Property management in long distance vacation rentals

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Property management in long distance vacation rentals

Mikaela Casey
Member since 2022 · 14 posts · 7 votes

I am looking to buy my first long distance vacation rental. I have done research and found a few property management companies in the city. I am wondering if this is the best route, or if a service like vacasa makes more sense for the convenience factor? Any input is greatly appreciated! Thank you! 

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William Anderson
Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes
4y

If you are just playing around with STR, do it yourself, lots of fun. The guest calls at 11:00 PM and wants new batteries in the remote. The sink leaks in the kitchen and they don't call. The cleaner comes a day later and water is everywhere. Just kidding of course. This is one of your biggest investments. Treat it like a business from day one. If you can't make money having a great property manager take care of the property then perhaps owning an STR is not for you.

I am telling you from many years of experience that it's impossible to effectively manage your property remotely.  I pay 15% for the property manager and that's it.  They take care of everything including those calls when the AC goes out.  I factored in the 15% along with a maintenance budget when I bought each of my properties.

If you can't fit in 15% then buy your property for less or charge higher rents.  If that does not work, find another type of investment.  One thing it took me a while to understand was the value of my time.  I could grow my wealth by duplicating my efforts.  Yes, lower income at first but the big bucks come as a portion of a larger number of rentals, products, etc. 

For many years most of my STRs were in Spain.  I had three excellent property managers.  I never received a single call from them for issues.  If it broke, they fixed it.  Every month I looked at my deposits and reports, that was it.  This was a true passive income business.

I am closer in proximity to my current STR therefore I do stop by and meet guests from time to time just to get their reading on my property. If they pass along any issues, I notify the property manager who takes care of them. I meet with the property manager about once each month to discuss strategy for the next quarter and the next big season which I could do via phone. This is where I hear all of the horror stories that have already been solved.

Sorry for preaching for what it's worth, start out the right way.  Create a budget, create a business to own the property, buy at the lowest price, and rent at the highest end of the market.  Be sure that your property manager has the correct checking account number and routing number for your profits.

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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y

    As you can imagine this question has been asked here many times. In fact bigger pockets published a book on the subject. 

    Short Term Rental Long Term Wealth 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    1Reply
  • Trent Reeve
    Atlanta · Member since 2022 · 712 posts · 642 votes
    4y

    I am very new and shopping for my own first STR. I was initially set on using a property mgmt service. But i look at the money they are taking in, I wanted that money. I would say it depends on where you are buying. If it is a place, say Myrtle Beach, Gulf Shores, etc, that has a lot of STR's, you could self manage. Avery Carl has a good book on STR's and talks about self managing. And a lot of podcasts about it. You need to have good cleaners and a handyman, which in a big vacation place you should be able to get. There are a lot of tools you can use to self manage and reduce the time needed to manage it. But if you self manage, you will need to devote some time to it. With a property mgmt, you can be fairly hands off. You just have to look, is it worth giving up 20-30% of your sales. For me, the numbers didnt work, I wanted that 20-30%.

    1Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y
    0Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y

    thanks @Luke Carl! I'm going to buy the book right now!

    0Reply
  • Trent Reeve
    Atlanta · Member since 2022 · 712 posts · 642 votes
    4y
    Quote from @Mikaela Casey:
    where i am looking, im a 6-hour drive away. This is where you develop a relationship with your cleaners and handyman. Some places even offer a concierge service that can do errands. Your real estate agent should help and identify cleaners you can contact. You can set up services that they can do. But it depends on what the issue is. If its a leaky pipe, you wouldnt be fixing it yourself likely, you would call a plumber or handyman. No different doing it remotely than if you were there. Maybe you identify a restaurant that you can pay over the phone, so if an issue is bad enough, you can offer a dinner "on the house" while the issue is being handled. 
    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    The tools that Vrbo and Airbnb provide make it easy to remotely manage yourself. Add a great cleaner and you are most of the way there.

    4Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    4y

    Is Vacasa the in-house property management for that property? If not then there's no difference with local PM. Also you may want to investigate the pricing scheme for STVR as it could be very different from one to another.

    0Reply
  • Christian EhlersBusiness Member
    Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
    4y

    If it's one of your first investments and you have the time to manage it I would definitely suggest managing from a distance to start and if you end up needing help or not enjoying the work you can take on a property manager at that point. Once you have the place furnished most of the work can be handled by automated messages in Airbnb app or a channel manager (I use guesty for hosts) and a Pricing software (I use price labs for example). Most of the work I've had to do is simply answering guest questions and inquiries, and checking in with my cleaners when guests leave things behind and what not. Definitely worth saving the 10-30% I've seen different property managers charge, at least when starting out and money is your biggest limiting factor in your investing journey. 

