Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
I'm looking to create a property management company for STRs in the area of Texas where my cabin is, the Hill Country. I've self-managed mine remotely (4 hours away) for almost a year and a friend is asking that I manage his house located about an hour north of mine. I'm willing to take it on but I want to make choices in the management of both properties that will help me scale. I'd like to add up to 10 properties to my management portfolio in the next 12-18 months.
I don't use any mgmt software for dynamic pricing because its not available in my area yet (through Beyond Pricing) but it could be for properties closer to Austin/San Antonio. I need to know the best PMS software to use that will allow me to scale and add more properties easily.
I'd also like to know what your tips are for managing properties of others. I'm taking in so much information from Vacation Rental Success by Heather Bayer. She has sooooo much great info! If you're not listening to her podcast, go ahead and subscribe already!
@Ashley Wolfe I've enjoyed following your journey. Even way back when we talked on the phone and you thought I was crazy for telling you that you could do this. Looks like I was right :)
My advice is... don't do it. Life is not about working. Being a property manager is work, and not fun work. I've taught hundreds of folks how to do what they're doing with short term rental, and a small percentage of them get the idea to manage other peoples properties. The idea usually fizzles out. Occasionally they seem to have some success and pick up 5-10 properties. Then they lose interest because they realize it kind of sucks, and the quality of the management goes down.
Think of it this way, what can you offer that a giant company like Evolve or Turnkey can not? "Locally owned and operated?" Travelers don't care. They just want a hot - hot tub and a place to throw towels on the floor.
I do however wish you luck if this is truly the path you'd like to walk down. My suggestions are as follows...
Learn the rules in your area. Do you need to be a licensed real estate agent (likely) and do you need to have a management license of some sort. Do you need liability insurance (likely). Every state will be different.
Hopefully you'll get some decent advice here that will steer you in the right direction, but I urge you do search the forums and do some googling as you'll find better and/or more information.
Once you've got all your ducks in a row and you are legal... put your friends property in your name, list it, and the gig will be basically the same as what you're dealing with on your own property. (This is why I say it's a bad idea. For me personally there's no way I'd deal with OTHER PEOPLE's guests).
Lastly, my advice is spend your time figuring out how to get more properties, not more guests. You must OWN the property in order to create long term wealth. Otherwise you're just creating a job.
@Ashley Wolfe I've enjoyed following your journey. Even way back when we talked on the phone and you thought I was crazy for telling you that you could do this. Looks like I was right :)
My advice is... don't do it. Life is not about working. Being a property manager is work, and not fun work. I've taught hundreds of folks how to do what they're doing with short term rental, and a small percentage of them get the idea to manage other peoples properties. The idea usually fizzles out. Occasionally they seem to have some success and pick up 5-10 properties. Then they lose interest because they realize it kind of sucks, and the quality of the management goes down.
Think of it this way, what can you offer that a giant company like Evolve or Turnkey can not? "Locally owned and operated?" Travelers don't care. They just want a hot - hot tub and a place to throw towels on the floor.
I do however wish you luck if this is truly the path you'd like to walk down. My suggestions are as follows...
Learn the rules in your area. Do you need to be a licensed real estate agent (likely) and do you need to have a management license of some sort. Do you need liability insurance (likely). Every state will be different.
Hopefully you'll get some decent advice here that will steer you in the right direction, but I urge you do search the forums and do some googling as you'll find better and/or more information.
Once you've got all your ducks in a row and you are legal... put your friends property in your name, list it, and the gig will be basically the same as what you're dealing with on your own property. (This is why I say it's a bad idea. For me personally there's no way I'd deal with OTHER PEOPLE's guests).
Lastly, my advice is spend your time figuring out how to get more properties, not more guests. You must OWN the property in order to create long term wealth. Otherwise you're just creating a job.
Also in addition to what @Luke Carl said, have you looked into licensing requirements to be a PM for someone else? I'm sure you local jurisdiction has requirements to be able to legally do this for other than your own properties.
Thank you so much for your words of wisdom. Lucas, you should have seen my jaw drop when I read your suggestion NOT to manage properties for others but I totally trust what you’re saying. I’m looking into the legal requirements of PMCs and talking to seasoned prop mgrs and realtors about it too. Lucas, when you say, “get your friend’s property in your name” does that mean on Airbnb? I’m assuming so.
I’m getting just a bit of remote hosting fatigue but not enough to quit. And, at the moment, we’re not positioned to personally acquire more properties to manage unless it’s some creative, no money down, seller finance situation.
If you haven't already, I stronly encourage that you look into the local regulations. In our area, you have to be within 45 miles of the property or have a property manager that is. Hopefully that isn't the case with your area.
@Samantha Kay Excellent point! I will research that for sure!
@Luke Carl and @Paul Sandhu Its worth mentioning that I'm looking to get our of my current W2 job of elementary librarian so I can work for myself, even if that means working for others. There are LOTS of options to weigh out, pros and cons lists to make.
This is actually just a means to an end, however because I have an idea of a STR PMC that consults with apartment investors and owners. So I'll have to have experience in operation my own STR PMC if I want to be an expert in the industry.
