Buy a Disney area STR with existing bookings

Orlando, Florida
Short-Term & Vacation Rental Discussions
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Buy a Disney area STR with existing bookings

Karah Kramer
Member since 2022 · 2 posts · 0 votes


My husband and I are looking to buy in the Disney area (currently looking at Windsor Hills, Championsgate, Solara etc.), and noticed that many of the listings say that existing bookings convey, if we stay with the existing management company. I'm curious what happens if we wanted to change management companies:

a. Does the existing management company get first dibs to try and rebook those guests to other properties they manage? Or do we get a chance to try and retain the bookings? What's the experience for guests? 

b. Has anyone heard of successfully "buying out" the current PM company? I.e. assuming $50K in bookings, that would be +/- $12.5K in commissions. I'm wondering if there are options to buy that PM out to keep the bookings with the house. 

We're not opposed to talking to the existing PM, particularly since it would be smooth to keep the existing relationship in place, but we don't want to be locked in. 

Thanks,

Karah

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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
3y
Quote from @Karah Kramer:

We're not opposed to talking to the existing PM, particularly since it would be smooth to keep the existing relationship in place, but we don't want to be locked in. 

This is something you need to decide ahead of time, so you can include language about it in your offer.  Most management companies have contracts that hold the owners by the balls, and canceling the bookings is going to mean a penalty will need to be paid to the PM.  You're going to want to make sure that is an expense for the seller who hired that PM (and it should be a drop in the bucket to them with the cash they're making on the sale if they didn't buy recently), not a liability of yours.

This is also a good lesson on why, when you do take over the place, you either self manage, look for a manager that is willing to do a co-hosting setup where you still own the bookings, or if you do decide to go the more traditional PM route, examine the part of the contract that covers these things when choosing the manager rather than focusing on just commission and skimming over the rest.

 A lot of management companies set up their contracts so it is as difficult and expensive as possible to leave them.  You want a manager that you stay with because you're happy with the job they're doing, not one that you stay with because it's too much of an expensive PITA to leave them.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    It would depend on how the agreement between the PM and the old owner is worded. Does the PM have the right to the bookings, or does the owner?

    I would think this could be easily worked out at any rate....

    1Reply
  • Matthew McKee
    Real Estate Coach · Boise, ID · Member since 2022 · 177 posts · 285 votes
    3y

    Definitely have your Realtor set you up on a meeting with the PM and I'd look into other's who have gone through that process. Hopefully you're using a realtor who has worked with other investors of this model and is one themselves

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    3y

    I’m almost all cases you don’t want those bookings. You’ll do better on your own. Manager will simply move them to their other houses anyway so it probably won’t matter. 

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  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
    3y
    Quote from @Karah Kramer:

    We're not opposed to talking to the existing PM, particularly since it would be smooth to keep the existing relationship in place, but we don't want to be locked in. 

    This is something you need to decide ahead of time, so you can include language about it in your offer.  Most management companies have contracts that hold the owners by the balls, and canceling the bookings is going to mean a penalty will need to be paid to the PM.  You're going to want to make sure that is an expense for the seller who hired that PM (and it should be a drop in the bucket to them with the cash they're making on the sale if they didn't buy recently), not a liability of yours.

    This is also a good lesson on why, when you do take over the place, you either self manage, look for a manager that is willing to do a co-hosting setup where you still own the bookings, or if you do decide to go the more traditional PM route, examine the part of the contract that covers these things when choosing the manager rather than focusing on just commission and skimming over the rest.

     A lot of management companies set up their contracts so it is as difficult and expensive as possible to leave them.  You want a manager that you stay with because you're happy with the job they're doing, not one that you stay with because it's too much of an expensive PITA to leave them.

    Cosmic Vacations4.9174 Reviews
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  • Karah Kramer
    OP
    Member since 2022 · 2 posts · 0 votes
    3y
    Quote from @Ryan Moyer:

     A lot of management companies set up their contracts so it is as difficult and expensive as possible to leave them.  You want a manager that you stay with because you're happy with the job they're doing, not one that you stay with because it's too much of an expensive PITA to leave them.


     Thanks for this - lots of good info here for us to consider as we think about what PM company we might use. 

    0Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    We have taken over other units listings here in Tampa, and I mostly agree with everyone above.  You will want to see what they look like/are worth keeping but moving them over to your new managers books is not easy or fun when dealing with the OTA's.  Likely you will just want them cancelled or in the case of one I am onboarding now their existing bookings only go until Christmas, so we already have a new listing up with availability beginning Jan 1.  Please let me know if you have any other questions, we are also beginning to manage in Kissimmee :)

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Karah Kramer:
    Everything is negotiable. One seller's answer may be completely different from the next. Same with the management company. Just have the conversation and see what your options are.

    If the short-term market is so hot, why are they selling? I would consider that sales prices are still dropping (down 20% as of a month ago) and vacation rentals seem to be slowing down in most markets. Would you kick yourself if you saw home prices drop another 10-20% in the next year?

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  • Tyler GibsonBusiness Member
    Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
    3y
    Quote from @Karah Kramer:


    My husband and I are looking to buy in the Disney area (currently looking at Windsor Hills, Championsgate, Solara etc.), and noticed that many of the listings say that existing bookings convey, if we stay with the existing management company. I'm curious what happens if we wanted to change management companies:

    a. Does the existing management company get first dibs to try and rebook those guests to other properties they manage? Or do we get a chance to try and retain the bookings? What's the experience for guests? 

    b. Has anyone heard of successfully "buying out" the current PM company? I.e. assuming $50K in bookings, that would be +/- $12.5K in commissions. I'm wondering if there are options to buy that PM out to keep the bookings with the house. 

    We're not opposed to talking to the existing PM, particularly since it would be smooth to keep the existing relationship in place, but we don't want to be locked in. 

    Thanks,

    Karah


     I have dealt with this a few times. You can tell the PM to cancel the bookings outright if you want to switch immediately. They can not hold you to their contract with the other owner. What my clients typically do is ask the sellers to stop taking future bookings and then allow the current bookings to happen with the current PM and make the switch after those have been completed. Keep in mind that switching PM's will likely mean that any listing on Airbnb or VRBO will not convey. So, if you have a property that has 100's of 5 star reviews already, it might make more sense to keep the manager, the listings, and all the reviews.  

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