    This also helps you learn the business and how well your property should perform if someone is really watching it closely, so if you ever do switch to a Property manager for that you have a baseline to compare their performance too. 

    [email protected]978-396-9939
    1Reply
  • Andrew Street
    Member since 2019 · 1k+ posts · 292 votes
    4y

    Hello @Mikaela Casey - I just messaged you!

    0Reply
  • Joshua MessingerBusiness Member
    Property Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
    4y

    Hey @Mikaela Casey! 

    I would recommend self-managing your first property if that is possible for you since if you do you will get a gist of all the operations and services that go into operating an STR. Otherwise, if you are looking for a management company I would recommend not working with a larger company as they will not be as hands-on and direct with you as you may like. Also, they have 1000s of other clients they are focusing on so their main focus will not be directly on you.

    I hope this helps and if you ever need anything please don't hesitate to reach out to me! 

    All the best,

    Josh 

    [email protected]484-986-5012
    1Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y

    @Joshua Messingerthis was super helpful!! Thank you so much Josh! 

    1Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y

    I think if you want to keep your quality of life and scale your business then you should be a passive investor.  Get a full-service property manager who knows their stuff!

    3Reply
  • William Anderson
    Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes
    4y

    If you are just playing around with STR, do it yourself, lots of fun. The guest calls at 11:00 PM and wants new batteries in the remote. The sink leaks in the kitchen and they don't call. The cleaner comes a day later and water is everywhere. Just kidding of course. This is one of your biggest investments. Treat it like a business from day one. If you can't make money having a great property manager take care of the property then perhaps owning an STR is not for you.

    I am telling you from many years of experience that it's impossible to effectively manage your property remotely.  I pay 15% for the property manager and that's it.  They take care of everything including those calls when the AC goes out.  I factored in the 15% along with a maintenance budget when I bought each of my properties.

    If you can't fit in 15% then buy your property for less or charge higher rents.  If that does not work, find another type of investment.  One thing it took me a while to understand was the value of my time.  I could grow my wealth by duplicating my efforts.  Yes, lower income at first but the big bucks come as a portion of a larger number of rentals, products, etc. 

    For many years most of my STRs were in Spain.  I had three excellent property managers.  I never received a single call from them for issues.  If it broke, they fixed it.  Every month I looked at my deposits and reports, that was it.  This was a true passive income business.

    I am closer in proximity to my current STR therefore I do stop by and meet guests from time to time just to get their reading on my property. If they pass along any issues, I notify the property manager who takes care of them. I meet with the property manager about once each month to discuss strategy for the next quarter and the next big season which I could do via phone. This is where I hear all of the horror stories that have already been solved.

    Sorry for preaching for what it's worth, start out the right way.  Create a budget, create a business to own the property, buy at the lowest price, and rent at the highest end of the market.  Be sure that your property manager has the correct checking account number and routing number for your profits.

    7Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Hey @Mikaela Casey, I disagree with @William Anderson. It is completely doable to manage your vacation rental remotely. We live 360 miles from our lake house and have been managing it remotely for 5 years.

    There is no way we would make money using a PM. The best I could find wanted 35% off the top to manage our lake house. It is quite a ways outside of town and they are charging for it.

    The most important thing to do is keep up with the systems. Make sure the A/C and furnace is serviced 2x a year. Keep up on the water heater. Change the water filters regularly. All this can be done by a good handy person and your furnace people. We have a contract we pay $15 a month and that gets 2 services a year with filters. Worth every penny. I flush the water heater yearly myself.

    Have spares for things. Make sure you cleaner is the best you can get. They are the lifeline. A good cleaner will make things smooth as glass. We have a great cleaner and don't have issues.

    Often times you can't just charge more or pass less for properties when you are looking in a specific place. The market dictates that and if you keep lowballing in order to use a PM, then no one will take you seriously and kick you to the curb.

    For the last 5 years we have been managing our lakehouse. The guests all have my cell number. I have never gotten a call or text at 2am about batteries or sewer issues or whatever. I keep the batteries replaced yearly whether they need them or not. I have never gotten a call/text at 2am for anything, ever. I communicate with the guests regularly during their stay. I check in with them the day after they arrive in order to find out if there are any issues they might be embarrassed to call about. The only calls I get is how is the local restaurant or where to rent a boat.

