We use Pricelabs, the other two big ones I've heard of are Wheelhouse and Beyond. Most of the other software we use probably isn't worth it unless you have multiple STRs you need to manage. I'm happy to share more details about software :)
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