I'm hiring a management company for my STR. Of course, I can figure out what my insurance, cable and taxes will be. But, what can I expect to spend for all of the other expenses? Consumables, utilities, repairs, yard work, etc. Does someone have a report of what and how much they pay that you would be willing to share with me.
Also, which of these expenses would a management co typically have INCLUDED in their % of income fee? The rest of expenses are billed at cost? Marked up?
My expenses are categorized as follows
- Supplies to restock consumables
- Telling my coordinator to go out and do random things because inevitably people coming in for STRs fail at figuring things out
- Cleaning crew
Why hire a PM you can do it yourself in a couple minutes per day. Don't waste your money. I have a day job and I manage 6 of them and I'm an idiot.
For me, annual property taxes come out to 7-10 days of rent per year. So that is insignificant.
Consumables, you can figure on spending about $30-$50 at WalMart each time you have to restock a place. This includes cleaning supplies that are going to be used before it's rented out again. If you are not the one buying supplies, plan on spending $60-$100.
Utilities usually run 25% - 33% of the monthly rent. If it's not being rented, there is no water/electric/gas being used. If you are not there to make sure everything is turned off and nothing is dripping after someone moves out, plan on spending 40% of your rent on utilities.
Repairs, that's like asking "How long is a piece of string? How far can a dog run in the woods?" You should know how to change a fill valve in a toilet, replace a ceiling light fixture, replace a ballast, balance a ceiling fan, replace a hot water tank, change the agitator dogs in a clothes washer, replace a heating element or thermostat in a dryer, etc. If you don't know or don't know anyone that can do this for free, plan on spending about $1800 plus parts per year on repairs. That averages $150 a month plus parts.
Yard work. Plan on spending $3 worth of gas each time you mow. You also need to know small engine repair and lawn mower maintenance. If you are not the one doing the mowing, plan on spending $60 per month.
I have been doing Air BnB in my home for a year now. I have tracked my expenses since the onset. I also own an air BnB at a local ski resort. That has been operational since September. So I have expenses representative of both types of rental styles that I would be happy to share.
I agree with @Lucas Carl, no need for a management company especially if you're covering everything that you listed. What are you paying for? Reservation management? Get some electronic door locks, find a cleaner on Nextdoor and spend about 10 minutes a day per property adjusting pricing and managing cleaning schedules. Or, you can even off-load these duties for far less without a management company. Don't forget HOA's (can't stand them). All of these things you should be able to get historical data or be able to estimate very closely.
@Michael Greenberg I've heard people recommend smart or electronic locks. Do you ever have an issue where the tenant has problems connecting or getting in with these? I'm somewhat inclined just to get a regular old lock box and put the key in there, but also like the idea of an electronic lock. What has your experience been with it?
Also can you all speak to how you should be adjusting pricing? What about for big events? For example, I live in Atlanta - If I begin AirBnBing, I'm worried I may not adjust my pricing correctly for some big event far in the future I'm not aware of. How do you all make sure your pricing is maximizing value? @Lucas Carl @Paul Sandhu @Karen Chenaille
Hi Julie- do you live close to your STR or trying to manage it from a distance? In my opinion that would determine if you need a property manager or not. As an example, my soon to be STR is about 350 from my home so my property manager is pivotal to its success. Well worth the fee I pay each month -$150-. In addition, if your guests need anything 24 hours a day, my PM is close by to help. Also think about any upgrades- bathrooms, kitchens etc, they can help screen the contractors etc.
My two cents.
Yes, I agree that the repair question was silly. The house is newly renovated. I did wonder if there was a rule of thumb per repairs/maintenance per bedroom type thing. Like replacing light bulbs, air filter, misc -ongoing maintenance items.
For example, with multi family properties, there are rules of thumb per door.
@Charles Kennedy I don't use WIFI connected locks, not yet anyway. I use electronic keypad and rotate combinations between guest stays, then change them about once a quarter. Never had an issue. Keys become an issue when you have more than a few properties. I do use WIFI thermostats (NEST and Sensi) as my summer season is VERY hot and EXPENSIVE for utilities. I can make sure to adjust and lock the thermostats remotely. You can use tools like Everbooked, beyondpricing, or wheelhouse if you're concerned about missing event opportunities, though none of them are perfect. I've also started using Homeaway's Market Maker tools for pricing and adjust just nearly every day. Part of the business and if you're "in the business" and it's not a "hobby" it has to be a daily duty.
@Charles Kennedy I used to try to adjust my prices myself. It was really time consuming to adjust each day and I did not have the data available to establish a fair market price that took into account seasonality, competitors, and holidays. I am Now using Wheelhouse and I love it. Www.usewheelhouse.com. You can also use beyond pricing. Whatever you choose stay away from Air BnB’s smart pricing. It’s ridiculously low and not reflective of listing value. If you are on HomeAway and AirBnb, there isn’t a tool out there yet that syncs pricing to both. HomeAway has introduced a new market driven pricing tool that is pretty good and free and the pricing is realistic.
