Is it insane to manage your own STR?

Short-Term & Vacation Rental Discussions

Is it insane to manage your own STR?

Investor · Spokane, WA · Member since 2023 · 31 posts · 16 votes

Hey friends,

Really struggling with paying 25-30% of our gross to a property manager on our first STR.

I love all the details that go into AirBNB (decor, set-up, marketing copy, customer service), so the only things I can really see needing help with are:

1. 24/7 emergency response person

2. Lawn care

3. Great cleaning people for turnovers who I can trust

Is that worth 30%?

Our STR is in a vacation town 40 min from us - we are very familiar with the area.

High season is all summer, then slows way down.

Thoughts? What am I missing?

TIA!

Kelly

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Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

Yes. I’m insane. I have a bunch of them.

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills

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Tony Ngo
San Gabriel Valley, CA · Member since 2022 · 26 posts · 9 votes
3y
If you already feel struggling on PM with 25-30% of your gross, you can give it a try for yourself. @Michael Baum suggested. Do welfare check the place once a month or so. Most important person is the cleaner. If you can find someone that you can trust, pay them a little more with return that he/she can be your 24/7 emergency response person and look out the property. You can always communicate with cleaner each time on guest check out for conditions of place at the beginning so that the cleaner know your expectation. Good luck. You can do it.
0 Reply
Connor Dahl
Member since 2020 · 12 posts · 10 votes
3y
How has no one mentioned the huge tax benefits you can get from managing your own STR? Check out some STR focused podcasts on the "Tax Smart Real Estate Investors Podcast".
0 Reply
Brett Ferrara
Member since 2023 · 14 posts · 3 votes
3y
Look for someone a bit cheaper? You have to weigh what your time is worth if you do it on your own. Will it be worth the extra income you'll have to pay taxes on anyway?
0 Reply
John M.
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
3y
can anyone here tell me how passive hiring airbNb is. What has your experience been like with them?
0 Reply
Joe PrillamanPro Member
Rental Property Investor · Carolina Beach, NC · Member since 2017 · 441 posts · 462 votes
3y
It's not just the management fee you have to think about but the gross annual income as well. The PM companies in my market don't come close to the gross annual income that a self managed STR can get. So they end up making less and charging you 18-25% of your income. If the goal is stack cash to buy more properties it's worth it to self manage and do the work. Great part about real estate, you can always change your mind.
1 Reply
Blake Novotney
Real Estate Agent · Wilmington, NC · Member since 2021 · 166 posts · 116 votes
3y
Definitely not insane, in fact, you already know exactly who you need! Start building your database with the appropriate contacts and make sure to have multiple of each just in case, especially handyman for little things that can respond quickly. In my market, those who treat managing their own STR's like a business see that directly result in success. I've seen property management companies do a piss-poor job managing STR's far too many times, make sure you vet them well if you go that route.
2 Reply
Brian G.
Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
3y
@Kelly Cochran if you WFH (you have time freedom), your goal is to maximize your return and you don’t mind learning an active business then self manage. We self manage remotely from 2,000+ miles away (ie you do not have to drive to & from your property to self manage). The biggest key is finding a reliable cleaner and a responsive handyman or two. There is definitely a learning curve but I’m confident you are more than capable. Good luck!
1 Reply
Wilson Hunter
Investor · Greenville, SC · Member since 2020 · 210 posts · 302 votes
3y
It ends up being way more than 25-30% of gross when you consider middling quality of most PMs, suboptimal pricing, hidden fees, etc.
0 Reply
Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes
3y
@Connor Dahl you can receive the tax benefits of cost segregation and bonus depreciation thru active management . You can always switch the following year to being a passive investor and still continue to take straight depreciation on the types of property you did not take bonus depreciation on.
0 Reply
Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes
3y
@Kelly Cochran hire a co host( retirees) to do the things you listed. Pay them 6-8% of gross or $25-$30/hr . Flat fee for cleaning.
0 Reply
Jay Murak
Member since 2018 · 24 posts · 10 votes
3y
Quote from @Kelly Cochran:

Hey friends,
Really struggling with paying 25-30% of our gross to a property manager on our first STR.
I love all the details that go into AirBNB (decor, set-up, marketing copy, customer service), so the only things I can really see needing help with are:
1. 24/7 emergency response person
2. Lawn care
3. Great cleaning people for turnovers who I can trust
Is that worth 30%?
Our STR is in a vacation town 40 min from us - we are very familiar with the area.
High season is all summer, then slows way down.

