STR Self Managers - What&#x27;s Your Monthly Mgmt Costs?

OP

Member since 2022 · 53 posts · 24 votes

4y

Thanks @Randy Dubiskas. Not paying for PL will cut costs for sure. I didn't know VRBO had that feature as I've not created my account yet--good to know! Also, I'm toying with the idea of only doing VRBO and not Airbnb because I've read a lot of anti-AB feedback in STR owner FB groups lately, and that the quality of guest seems to vary (though VRBO has its bad apples too), and it would keep me from trying to manager too much/synchronize calendars, etc.

John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

4y

You should be saving about 20% or more of your gross income, not net profit. This can be huge.

OP

Member since 2022 · 53 posts · 24 votes

4y

Quote from @John Underwood:

You should be saving about 20% or more of your gross income, not net profit. This can be huge.

Thanks, as always, John! PM companies I've talked to take their cut after state and local taxes. So, their 20% of net is about equivalent to 17.5% of gross. Either way, at wildest best-guess predictions for gross, it'd be about $1500-2000 if I did it myself, or $5200 if I handed over the reins. But very likely it'd be more like $3,500 year as that best-guess figure (from AirDNA) is aggressive.

Wilson Hunter

Investor · Greenville, SC · Member since 2020 · 210 posts · 302 votes

4y

You will be able to get much higher prices, higher occupancy, and better reviews from self managing. You need to account for lower revenue from a prop manager as you’re weighing options.

Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes

4y

As each private managing owner is different each property manager company is different. We are property managers and our pricing is higher than individuals. In fact we had to stop using tools like Price Labs since they kept trying to bring down our rates.
What you’re not taking into consideration is with a great p.m. their cost will be absorbed by the higher rates they book. Making their percentage irrelevant Plus you’re not spending the time on the phone with the guest answering questions about internet etc. You will also spend more on contractors because we as property managers get better rates or as in our case we are able to take care of issues in-house keeping costs significantly lower. We can also reply at midnight. I would ask you what is your time worth? Also is it scalable? I own over 40 strs and we manage over 200. Those are some of questions I would be asking myself as a new str owner.

3 Reply

Wilson Hunter

Investor · Greenville, SC · Member since 2020 · 210 posts · 302 votes

4y

Valerie, your comment about PriceLabs bringing your prices down is a bit of a red flag because the way PriceLabs works is you choose the base rate. It simply helps owners automate prices for supply and demand for days relative to each other, but you still have to put in the work on setting base rates and adjusting custom rulesets.

It is definitely not the norm for a prop manager to make more than self manager thus cancelling out the pop manager fee… In the markets I’m in a good self manager will make something like 50% more than even the decent people managers in the area. Maybe Branson is different though.

2 Reply

Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes

4y

Thank you for your comments.I stated tools like PriceLabs since this company was in the dialogue. We actually used another company to do the evaluation. I only referred to PriceLabs as the example. @Wilson Hunter my comment was to give Anthony a different perspective. What self managers need to consider is what is the value of their time and the guest experience. What happens when the self property manager is on vacation, has a full time job, on an airplane. Who manages the phone during that away time? We have a 24 hr dispatch that is available to dispatch all hours. Again, just a perspective to evaluate.

2 Reply

Nathan GesnerBusiness Member

Moderator

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

4y

As usual, your calculation is missing one of the biggest expenses: your time!

If your time is worth $50 an hour and you spend two hours a week answering calls, coordinating cleaners, or whatever, that's $400 in your calculation.

You'll hear people on BP say they have several rentals and it only takes them 5 minutes a week to manage, which is pure bunk. There are tools to help you cut down the amount of time spent, but you can't do this without some level of involvement. I recommend you try it yourself and see what you can do. If it becomes too much, hand it over to a manager.

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2 Reply

Daniel Murphy

Financial Advisor · Saint Paul, MN · Member since 2016 · 190 posts · 143 votes

4y

We'll see if this is helpful or not. Here's our breakdown.

We pay for Owner Rez ($35) to manage between VRBO, Airbnb & our direct booking site. It also automatically sends out our legal agreement.

Pricelabs ($35) for our pricing data. Not a ton of monthly costs.

When a guest books, I send a quick reply message. I do cut & paste the link to the legal agreement from owner rez in this message so it's not 100% automated. This takes about 2 minutes even if I'm on my phone to go to owner rez, copy the link & then to Airbnb to paste it into the quick reply.

I add the guest info to my cleaning calendar, 1 minute. We can integrate this into owner rez to happen automatically but I just haven't done this yet.