    It is a customer service sort of investing. The better you are at communication with the guests, the better you will do. The more you maintain your vacation house, they better you will do.

    3Reply
  • William Anderson
    Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes
    4y

    Michael,

    35% is terrible, I acknowledge at that rate few STRs would be profitable.  What you are doing is working for you and that's good.  I see rates as high as 25% in my area and that's too high also.  

    The "ideal" situation is a low rate such as I am paying and having the manager do the work.  That's ideal and of course, there are some areas where your costs will make that very difficult.  I still believe that if you want to scale up, it's best to buy in areas where PM rates are reasonable.  

    0Reply
  • Anthony R.
    Member since 2022 · 53 posts · 24 votes
    4y

    I recently posted asking the same basic question. Got a lot of excellent advice on both sides of the question. In the end, my wife and I weighed the pros and cons of self-managing vs paying a PM company. We reminded ourselves of our main goal: We are getting in the STR industry to have a passive income to help build wealth in an appreciating home (hopefully), not to become hoteliers/innkeepers/PMs/hosts. And we can't achieve the passive part if we have to be (or choose to be) active.

    As for the 20-25% it costs to do that, well, that's the cost of doing business--or should I say, of not doing business. :-)

    4Reply
  • Zachary Beach
    Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
    4y

    @Mikaela Casey the two main things to consider are the value of your time, and the profit difference. Having a PM should always be a lot less time unless they are awful. As for profit most get less revenue than people who self manage and actually try to do well. There are some PM’s that make more than you would likely make self management but they are few and far between and not any of the big companies currently. Some PM’s are more than worth the cost, example if they get 30-100% more revenue than you would have gotten self managing. That’s the business model my PM company follows.

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Remember, no one cares about your property more than you. No PM can match that.

    1Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y

    @John Underwood thanks john! that is super encouraging and a great way to save money!

    0Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y

    @Anthony R. great point anthony!!! 

    0Reply
  • Mikaela Casey
    OP
    Member since 2022 · 14 posts · 7 votes
    4y

    @William Anderson thank you so much for that response! It was super encouraging! Down the road my goal is to own STR out of the country and its really cool to hear of someone who is doing it successfully! Also, good to know you can hire a property manager and make the numbers work! Thank you again!

    0Reply
  • William Anderson
    Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 206 posts · 168 votes
    4y

    Try Spain, 1st world legal system with good values and nice rental season.  Thanks 

    1Reply
  • Khalid Bryan
    Real Estate Broker · Fort Lauderdale, FL · Member since 2018 · 196 posts · 191 votes
    4y

    We are based in Fort Lauderdale FL. We manage properties on both long term and short term basis. 2 of my agents are currently Super Hosts.

    Lets connect!

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    4y
    Quote from @Mikaela Casey:

    I am looking to buy my first long distance vacation rental. I have done research and found a few property management companies in the city. I am wondering if this is the best route, or if a service like vacasa makes more sense for the convenience factor? Any input is greatly appreciated! Thank you! 

    Here is my personal experience

    1. For both LTR and STR only use a single person property manager, never a larger property management company.  And if the PM doesn’t “wow” you, fire him and find one who does.

    2. For LTR management pay no more than 10%, for 30 - 90 day rentals pay no more than 15%, for STR no more than 20-25%.  

    3. For do it yourself property management of a LTR the property has to be at least average condition, for medium term rental at least good condition, for STR excellent condition.  Otherwise the repairs and maintenance will kill you.

    4. Self management of LTR is much easier utilizing technology, self management of STR is only possible utilizing technology.

    5. Self managing rental property, especially STR adds a BUSINESS component to your investment.  It changes a passive investment to an active investment.

    6. If you pay 35% for STR property management, your returns will be the same as LTR, so why bother?
    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    2Reply
  • Robert Finn
    Realtor · San Antonio, TX · Member since 2021 · 150 posts · 107 votes
    4y

    Like others above, if the margin accounts for the fee then in my opinion its worth it. Accounting for all the services, putting together furniture, decor, etc takes a lot of time and supervision if self managing, especially long distance. In the market you choose, I'd also speak to those property managers about rent trends in their coverage area. There are not too many out there that manage both long and short term. In metro areas, if the numbers pencil out on both with the same property manager then it's worth the interview in my opinion. Best of luck!

    0Reply
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