I'm sure the answer varies by market and experience, but I wanted to see what advice some of you may have when considering professional management and STR.
Here is the situation:
I am purchasing a 2BR/2BA condo in Destin, FL with deeded beach access. I will be utilizing it as a primary residence this September but I will have most of the high season (March-September) to generate STR income before I move in.
I have spoken with one property manager that I trust and who I have worked with before as a customer, his rate is 22%.
I have two single family properties that I manage on my own, but I am relatively inexperienced.
Bottom Line: Is a property manager a good choice to maximize value in the most popular booking period?
For me I get all the rentals I want from Homeaway during the summer. I have a house keeper that handles turnovers and cleanings. If you don't mind sending a few emails to renters with checkin information and answering a couple questions from time to time then it is pretty easy to self manage.
If you easily get stressed when there is an issue than you may want to use a PM.
22% sounds like a good rate for a VRBO, but your still giving up 22%.
@Ryan Smith You're right. It definitely depends.
So, I've been back and forth on management. Also, something that I have seen here on BP, and something that I wish I had done is: Automate before you delegate. There are some amazing automation tools, especially for STR, like Smartbnb. I would highly recommend putting your listing on Smartbnb first and go from there. They can automate messaging (even questions!), check-ins, check-outs, cleaner coordination, reviews, guest vetting, and more... However, there is usually 10% of human interaction that is needed.
Personally, I believe managers are asking way too much to manage STRs. With platforms like Airbnb, VRBO, Homeaway and the automation software like Smartbnb there is NO reason to pay a manager more than 20% IMO. Gone are the days of paying a manager 40% because they have their own website they market where all the leads come from. Nowadays, I think 10-15% is more fair. Your ability to negotiate this with a quality manager depends on how many properties you have and how much money you're bringing in.
Ryan - suggest you ask for a list of what you get for your 22%. Once you have that then figure out how that would impact your bottom line. You may be able also negotiate a "pay for performance" model by offering a greater percentage based on occupancy and guest feedback.
@Ryan Smith I do STR Property Management, while I’m all for new clients and growth I’m more for STR owners making the best decisions with Properties. Depending on your current setup you may not even need a full time property Management company. To operate 2 locations you really need to have a reliable cleaner or 2, sync calendars on booking platforms and download the apps to communicate with guests. At the very most if you don’t want to be hands on having an online co-host would be much cheaper than a full time management company that can run you anywhere from 20-50% of booking revenue.
The whole idea of a property manager is a business transaction. With every business transaction, money exchanges hands. When money exchanges hands, one party to the transaction becomes richer and another party to the transaction becomes wiser.
I have 22 STRs in this town and self manage.
If done properly, self managing an STR will require very little time and effort and can increase your ROI dramatically. The key is putting the right team in place and managing bookings efficiently. First, hire a house cleaner that you trust and pay him / her well above market rates. This is an investment that will pay HUGE dividends, as this person will be your daily "boots on the ground." Second, hire a local handyman to be on call in the event something goes wrong at the property. Third, have backups for each of these two resources in case one were to fall through. And last, be willing to manage the bookings yourself via airbnb, homeaway or the like. This will involve 2-5 emails per guest.
With the right team and an efficient, self-managed, booking process, I think you will find that property management fees will have to be pretty low (I suspect lower than 22%) to make financial sense.
@John Underwood Thanks so much. Do you have any tips for handling the turnover/cleaning. I'm sure in my market there is plenty of experience in the industry, so I wouldn't be asking for something irregular for turnover between renters but I'm just wondering if you have had any lessons learned.
@Michael Bowie Thanks Michael. I will check Smartbnb out! I definitely don't have a lot of leverage for getting a better price.
@Chewie G. With any type of pay for performance I would worry about getting the right mix of performance metrics. E.g., If I just use a metric like 90% occupancy and the PM just keeps the rates really low. Along those lines, do you have any technique to delineate a balance of pice and occupancy?