All the best,
Hi @Julie Groth ! Looks like you got some great advice already from the best of the STR forums! You can save by doing things yourself for sure, however I remote manage so my expenses align with outsourcing most things just for further insight. I usually tell people to expect anywhere from 60-75% Operating Expense ratio.
Best of luck to you!
@Charles Kennedy In my market, a cheap motel room is about $400/week for 2 guys. A nice hotel (pool, gym, breakfast, etc) is $600-$700 per week. I charge $200/week for each bedroom in a house, but the tenants get the quality of the $600-$700 hotel room. My base price of $200 for each bedroom comes from the local motels.
2 guys can share a 2 bedroom for $400.
3 guys can share a 3 bedroom for $600.
4 guys can share a 4 bedroom for $800.
All the above houses have an extra bed or two in addition to the ones in the bedrooms. If it is normal times, I don't charge for the extra beds. So the tenants pay $133-$150 each if the extra beds are being slept in. If there is something big happening, lots of people in town, that's when I start charging for the extra beds. I charge $200 a week for the extra beds.
I draw the line with hot swapping. I don't charge extra for hot swapping. There are probably extra sheets in the house to allow this, but I'm not going to buy extra sheets. The tenants are already saving money by sharing a bed. One of them can pony up $20 for a set of sheets (that they'll end up leaving behind for me to use).
@Charles Kennedy I have digital deadbolts and a lock box with a key in case something happens like we forget the change the batteries. This is not common. I have the batteries on a schedule. One time we had someone that couldn't figure out the lock and pushed the buttons so many times they killed the battery. It was a Saturday night I was at a no cell phone dinner with the wife. Half an hour later when I'd gotten to my phone they already went back down the mountain and got a crummy hotel. I ended up raising the rates for her nights and got it booked again within minutes for more money.
In re to your question about what typically is included when using a management company, in our case we handle at no charge...
- minor service requests (fixing the cable, changing a light bulb, batteries in remotes, tightening doorknobs, etc)
- HomeAway service during periods of extended vacancy (flush the toilets, run AC, inspect property, etc)
- Our housekeeping service provides starter supplies w/ each visit (toilet paper, dishwasher pods, washing machine pods, etc)
- We provide a 24/7 call service as well as live customer service M-F 8am-5pm.
You can definitely manage a property on your own but it's not always easy and both the marketing and the customer service can be very time consuming. Also, many guests prefer a management company so they can feel free to complain at will when something goes wrong without feeling like they are bothering or offending the homeowner. Many times, guests will not complain to a homeowner, they just will not return.
Our properties attract a lot of snowbirds who tend to be older and the amount of customer service and time we spend helping them with the cable and internet is quite a lot! Sometimes we have to go to a property daily because the guest just cannot figure out the TV, even after we have shown it to them multiple times and have provided written instructions, etc.
Hope that provides a little insight! Best of luck :-)
One thing you CAN control is electricity use. Guests are on vacation and are not thinking conservation. Maybe some of the things I have done can help you save a few bucks:
I replaced the garage lighting with shop lights from Costco. They have a motion detector and timer, so they shut themselves off if no motion is detected for 10 minutes.
Almost all lighting has been converted to LED lighting. Not only do they save electricity, they don't burn out, reducing maintenance calls and increasing guest satisfaction.
I replaced the cooktop and clothes dryer with gas ones. That saves a ton! Guests prefer cooking with gas and may not notice that their clothes dry faster - but you'll notice lower bills.
Outdoor lighting is all LED on motion detectors. For some outdoor lighting, I have solar ones which never use line electricity and work if the power is on or off. I installed one above the BBQ, so it lights up the grill when someone approaches.
I installed electronic count down timers for the exhaust fans. 30 minutes in the baths, 4 hours in the kitchen. I got the kind that can't be set to "hold" and run for an unlimited time.
For the sauna and a couple of closets - where it isn't apparent if the light has been left on - I installed switches that glow with a red light if they are left on, prompting folks to turn them off.
If you have an old hot tub, look into replacing it. The new ones are remarkably efficient.
At one point I was regularly using over 2,000 KWH per month - even hitting 2,500 KWH a couple of times. Now, if use goes over 1,000 KWH it's unusual.
One of the best ways we have found to manage consumables for our 7 units is to use Amazon's subscribe and save and pantry features. We get monthly, bi-monthly, and bi-yearly boxes with all our consumables ready to go, then we just have our property manager/cleaner restock after every guest.
@Charles Kennedy and @Michael Greenberg We use electronic, wifi-connected door locks by lockstate and they are fantastic. They aren't highly reviewed on amazon, but we've had them in our units for several months now with minimal problems.
As to pricing, we have high and low season priced separately as determined by the number of bookings we've gotten over the past few years. Additionally it really pays to keep track of big events in the communities you tend to rent to and bump the price a bit for in-demand times.
Wifi thermostats are amazing, and save so much energy. We personally use Ecobee in our rentals.
If you would like more information, please feel free to check out my website www.thevacationrentalist.com