Then I enter the guests door code into my Schlage app, about another 2 minutes.

While the guest are staying in our home, they may have some questions. This is guest-dependent but most guests are pretty easy. For an average guest stay, I have maybe 5-10 minutes messaging back and forth.

Our cleaner shows up & clean the property, we do not need to spend time arranging this. Occasionally we have to deal with an issue or a maintenance item. On average, this is maybe 15-30 minutes per month.

Once the guest leaves we review them, 2 minutes.

All this is to say that self managing is not hard, costly or labor intensive.

More importantly, you need to make the decision that's right for you. It's good to ask these questions to get different perspectives so that you can feel comfortable with your decision.

For me, I love hospitality. I love guest feedback. I love ownership (of my home & my outcome). Real Estate, finances, interpersonal skills & handy maintenance skills are all in my wheelhouse so it's not hard for me. Plus, I want the material participation for Cost Seg reasons...

I can't imagine any reason why I would pay someone else ~ $1k per month to do all of this for me.

Hopefully this helps a bit for perspective...

3 Reply

Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

4y

My wife and I self manage 23 STRs for ourselves. We probably spend 60 hours a week combined. We do everything except air conditioning work where you need a license and anything involving a roto rooter.

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Anthony R.:

50 Guesty/OwnerRez/Whatever
50 For miscellaneous I might be missing on this list
30 Detergent & cleaners
20 PriceLabs - Dynamic Pricing
20 Linens
10 Trash bags
Total: $180/mo | $2160/yr

a)You can cut out Guesty and Pricelabs right off the bat.

b) Never have a misc on a budget list. Know your expenses.

c) Depending, but some PM companies are not going to buy your supplies for you, they expect you to pay for them, so those costs are a wash.

Your costs will be minimal, it is really a choice about your time. With one smaller place, you will probably spend about 2 hours a week, incl cleaning. I think it's well worth it.

OP

Member since 2022 · 53 posts · 24 votes

4y

Thank you, @Bruce Woodruff.

For a one-STR owner, a channel manager like Guesty is not needed? I thought they help systematize and automate (calendar synch, text messages, etc.)?

You're right about knowing expenses--I'm in a learning curve right now, so I was trying to keep my expectations realistic by padding my potential costs in case I later became aware of something.

Yes, while it's great PM companies throw linens in as included, those will be a cost I'll need to pick up. Sounds great that they do, but as I dig into the cost of linens I realize it's minimal, esp for my 1bd/1ba.

I won't be cleaning; I live 2.5 hrs away, so I'll have to partner with someone there.

Thanks for your reply!

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Anthony R.:

Thank you, @Bruce Woodruff.

For a one-STR owner, a channel manager like Guesty is not needed? I thought they help systematize and automate (calendar synch, text messages, etc.)?

No. The hosting platforms do all that already....

OP

Member since 2022 · 53 posts · 24 votes

4y

@Paul Sandhu I've read many of your posts over the last couple weeks I've been on here. Always solid info and often entertaining! You and your wife are quite the power couple! Really cool the way you work together!

Andrew Street

Member since 2019 · 1k+ posts · 292 votes

4y

@Anthony R. I just pm'd you. Happy to connect and share!

William Beck

Realtor · Branson, MO · Member since 2018 · 272 posts · 283 votes

4y

I agree with @Nathan Gesner Time. How much is it worth to just spend time managing it? I Think it's worth doing for a little but just to tacitly know how much work is involved, but it's not scalable and not something that I think is very fun. I still use an STR Property Manager because I don't have time to hyper-analzye my performance, handle guest inquiries in a speedy fashion, mess with issues that will undoubtedly occur with damage claims and maintenance. It's worth at least trying self management just to get a taste, but ultimately that's up to you if you want to do that forever.

OP

Member since 2022 · 53 posts · 24 votes

4y

Jonathan Hoflander

Investor · Overland Park, KS · Member since 2022 · 5 posts · 1 vote

4y

We took a hybrid approach when we started our first STR. We manage the guest communication, listing, and pricing and we hire a cleaning company to clean, turn the place, restock, and to do minor maintenance. We may outsource more of the duties later but this approach has allowed us to get in tune with the business so we can mange the manager later. There is some work to do the first month or two to get everything up and running but now we are finding that it doesn't take a ton of time now that we have systems in place and leverage automated messaging. Best of luck on our journey!

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

Quote from @Valerie Budd:

As each private managing owner is different each property manager company is different. We are property managers and our pricing is higher than individuals. In fact we had to stop using tools like Price Labs since they kept trying to bring down our rates.
What you’re not taking into consideration is with a great p.m. their cost will be absorbed by the higher rates they book.