@Account Closed That adage is why I am hesitant Paul. I want to build my wealth, not the PMs. However, I'm sure there is a rate where it is mutually beneficial--I just doesn't sound like 22% is that number.
@Mike Woods I think you have summarized what I have learned in the past 30 minutes beautifully. This might sound like a stupid question, but what is your technique for "hiring" a handyman. In the past on my SFR homes I have had some work that needed to be done and just built the relationship that way. I assume I could use the exact same method here, however, I only ask to see if there is a different technique or need with STRs. Thanks for the help.
@Ryan Smith After reading your post, I had the idea that condo in Destin was far away. So I googled the distance between your town and Destin. It's 8.8 miles via US-98E. If you were driving a bicycle with a trailer or a rickshaw to self manage the property, it would be doable. Difficult but doable.
Do you have a car in working condition? Who is the other person in your profile picture? Do they have a car in working condition? Do you have a part time job? Does the other person in your picture have a part time job? (Part time is 40 hours or less per week. Full time is what my renters work, 60-84 hours/week) Do you have a brain and know how to use it?
If the answers to my questions are Yes, Wife, Yes, Yes, Yes and Yes; then you have the time to self manage your property that is 8.8 miles away via US-98E. Self managing is basically cleaning/restocking between occupancies, repairing/maintaining the property and finding renters.
Look at your own house the way it is right now. If I came over and took a look, would you feel embarrassed or would you be proud of the way it looks. If you can keep your own house clean and in working condition, you can keep another house clean and in working condition too. It's not rocket science. You just need 3M talent. Mechanic, Magician, Mindreader.
I would suggest self managing @Ryan Smith . Not only will you be saving money but you need to learn what a STR/VR property manager does and what they should be doing. I think that 22% is highway robbery I don't care if it's "the norm". I'm sure you are an intelligent and skilled individual or else you wouldn't have acquired this property and looked into STR's, so I believe you are more than skilled enough to do it yourself. However time is an important factor if you don't have 20-30 minutes a day to make phone calls, reply to emails or check in then yes go with property management that 22% is worth it in that situation. I just think it's better to keep that percentage and do it yourself. Really just find someone you trust in the area to clean it and be the maid/house keeper. I believe that is much more important and is really what you need. Like I said I don't know your situation, but it's always best to trust your gut and do what you think is right. However with that being said don't let the fear of self managing keep you from doing so. Good luck!
@Paul Sandhu Not going to lie, the first time I read your post I was pretty taken aback. I only started laughing after the second or third read. Right on! Thanks for the encouragement and information.
@Michael Guzik That is probably the most value I can get out of this deal, the learning/experience. Thanks for the reply and information. Common theme in the recommendations is a quality housekeeper, so I'll be sure to invest heavily in that part of my team.
@Paul Sandhu Do you have a 40 hr "part time" job outside of your rental properties?
@Paul Sandhu I've been meaning to ask.. do you have 22 rooms or 22 houses?
@Michael Bowie I'm on call 8am to 6pm M-F and 10-2 Sat at a medical clinic to do pre-employment drug screens, most are people going to work at the refinery. I'm actually here 3 to 5 hours a day, that leaves me with 5-7 hours a day to attend to STRs or goof off. 22 houses, 82 beds.
My biggest STR is two blocks from where I work, the lot next to it is vacant. I scatter cracked corn in that lot about 17 yards away from a window. The corn attracts pigeons, starlings, sparrows and squirrels. My 10-pump pellet with a 7x scope is sighted in at 17 yards. I have a bulletin board like this:
Pigeons ||||| ||||| || ||||| ||||| ||||| ||
Starlings ||||| ||| |||
Sparrows ||||| ||
Squirrels ||||| ||||| ||| ||||| |||
@Paul Sandhu . Nice. Talk about a great marketing channel baked into your job.
