Are out of state property managers worth it?

South Bend, Indiana
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Are out of state property managers worth it?

Patrick F.
Northern Virginia · Member since 2023 · 7 posts · 2 votes

Hi all, I'm coming close to buying my first rental as an out of state STR. I have been in contact with a local property manager who charges 18% to manage the listings on their accounts (Airbnb, Vrbo, etc), take care of cleanings, help with stockings, set the prices, and really just let me collect a paycheck every month. Given that this is my first rental (and the nerves are there), this seems like a nice convenience for peace of mind.

However I was crunching some numbers and it looks like self managing could almost double my cash flow. I’m a little worried about finding cleaners and handling stocking of household items. I also worry that having a new Airbnb/Vrbo account could lead to review-volatility as opposed to using a PM’s established account.

Anyone have advice on the above? Any tips on finding out of state cleaners & stockers? (especially in South Bend!) Any suggestions for PM softwares like Guesty, etc? Thank you!

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Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
3y

There is NO such thing as passive income, even with a property manager. I have 8 self managed STRs and 200 something LTRs with managers. What I have learned from investing over the better part of a decade is that there is no scenario where you can buy something and then lay on the couch the rest of your life and throw your phone in the trash. You're still going to have to answer when the property manager inevitably calls because you as the owner need to make a decision. Our LTR manager called yesterday bc someone worte the F word with a stick in the fresh sidewalk concrete we put in.

There is a time and place for managers in STR. If you're in scale/growth mode, that is not the time. That being said, I don't know if "doubling" the cash flow is accurate. But it can be the difference between cash flowing and breaking even depending on the deal. You have to decide if answering a few messages and calling a handyman a time or two a month is worth the 18%. When I first started I was happy to answer the "I can't work the remote" message to keep that extra 10k, because I had plans for it. Now, with more properties, what used to be 10k in savings each year is enough for the down payment on an apartment building. So you have to decide which is more important to you at this stage in your life: scaling or being mildly annoyed when a guest can't figure something out and messages you while you're at the movie theater.

And there's no wrong answer to that, by the way.

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  • Dave StokleyBusiness Member
    Property Manager · Cleveland, OH · Member since 2015 · 699 posts · 799 votes
    3y

    Per STR Insights, 60% of the highest performing properties are managed by LOCAL property managers. Not self-managed. Not managed by the big companies.

    3Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    Get a property manager. You’ll be creating a job for yourself and your worry about cleaners is going to be a huge issue. I still fire them all the time and I own a property management company. 

    2Reply
  • Matt Barth
    Investor · Member since 2023 · 35 posts · 29 votes
    3y

    Finding a good PM can be a hassle, but not as much as doing everything yourself. I would say if you want a job and you need the cash flow for this to make sense and you don’t mind how much time you are going to pour into making x amount of dollars then self manage. If you don’t want a part time job or your time is more valuable definitely hire a PM. 

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Patrick F.:

    Self management doubles your cashflow? What are the hard numbers?

    Let's say your cashflow goes from $10,000 a year to $20,000. That's $10,000 more in your pocket . . . but it comes at the price of you being the one to answer all the calls and emails, emergency calls from guests that can't find the breaker panel or figure out how to operate the A/C, guest complaints, coordinating cleaners, refunds, or whatever.

    If you have 150 bookings a year and spend an average of one hour per guest, that's 150 hours of your time. If your time is worth $40 an hour, that's $6,000. So you've only gained $4,000 in cash flow.

    There are many guests that won't take 5 minutes of your time. There are others that will suck up hours. Talk to others that self manage to get a realistic idea of what it takes to manage in the Smokies, do the math, and decide if it's worth the effort or if you just want to hand it over.

    18% management fee? That sounds awfully cheap and I would have to question how professional they are. But maybe that's normal in the Smokies?

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  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
    3y

    18% seems to be within reason to me. I looked into converting my LTR into STR and got quoted 20% here in Fort Lauderdale. I live here and still wouldn't want to self-manage as I know it could take a lot of time. Dealing with a lot of different guests could be such a time suck and could take away from your other responsibilities. Spend the time to find the right PM and collect

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Patrick F.:

    Hi all, I'm coming close to buying my first rental as an out of state STR. I have been in contact with a local property manager who charges 18% to manage the listings on their accounts (Airbnb, Vrbo, etc), take care of cleanings, help with stockings, set the prices, and really just let me collect a paycheck every month. Given that this is my first rental (and the nerves are there), this seems like a nice convenience for peace of mind.

    However I was crunching some numbers and it looks like self managing could almost double my cash flow. I’m a little worried about finding cleaners and handling stocking of household items. I also worry that having a new Airbnb/Vrbo account could lead to review-volatility as opposed to using a PM’s established account.

    Anyone have advice on the above? Any tips on finding out of state cleaners & stockers? (especially in South Bend!) Any suggestions for PM softwares like Guesty, etc? Thank you!