Thoughts? What am I missing?
TIA!
Kelly

If you have the time, you manage yourself. You will get great at it, trust me.
0 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Quote from @John M.:

can anyone here tell me how passive hiring airbNb is. What has your experience been like with them?
What do you mean?
0 Reply
Kelly Cochran
OP
Investor · Spokane, WA · Member since 2023 · 31 posts · 16 votes
3y
Quote from @Tony Ngo:

If you already feel struggling on PM with 25-30% of your gross, you can give it a try for yourself. @Michael Baum suggested. Do welfare check the place once a month or so. Most important person is the cleaner. If you can find someone that you can trust, pay them a little more with return that he/she can be your 24/7 emergency response person and look out the property. You can always communicate with cleaner each time on guest check out for conditions of place at the beginning so that the cleaner know your expectation. Good luck. You can do it.
Thanks, Tony! Any tips on finding a reputable cleaner? Things to ask when screening?
0 Reply
Timothy ChiBusiness Member
Real Estate Agent · Anchorage, AK · Member since 2018 · 88 posts · 45 votes
3y
We are in a similar situation. Our first STR goes live in Anchorage this July. We are planning to manage it ourselves. We are systems oriented and will try to automate as much as possible. We are hoping to use Hospitable for PMS, Pricelabs for pricing, and Hostfully for guestbooking. We will plan to clean ourselves for the first month to learn and get our systems dialed, then plan to have a cleaner moving forward. I believe. the cleaner can access the calendar on hospitable (i think?) so hopefully that aspect can be somewhat automated. Since you're just starting out, would love to connect and share experiences on how this is going.
425-985-9071
1 Reply
Tony Ngo
San Gabriel Valley, CA · Member since 2022 · 26 posts · 9 votes
3y
I was struggle at first locating cleaner. But lucky that I asked around people surrounded me and found someone I know in person. I didn't know she was doing cleaning too. Guess didn't hurt to ask :). I felt there are two type of cleaners. One do whole house cleaning for tenant to move in and one is specific to STR. Ask them if they done any STR before. I think there app people use for STR cleaner. May be someone can share it here. If you can find someone you trust, you can train him/her. This will be the best option as he/she may also help you look after your property.
0 Reply
Bonnie Griffin KaakePro Member
Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
3y
Quote from @Todd Goedeke:

@Connor Dahl you can receive the tax benefits of cost segregation and bonus depreciation thru active management . You can always switch the following year to being a passive investor and still continue to take straight depreciation on the types of property you did not take bonus depreciation on.
There is a misunderstanding here in this post. Whether you are an active or passive owner/investor in a property, STR or LTR, you are still most likely entitled to cost segregation and bonus depreciation. Using straight-line depreciation is NOT a benefit to an investor who plans to keep a property for at least 2 years. Yes, it is easier for a CPA/tax professional but not likely to your benefit taxwise. Think "time value of money". Do you want to be able to leverage that extra cash-flow now or wait 27.5 or 39 years?
[email protected]303-475-4459
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Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes
3y
@Bonnie Griffin Kaake understand that in regards to STVRs in order to have cost segregation and bonus depreciation apply one of the standards that must be met is material participation. A high income professional can have material participation in year one of the construction phase of a STVR but be unable to materially participate in the following years during the management and operations phase. Therefore although desiring to use the rest of bonus depreciation from the segregation study immediately they are unable to do so and must resort back to straight line depreciation.
0 Reply
Brady Hales
Rental Property Investor · Provo, UT · Member since 2021 · 46 posts · 50 votes
3y
@Kelly Cochran Tony Robinson from the real estate rookie podcast would be a great one to follow. I believe it was him where in one of his episodes he says it doesn't truly have to be 24/7. If there is a true emergency they should call 911 and you can deal with it in the morning. Also, so much of it can be automated nowadays. It is just trying to find those things to get automated. "The Real estate Robinsons" on YouTube would be good to follow. They have some great videos on this topic if memory serves me right;)
0 Reply
Zane Cress
Realtor · Athens, GA · Member since 2023 · 201 posts · 104 votes
3y
Quote from @Todd Goedeke:

@Zane Cress what about investors with retirement accounts owning STVRs who are not allowed by ITS rules to be active investors, they can’t self manage.

Then I guess they would have to eat the cost of management and be happy with lower cash flow and hope for appreciation over the years.
0 Reply
Matt Silverstone
Rental Property Investor · Los Angeles, CA · Member since 2018 · 40 posts · 17 votes
3y
I don't think it's insane to PM your own property. Just know what you're getting into and that you might be on call randomly but it hardly happens. 90% of the job can be taken care of with software: pricing, guest messaging, social media posts, etc. to be successful.
1 Reply
Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes
3y
@Zane Cress or they can be passive investors and lease their property via NNN lease where they get a fixed ConC return and have no risk of management risk or reward.
0 Reply
Bonnie Griffin KaakePro Member
Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
3y
Quote from @Todd Goedeke:

@Bonnie Griffin Kaake understand that in regards to STVRs in order to have cost segregation and bonus depreciation apply one of the standards that must be met is material participation. A high income professional can have material participation in year one of the construction phase of a STVR but be unable to materially participate in the following years during the management and operations phase. Therefore although desiring to use the rest of bonus depreciation from the segregation study immediately they are unable to do so and must resort back to straight line depreciation.
What you are saying is not correct. Cost segregation and bonus depreciation are not dependent on material participation or active status. Passive properties can also use these benefits. And, losses from one passive property can be used to offset taxes on another passive property. Active properties, whether they be materially participating STR owners or RE Professional owned properties can also use the benefits of cost segregation and bonus depreciation. We have been doing this for over 20 years and have NEVER triggered an audit. The difference you may be thinking of is that STRs with material participation (active) can use the benefits of Cost Segregation and bonus depreciation against their W2 income. Whereas, it is difficult for a RE Professional to claim RE Professional/active if they have W2 earnings.
[email protected]303-475-4459
0 Reply
Kelly Cochran
OP
Investor · Spokane, WA · Member since 2023 · 31 posts · 16 votes
3y
Quote from @Todd Goedeke:

@Kelly Cochran hire a co host( retirees) to do the things you listed. Pay them 6-8% of gross or $25-$30/hr . Flat fee for cleaning.

Tips on finding a cohost?
0 Reply
Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
3y
I enjoy doing my own management. I like STR operations better than LTR, and live close to my properties. I have been buying one STR a year for a couple of years now, and really like so many aspects of hospitality.
0 Reply
Sheri FluellenBusiness Member
Real Estate Agent · Cheyenne, WY · Member since 2020 · 123 posts · 64 votes
3y
SOOO many great responses!! The first step, in my opinion, is to ensure that whatever you do as an investor, it is consistent with your current and long term goals. I am a Psychologist and High Performance Coach (and investor) and often I find that people get lured into a bit more income, but the trade off can be a lot more stress and less time with family. And it can be easy to get into the "hustler" mindset and stay there. My husband and I have 25+ properties and have managed ourselves for many years. It was scary to let go of that and hire a property manager. At the time we did, we found major relief! The same path isn't the best for everyone. So I just encourage you, and anyone else, to really get clear on your goals, and what you're willing and able to put up with right NOW. Best of luck to you!!!!
[email protected]307-772-1185
The Titan Real Estate Team, Real Broker52 Reviews
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