While I'm impressed with your rodent hunting skills and professional accounting system, I'm not sure if the bulletin board helps edify your recommendation for self-management, i.e you have a lot of time on your hands. :)
Tips for handling the turnover/cleaning.
I was lucky enough to find an individual that has done vacation rental cleanings in the past. She says she loves cleaning our house because there is no clutter like a primary residence.
We put in new super capacity washer and dryer as doing the laundry is the biggest bottleneck and she does all this on site and remakes all the beds. We supply all bed linens and towels and we have spares on site.
I try and text her the next 2 or 3 cleanings that I know of so she can plan.
We have a separate closet with a combination deadbolt upstairs with all the cleaning supplies and consumables. She lets us know if we are getting low on anything. If I was unable or unwilling to keep this stocked I'm sure I could arrange for her to get this stuff send me the receipts and get reimbursed.
As with any rental it is about having systems in place to automate as much as possible and having a good support crew.
We have a lock box on the porch for the keys. I love combination keypads but prefer to keep it simple for know as a lock box has a very low chance of failure. It has no batteries or moving parts.
I have a camera system that monitors the front exterior and boat dock for security purposes.
I had a parent that rented the house for her high school daughters Prom party. If I had my camera back then I would have run them all off. No damage but a mess and a few missing items.
I also love my Honeywell 9000 Wifi thermostats! I can save money on electricity when no one is there and monitor temperatures to make sure I don't see one of my HVAC units struggling so that I can arrange for service before there is a failure.
Hey @Ryan Smith , our rates here in Denver are 20% so I don't think the 22% is too high. It might sound like "highway robbery" to some people but I think there really is value in hiring an experienced manager. Maybe ask them how much their properties make vs. comparable properties that are self managed. (Obviously my opinion is biased)
I would try self managing for a while and see how you like it. What do you have to lose? If you feel overwhelmed or don't like being on call 24/7, you can always switch to a manager. From reading this thread you've already found out that there are tons of great automation tools out there to help make your life easier, and they certainly will but they won't wake up a 3 am to help a guest who got locked out or call a plumber for you.
I would be happy to share some of our automation "secrets" if you want to PM me as well!
You can easily find a co-host via the Airbnb platform if you go into the hosting tab you will see a link to find co-hosts via the platform. For local hosts, depending on the level of involvement I’ve done flat rates or a commission split. It’s what you are comfortable with. I would be happy to walk you through this if you would like.
Right on, thanks @Account Closed . I will check that out and contact you if I have trouble finding it.
@John Underwood , it's funny how when you have a process/system in place how simple it seems but when you go line by line, there are a lot of small supporting functions. So a simple comment like, "hire a good housekeeper," has a good many required preemptive tasks to make the process the most efficient, both from a cost and convenience perspective.
Stocking cleaning supplies, laundry capacity, maintaining linen/towel inventory, and a defined scheduling process are all considerations I take from your post with regard to generating an efficient turnover model. Thanks.
@Ryan Smith My housekeeper keeps all the cleaning supplies in her vehicle. It's a Honda Ridgeline truck and the bed of the truck has a compartment built in. It can be a cooler if someone wanted it. She keeps a vacuum, spare light bulbs, sheets, towels, tools, plus all the cleaning supplies in there.
AirBNB rental it and have your maid manage it for you
I would agree with most here, and try self managing since you are physically close. I started that way with my property, and since I lived in first like you'll be doing, I had all the answers to questions that my guests ever had. I prefer using only the Airbnb platform personally, and I'm able to book my place 80-90% of the time using just that. When I do need someone to help with my place when I am on vacation, its easy to have them become a co-host for a short period of time.
I'm in agreement with most that a good housekeeper or team will be super important, since they'll be your eyes and ears. Perhaps you could de some trials or tests with different cleaners while you are still living there to try & find the best fit. A great on-call handyperson can be difficult to find, but since you are close in proximity to the property you mind be able to be the number 2 on call. Or, something extra for a housecleaner who may be willing to light handy person work as well?
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