Do I need a management company?

Short-Term & Vacation Rental Discussions

Do I need a management company?

Homeowner · DMV · Member since 2023 · 28 posts · 25 votes

My goal is to purchase my first STR this year or early next. The location I have my eye on is a 3 hr drive from my home in a vacation destination. My question is: How do you know whether to hire a management company or whether to just gather your own vendors (cleaners, handymen, etc) I'm confident in my ability to assemble my own team but doing it all remotely scares me a bit. Yes, hiring a company to do it all for me will take a big bite out of my profits but could it save me from huge headaches since I don't live there and not very familiar with the area? Any insight from your experience would be very helpful. Thank you!

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

DIY vacation rentals are great if you have TIE. Time, interest, and energy. If any of the three are missing, you need a manager to realize the property’s potential.

It’s not unlike any other DIY endeavor: You can save a bundle doing your own nails, coloring your own hair, mowing your lawn, changing your car oil, and ironing all of your apparel.

Most of our clients would rather watch paint dry than manage a rental. Doctors, lawyers, retirees, etc. Several of our homeowners haven’t even seen their rental in person, a few have never even been to Tennessee - ever!

Only you know if you have TIE. Well, on the other hand, you might pose the question to your spouse - to get a more truthful answer. 🤣

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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
3y
This is a value of your time question. And I don't mean this in a snarky way - I mean in it in a literal one.
Coldly, not aspirationally, rationally, value your time. If you earn $70K per year and work 40 hours per week, your time is worth $35 per hour.
Property management in the DMV area is probably going to cost you in the ballpark of $50-$100 per hour. If rent is $2,000, property manager charges $200 / 10% per month, plus a leasing/renewal fee, they are likely spending no more than 4-5 hours per month per unit, and that's likely where you will average to if you self-manage. This is guesswork - an art, not a science. But, still a useful exercise.
In this situation, if you believe I'm close to reality, and you make $70K, you should self-manage. It's simple arbitrage. Why work a job that pays a lower hourly rate and outsource the work of managing the property?
If you earn $250K, your time is worth $125 per hour. No way should you self-manage this property.
In between, you need to rationalize. If it's close, I'd go with professional management. You will grow to resent property managing yourself if it's close and it could be a blocker to scaling your portfolio.
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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Chelsea Price:

My goal is to purchase my first STR this year or early next. The location I have my eye on is a 3 hr drive from my home in a vacation destination. My question is: How do you know whether to hire a management company or whether to just gather your own vendors (cleaners, handymen, etc) I'm confident in my ability to assemble my own team but doing it all remotely scares me a bit. Yes, hiring a company to do it all for me will take a big bite out of my profits but could it save me from huge headaches since I don't live there and not very familiar with the area? Any insight from your experience would be very helpful. Thank you!

For first attempt, let the first year PMC is managing for you. This is hospitality business, not a rental.
Pro Tips: choose from the four superhost in your area so you can learn from the best.
1 Reply
Pablo Flores
Rental Property Investor · Palm Springs, CA · Member since 2016 · 138 posts · 38 votes
3y
@Chelsea Price
There's plenty of tools available for you to self-manage nowadays. But if you are planning on running a high end STR with lots of amenities I absolutely recommend hiring a local competent management company. If you have a simple 2 bedroom condo then you might be fine self-managing from far away and just trusting a local contact when **** hits the fan. But it largely depends on the quality of experience you are providing and the quality of your STR.
1 Reply
Pierre E.Pro Member
Washington, DC · Member since 2016 · 129 posts · 42 votes
3y
@Trent Reeve
Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before
0 Reply
Trent Reeve
Atlanta · Member since 2022 · 712 posts · 642 votes
3y
Quote from @Pierre E.:

@Trent Reeve
Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before

Atlanta is in Georgia, not Grenada
0 Reply
Brandon Wagner
Real Estate Agent · Northern Virginia · Member since 2021 · 106 posts · 50 votes
3y
I always liked the thought of try to manage it yourself when you start out. It will teach you a lot of valuable skills and you will learn much quicker when you are involved more in your business. If you find out that you aren't good at it, or it is too much effort, then you can always pivot to a manager after that.
Just make sure when you run your numbers it still works with the property management fee. In the STR space you're looking closer to 15%-20% of gross rents for that figure.
You will of course need a few people that are local to help you with the "you have to go to the property to resolve an issue items." I can't imagine driving 3 hours to and from will be worth it if they are having trouble with something simple at the property. Try to find some want to be investors in the area that have a good work ethic. You can trade them some experience, knowledge, or money of your STR for their help with simple boots on the ground tasks.
2 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Trent Reeve:

Quote from @Pierre E.:

@Trent Reeve
Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before

Atlanta is in Georgia, not Grenada

LOL this is so funny
1 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
3y
Depends on how much your time is worth.
Many setup systems to minimize their time investment - which works great until something goes wrong.
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Trent Reeve
Atlanta · Member since 2022 · 712 posts · 642 votes
3y
Quote from @Scott Trench:

This is a value of your time question. And I don't mean this in a snarky way - I mean in it in a literal one.
Coldly, not aspirationally, rationally, value your time. If you earn $70K per year and work 40 hours per week, your time is worth $35 per hour.
Property management in the DMV area is probably going to cost you in the ballpark of $50-$100 per hour. If rent is $2,000, property manager charges $200 / 10% per month, plus a leasing/renewal fee, they are likely spending no more than 4-5 hours per month per unit, and that's likely where you will average to if you self-manage. This is guesswork - an art, not a science. But, still a useful exercise.
In this situation, if you believe I'm close to reality, and you make $70K, you should self-manage. It's simple arbitrage. Why work a job that pays a lower hourly rate and outsource the work of managing the property?
If you earn $250K, your time is worth $125 per hour. No way should you self-manage this property.
In between, you need to rationalize. If it's close, I'd go with professional management. You will grow to resent property managing yourself if it's close and it could be a blocker to scaling your portfolio.

most STR managers charge in the 20-25% range. ive only seen 10% for LTR's. but one you set up your people and processes, it is fairly easy to remote/self manage.
0 Reply
Pierre E.Pro Member
Washington, DC · Member since 2016 · 129 posts · 42 votes
3y
@Trent Reeve

Quote from @Carlos Ptriawan:

Quote from @Trent Reeve:

Quote from @Pierre E.:

@Trent Reeve
Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before

Atlanta is in Georgia, not Grenada

LOL this is so funny

LOLs!

Quote from @Trent Reeve:

all depends on your appetite. we bought our first STR in Panama City and i live in Atlanta. hasnt been an issue so far remotely managing

====================

soooo... I saw Panama City + Remote (meaning not in atlanta for you) and that meant "Panama City, Panama"... you know... that country in the same general body of water as Grenada... Who knew there was another PANAMA City lol. who knows... maybe there is a MEXICO City in West VA
Anyway... I have been really hoping to get more information on international STR investing I think I saw what I wanted to see and... ran with it. lol. Trent do you do STR in ATL?

2 Reply
Pierre E.Pro Member
Washington, DC · Member since 2016 · 129 posts · 42 votes
3y
Emm so... I spoke to soon. Apparently there are several areas in the US alone named Mexico... (technically not Mexico City but... meh)
0 Reply
Brooklyn McCarty
Investor · Member since 2022 · 1k+ posts · 754 votes
3y
TLDR- no, you don’t need a management company! Read the BP book written by Avery Carl - Short Term Rental, Long Term Wealth and you will learn everything you need to know!
0 Reply
Akash Dedhia
Member since 2023 · 19 posts · 3 votes
3y
Quote from @Chris Seveney:

@Chelsea Price
I would strongly recommend a management company. While on paper it costs you $, in grand scheme of things the time and cost of not having one will wear on you. It’s also a better use of your time to focus on growing your business not managing a rental

typically a company charging 20% of gross revenue what are the things that would be their responsibilities?
0 Reply
Trent Reeve
Atlanta · Member since 2022 · 712 posts · 642 votes
3y
Quote from @Pierre E.:

@Trent Reeve

Quote from @Carlos Ptriawan:

Quote from @Trent Reeve:

Quote from @Pierre E.:

@Trent Reeve
Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before

Atlanta is in Georgia, not Grenada

LOL this is so funny

LOLs!

Quote from @Trent Reeve:

all depends on your appetite. we bought our first STR in Panama City and i live in Atlanta. hasnt been an issue so far remotely managing

====================

soooo... I saw Panama City + Remote (meaning not in atlanta for you) and that meant "Panama City, Panama"... you know... that country in the same general body of water as Grenada... Who knew there was another PANAMA City lol. who knows... maybe there is a MEXICO City in West VA
Anyway... I have been really hoping to get more information on international STR investing I think I saw what I wanted to see and... ran with it. lol. Trent do you do STR in ATL?

i do not. only have 1 property right now, just started out.
0 Reply
Jason Nguyen
Real Estate Agent · Fairfax, VA · Member since 2019 · 79 posts · 68 votes
3y
To be honest, if after the management fee is deducted and you still making good cash flow, go ahead and hire a management company. Think of it like running a company, you can't do or oversee everything. If the deal is negative cash flow with management fee then it is not a good deal anyway.
1 Reply
Angie Russell
Property Manager · Member since 2022 · 40 posts · 27 votes
3y
Quote from @Alecia Loveless:

@Chelsea Price Depends on your area. My area is a 4 season vacation area but PM companies are virtually non existent and it’s equally as hard to find handymen and reliable cleaners let alone electricians or a plumber if you need a bigger repair in short order.
Apparently people are managing to figure this out because about 85% of long term housing has become STR in the past 5 years.