Valerie, can you tell me how you're able to get higher rates as a PM company? Why would the guest care whether the property is managed by a professional management company or owner? If I understand your comment correctly, professional management companies charge more for the same exact rental? Help me understand.

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

@Anthony R., my wife and I manage multiple STRs remotely. I haven't tracked my expenses down to the $ for trash bags, etc. But PMs are going to make you pay for items like linens, detergents, trash bags, etc., either way. They'll either pass on the cost to you as an operating expense, or bake it into their management fees.

Even if your expenses are $180 a month, that's still waaayyy lower than a professional PM.

I personally don't think there's much of a distinction between the amount of time it takes to manage a STR remote vs local. Almost 100% of guest relations (bookings, questions, etc.), are done over the app or phone. None of that requires an in-person presence.

If you have a good support structure, mainly cleaners and handyman you can give them access to the house to prep for the next guest and repair anything that needs it.

Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes

4y

Quote from @Greg R.:

Quote from @Valerie Budd:

As each private managing owner is different each property manager company is different. We are property managers and our pricing is higher than individuals. In fact we had to stop using tools like Price Labs since they kept trying to bring down our rates.
What you’re not taking into consideration is with a great p.m. their cost will be absorbed by the higher rates they book.

Valerie, can you tell me how you're able to get higher rates as a PM company? Why would the guest care whether the property is managed by a professional management company or owner? If I understand your comment correctly, professional management companies charge more for the same exact rental? Help me understand.

We can offer more services to the guest then a remote located manager due to our on the ground maintenance team, on the ground guest concierge services, our internal Housekeeping and our own internal laundry. We have a lot of value added to our guest with these items as well as all the knowledge and experience we have an connections with venues and activities. If we get a guest need late at night we can be at the property

Property Manager · Branson Missouri · Member since 2022 · 73 posts · 51 votes

4y

@Greg R.. Your comment is a generalization about property managers. Each property manager handles their business differently. Those items you talked about we incorporate into the cleaning fee so the guest pays those.

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

Quote from @Valerie Budd:

Quote from @Greg R.:

Quote from @Valerie Budd:

As each private managing owner is different each property manager company is different. We are property managers and our pricing is higher than individuals. In fact we had to stop using tools like Price Labs since they kept trying to bring down our rates.
What you’re not taking into consideration is with a great p.m. their cost will be absorbed by the higher rates they book.

Valerie, can you tell me how you're able to get higher rates as a PM company? Why would the guest care whether the property is managed by a professional management company or owner? If I understand your comment correctly, professional management companies charge more for the same exact rental? Help me understand.

We can offer more services to the guest then a remote located manager due to our on the ground maintenance team, on the ground guest concierge services, our internal Housekeeping and our own internal laundry. We have a lot of value added to our guest with these items as well as all the knowledge and experience we have an connections with venues and activities. If we get a guest need late at night we can be at the property

I would be interested to hear about your concierge services. Regarding the other items, I don't see why the guests would care who does the laundry or cleans the property as long as linens are fresh and the property is clean when they check in. As a host I've rarely had to answer a call late night. Thousands of reservations and that might have happened once or twice. Sure we'll occasionally get a message about wifi, cable TV or something like that, but that's expected.

To clarify, I'm not diminishing what you do. I'm trying to understand if there is an actual difference in what the guests would experience. And if not, the value would be the work & time it takes to manage the property - which can be significant.

OP

Member since 2022 · 53 posts · 24 votes

4y

Thank you @Greg R. and @Valerie Budd for your insights. All good points.

After having done my research, there's no question that self-managing can save money, especially when it's a bigger property and the cut to the PM company would be that much bigger. But for me it's more than just the cost/savings (depending on how you look at it).

For my 1 bedroom condo that's about to go live 2.5 hours away, I can't get there quickly if there's an issue with a guest. And I don't have the local connections or screening process the local PM company has. But most of all, I'm getting into this to be a (mostly) passive investment. I don't want to be a hotelier over the tenure of my ownership.

That's great if some do, but for me, just in the speed bumps I've hit since closing a couple weeks, I'm glad I signed with a local PM. They've been immensely helpful with helping me resolve pre Go-Live issues I discovered post-closing.

Mine's not going to generate the income a larger property would, so the economy of scale somewhat works in my favor to go with a PM company. Not entirely, but within $2-4k, which to me is more than worth paying the PM to deal with the day-to-day.