     I have 7 different property managers and I found that's still easier to manage than managing myself, it's just pragmatically impossible when oOS

    0Reply
  • Patrick F.
    OP
    Northern Virginia · Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Patrick F.:

    Self management doubles your cashflow? What are the hard numbers?

    Let's say your cashflow goes from $10,000 a year to $20,000. That's $10,000 more in your pocket . . . but it comes at the price of you being the one to answer all the calls and emails, emergency calls from guests that can't find the breaker panel or figure out how to operate the A/C, guest complaints, coordinating cleaners, refunds, or whatever.

    If you have 150 bookings a year and spend an average of one hour per guest, that's 150 hours of your time. If your time is worth $40 an hour, that's $6,000. So you've only gained $4,000 in cash flow.

    There are many guests that won't take 5 minutes of your time. There are others that will suck up hours. Talk to others that self manage to get a realistic idea of what it takes to manage in the Smokies, do the math, and decide if it's worth the effort or if you just want to hand it over.

    18% management fee? That sounds awfully cheap and I would have to question how professional they are. But maybe that's normal in the Smokies?


    That’s a good way to look at it. The hard numbers aren’t necessarily worth all the extra time put into it especially if I want to scale up. And this is in South Bend, not the Smokies - different ‘S’ town!

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Patrick F.:


    Sorry, I read so many posts/responses from owners in the Smokies that it's constantly on my mind.
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    0Reply
  • Sean Haberman
    Member since 2022 · 12 posts · 6 votes
    3y

    I was in the same situation as you last year, I opted to hire a property manager, I am happy I did. 18% is a very reasonable rate, for a good manager. 

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    This sounds like a co-host service, not property management. Co-hosting in my opinion does not justify 18%. 

    0Reply
  • Patrick F.
    OP
    Northern Virginia · Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Matt Barth:

    Finding a good PM can be a hassle, but not as much as doing everything yourself. I would say if you want a job and you need the cash flow for this to make sense and you don’t mind how much time you are going to pour into making x amount of dollars then self manage. If you don’t want a part time job or your time is more valuable definitely hire a PM. 


    I really like this framing. The goal is to get passive income after all!

    0Reply
  • Kerry Noble JrPro Member
    Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    you can find someone locally to be boots on the ground for you.....i do it here in indy! If you wanna come a lil farther south, we can connect

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

    We are a local PM in FL and charge 20%.  There are some people cheaper but they often upcharge fees to make up their % with higher fees they siphon off.  If I were to search for a PM in another state I would look for the following:

    1 - Small but not too small.  Small enough where you can get ahold of someone easily but not too small where one guy is trying to do everything.

    2 - What reach they have. There are more options to STR than Airbnb and VRBO. We are partnered with Booking.com, Allegiant Airlines, JetBlue Airlines, Google Vacation Rentals, and Marriott Homes and Villas. Some of these connections will only work with PM with 50+ units. Marriott is one such one and they are great and deliver about 15% of our bookings now. We also derive about 10-15% from our own booking channel. All of this additional marketing helps occupancy rates go higher.

    3 - What technologies are they implementing? At minimum they should use Pricing Software, a solid PMS, and Channel Manager.

    4 - Any other features? For example we have a damage waiver program where we insure every reservation for $1,000, $1,500, or $2,000 depending on size.

    5 - Fees.  Which fees do you get and which ones go to PM?  Make sure your cleaning fee is reasonable to your competition.

    I hope this helps!

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  • Kevin Luttrell
    Lender · Orange County, CA · Member since 2019 · 299 posts · 255 votes
    3y

    @Patrick F. I was in your position a couple years ago and opted to self-manage. Very glad I did, and it has definitely not been as hard to manage from out of state as some would lead you to believe. 

    Check out Turno.com for finding cleaners. I've been using this from the beginning and it has worked great. My cleaner does all restocking for everything I need, and you'll find most cleaners are either decent handymen/handywomen themselves, have a significant other who is, or have good recommendations. 

    I use Guesty for Hosts for channel managing, although I believe the cost is higher now than when I signed up. Also heard good things about Hospitable. 

    1Reply
  • Nick Sheveland
    Rental Property Investor · Austin, TX · Member since 2018 · 128 posts · 84 votes
    3y

    Hi @Patrick F.

    What are your goals with the STR / MTR? Are you looking for max cashflow and a new part time job, or more passive income and peace of mind that a professional is taking care of it. I own a vacation rental company that manages remotely and our clients love knowing their property is being properly taken care of and getting a check and report at the end of the month. I like to utilize local realtors for recommendations for building our boots on the ground team, I also like using local FB groups for this.