0 Reply
Angie Russell
Property Manager · Member since 2022 · 40 posts · 27 votes
3y
Interesting, PM companies are non existent with so many opportunities? Can I ask where specifically this is?
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Akash Dedhia
Complete management of the property from A-Z
Now remember management. And maintenance are not the same.
But they should handle all reservations, bookings, cleanings, maintenance calls etc
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Lee Patsel
Member since 2023 · 9 posts · 3 votes
3y
It all really depends on what you want out of this investment. If you want to spend the time and energy managing the team, the bookings, the marketing, the guest communication and everything that goes with it, then doing it remotely is not an issue. With the right tech and operating procedures you can be very successful. Most of us (property managers/co-hosts) do what we do remotely. No reason an owner can't do it as well. If your goal is to get more properties, use your time on other things, then having a property management company is a very good investment. I would say the attention to the details of keeping your property priced right, listing optimized for SEO and having a direct booking option with marketing is going to be more and more crucial as the market changes and success isn't as easy as it was over the last couple years. Good luck in this exciting time!
1 Reply
Osazee J Osagie
Investor · Potomac Maryland · Member since 2020 · 81 posts · 46 votes
3y
Very simple answer, hire a management company because you live 120 minutes away, Expert opinion says your limit driving time wise for your self managed investment property should be 90 minutes drive max.
4 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Quote from @Osazee J Osagie:

Very simple answer, hire a management company because you live 120 minutes away, Expert opinion says your limit driving time wise for your self managed investment property should be 90 minutes drive max.
Hehe, we live 7 hours from our places and we self manage, no problem.

2 Reply
Alex ScattareggiaPro Member
Investor · Cabo San Lucas, Mexico · Member since 2023 · 150 posts · 139 votes
3y
Quote from @Pierre E.:

Woah! Can you share more about what its like doing international STR?
Been thinking about Grenada due to friends and family but never done an STR before
Hi Pierre,
This is an incredibly broad question and will really come down to the specific market you want to operate in. All of my doors are in an international market. Three key things before you get started would be
1. Regulatory environment of that particular country or market. (some are better then the states, some much worse)
2. Tax implications of that country or market (again, some better some worse)
3. Saturation, future outlook for travel growth to that destination. This is kind of the secret sauce when you are dealing with a market which has very little local travel. When we look at a new market we are looking for year over year growth in visitors over at least a five year period. Looking at flights to a destination, airlines shrinking routes or adding is a simple metric for evaluating future growth as an example.

If you want a bit more info, let me know and I am happy to help. Cheers and good luck.
1 Reply
Kerri Ernewein
MA · Member since 2020 · 1 post · 1 vote
3y
Hi Chelsea - We definitely understand your reservations around investing and hiring a management company from afar. We are long distance investors of STRs ourselves as well as manage STRs for clients hundreds and soon to be thousands of miles away. It can be done and be done profitably. You just need to make sure you and the management company are aligned in your goals and understanding of who takes on what. We prefer the owners to have a completely hands off approach and let us take it over. We provide monthly reports to our owners so they can see exactly where the breakdown of monies (income and expenses) are being allocated. Hope this helps a bit.
1 Reply
Ben Strackany
Member since 2020 · 5 posts · 1 vote
3y
I have a PM for one STR and will probably get one for my other STR. Use AirDNA to figure out what you think your STR will make in a year (be conservative), then figure out what you'd end up paying a PM to run it, and decide if that ends up being worth the time. Time spent can vary wildly -- I'm sure there are hosts that spend 5-10 hours a month, and some that spend 50+ hours/month.
0 Reply
Wendy Vaidic
Real Estate Agent · Indialantic, FL · Member since 2014 · 182 posts · 80 votes
3y
If you're confident in your ability to build a team give it a try. You can always pivot later. There's also the option of hiring out portions of it that you don't enjoy.
I would definitely suggest staying in your property a few times a year if possible so you can keep an eye on things and experience what your guests do.
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