    If you have and questions or would like to brainstorm send me a message, happy to help :)

    0Reply
  • Hunter Reed
    New to Real Estate · Texas Christian University · Member since 2022 · 118 posts · 56 votes
    3y

    You should weigh your options. Call up 10 property managers and 10 agents in the South Bend area and find out who provides the best service for STR. Based on the referrals you receive you can easily narrow down your options. Just because one person offers you a deal doesn't mean you should take it. It is the same principle for finding a real estate investment property. You are going to analyze 50-100 deals before you find the right one. The same rules apply for finding a top notch management service for your STR. Hope this helps.

    0Reply
  • Bryan S.
    Member since 2011 · 92 posts · 40 votes
    3y

    Its all about your situation.  I have a friend who has some really incredible properties in LA and he does a mix of self manage, property managers and depends on the property. 

    If you have a full time job, 1k+ miles away, and family, probably worth having a property manager. 

    If you look at Vacasas reviews they are typically like 4.5 and seem to be mailing it in.  The midsize-local seem to be the way to go. 

    0Reply
  • Narmina Amirbekova
    Real Estate Agent · Houston TX · Member since 2018 · 4 posts · 0 votes
    3y
    Quote from @Eliott Elias:

    This sounds like a co-host service, not property management. Co-hosting in my opinion does not justify 18%. 


     That is what I am thinking too. What does 18% include? for example I have property manager that is only engaged in talking to guests and cleaning crew and he is out of state. I live 10 min away from the property and still have to go there each time something breaks or needs attention i wish i could pass it to property manager as well. Or do i need to hire handyman? 

    0Reply
  • Manco Snead
    Investor · Spokane, WA · Member since 2015 · 238 posts · 133 votes
    3y

    Just my personal experience. I'm going onto PM # 3 within 1.5 years for my LTR OOS property. If this new PM turns out to be good I may at some point buy another property in that area. That aside, I won't buy OOS again because the likelihood of ending up with a crappy PM is too high. Again, just my experience.

    0Reply
  • Jay ThomasPro Member
    Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
    3y

    Consider hiring a property manager as it can alleviate the burden of managing the property by yourself. By doing so, you'll be able to avoid creating additional responsibilities for yourself and avoid the worry of managing cleaners, which can be a significant issue.

    [email protected]832-889-5607
    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    I am on the opposite side @Patrick F.. I self manage from 360 miles away and I find it pretty easy to do.

    Once everything is setup and running, it isn't that hard. Find a good cleaner and handyman, setup regular maintenance on the hard systems and stay there once in a while will keep things on track.

    I haven't had that hard of a time with cleaners as others seem to have had. Going on year 3 with our current cleaner and it has been great!

    0Reply
  • Patrick F.
    OP
    Northern Virginia · Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Narmina Amirbekova:
    Quote from @Eliott Elias:

    This sounds like a co-host service, not property management. Co-hosting in my opinion does not justify 18%. 


     That is what I am thinking too. What does 18% include? for example I have property manager that is only engaged in talking to guests and cleaning crew and he is out of state. I live 10 min away from the property and still have to go there each time something breaks or needs attention i wish i could pass it to property manager as well. Or do i need to hire handyman? 


    The 18% here includes listing (on their respective accounts), pricing, cleaning, communicating with guests, receiving packages & stocking, and marketing. I’m just reading up on cohosting now but it seems like co-hosting is less involved than PM’ing?

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Hey @Patrick F., is the listing under their name? If so that is a bummer as they own it so all the reviews are theirs and if you decide to change systems, you will have to start over.

    0Reply
  • Patrick F.
    OP
    Northern Virginia · Member since 2023 · 7 posts · 2 votes
    3y
    Quote from @Michael Baum:

    Hey @Patrick F., is the listing under their name? If so that is a bummer as they own it so all the reviews are theirs and if you decide to change systems, you will have to start over.

    @Michael Baum It would be. Think it is worth it to see if we can put it under my name? I would be starting fresh with a new host account so not sure how that would affect bookings, etc.

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Patrick F.:

    Hi all, I'm coming close to buying my first rental as an out of state STR. I have been in contact with a local property manager who charges 18% to manage the listings on their accounts (Airbnb, Vrbo, etc), take care of cleanings, help with stockings, set the prices, and really just let me collect a paycheck every month. Given that this is my first rental (and the nerves are there), this seems like a nice convenience for peace of mind.

    However I was crunching some numbers and it looks like self managing could almost double my cash flow. I’m a little worried about finding cleaners and handling stocking of household items. I also worry that having a new Airbnb/Vrbo account could lead to review-volatility as opposed to using a PM’s established account.

    Anyone have advice on the above? Any tips on finding out of state cleaners & stockers? (especially in South Bend!) Any suggestions for PM softwares like Guesty, etc? Thank you!


     Super confused. How does removing a service at 18% charge of rents, equal 100% additional profit? 

    Are you saying your STR is operating with a gross-net margin of less then 40%? Because that should be your #1 issue if that's the case.

    0Reply
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