@Ashley Wolfe Have you considered rental arbitrage? That's where you rent an unfurnished property, furnish it, then turn it into an STR. There are a few people on here that are making a killing doing that. It probably only works in certain markets. Just like my STR strategy only works in towns with a large industry and lots of bank foreclosures and your W2 job lets you meet potential renters on a daily basis. I give pre-access drug screens to travelling contractors that come here to work short term jobs in a refinery. Welders, pipefitters, boilermakers etc. The guys you see working on the large erections of steel at a refinery.
I've heard of that strategy but my husband is averse to it... he's risk averse to a lot of stuff but it balances my Ready, Fire, Aim mentality.
Maybe that is a good thing. Because it's Ready, Aim then Fire. If you Ready, Fire then Aim you're going to miss your target. I should know this, used to be a Hunters Education instructor. Plus I probably go through 5,000 shotgun shells a year.
@Paul Sandhu LOL! I heard of a seller finance option for acquiring STR properties from motivated SF sellers. Something like, contact a highly motivated seller about their property that hasn't sold on the MLS. Offer to pay cash in a seller finance deal with no money down and 90 days before the first payment. In those 90 days, the property is rehabbed for STR and the guests start coming in. This particular host on the podcast said that, usually within 45 days, he's already cash-flowing from STR and is finding a mortgage company to pay the seller in full. Mortgage payments commence after that. I don't know how realistic this is but it sounds pretty good, if you're in the right location, with the right management.
@Ashley Wolfe When Amazon relocated their distribution facility from my town, a lot of people left to find employment elsewhere. If they had a loan on their house, they let the bank have it. Bank foreclosures are common. A 3BR with CH/A goes for $9500. I get $600/week when it's rented to refinery contractors.
@Ashley Wolfe her podcast is amazing, such useful information! My husband and I currently do management for STRs in the Midwest and I have to disagree with Lucas on the time aspect. If this is the route you want to go, STR management is very scalable with the technology available today.
Just to clarify, do you mean SRT management or actual property management for the STRs you acquire. Because there is a big difference as property management can include str management but srt certainly does not include property management.
- Have you looked into Pricelabs for pricing? I like it a lot more than Beyond Pricing
- Get messaging automated (airgms, guesty, smartbnb, you name it) helps a ton
- Automate checkin if you haven’t vía smart locks
Feel free to DM me for more info and best of luck!
@Ashley Wolfe if you decide you proceed consult a local real estate attorney about the licensing requirements.
In my market, I am able to legally ‘manage’ other properties without any specific licensing. My state DOES require all property managers to be licensed and that process is not easy to achieve.
However, you may not need to be a true “property manager”. The key is in the details.
Property managers collect rent from guests and pass the rent to the owners. Solution? Have all funds collected go through Airbnb / VRBO / personal websites directly into the owners accounts. You don’t touch a dime of the owners collected ‘rents’. You simply Invoice your clients your agreed upon %.
Property managers pay the cleaners and staff and invoice the owners. Solution? Have all cleaning and maintenance invoices paid directly by each owner.
This might sound familiar. It’s called Co-Hosting.. and Airbnb allows it in every market... because it’s completely legal.
I selectively handle a few units for people, get paid my ‘agent fees’. I invoice my clients monthly with two invoices- one to be paid for my services and one to go to the cleaning staff. I handle all inquiries, guest interactions, staff interactions etc. I will not cross any of the lines that my lawyer specifically told me about. I also have a limited power of attorney in my contracts to allow me to handle any other issues that arise. By using OwnerRez the invoicing process takes me about 15 minutes a month per owner.
Completely legal and achieves what you’re trying to do, however technically not a property manager and no licensing needed.
I completely agree with Lucas when it comes to smaller properties. Not worth the time or headache. However, in my market a nice unit can easily collect $120,000+ in rent (not taxes, fees, or other pass through costs) and when the locals demand 35% commission my 20% is a steal and isn’t a whole lot more work for the 25k+ a year I’m making per property.
Except those 2am phone calls. I hate those people with a passion. 😂
Wow! Great perspective and information on how to manage without being a technical property manager. I’ll start looking for some real estate attys to talk to in the area where my rentals will be. So, if the smaller properties are a pain, what do you search for? Thanks so much!!
@Mike V. One question about Co-Hosting: In your particular case with the properties you represent, do you agree that the owner of the property have inside access to what’s going on through the online platforms? In other words, is this a true Co-Hosting situation or just on paper and you have 100% control of operations?
@Ashley Wolfe, each properties owners have their own individual accounts on VRBO and Airbnb.
On Airbnb I create a new account for them (or update theirs if they already have one) and add myself as a cohost giving my primary Airbnb account access and preventing multiple logins.
On VRBO I do the same except I handle all their account stuff from my third party API so I rarely go in it.
This keeps everything in their name which helps during the sales pitch- they own the content and reviews- and if we split ways they keep it.
Yes, they have access to everything. You can set it up on vrbo if you’d like so they do not (just don’t share the password). But remember they’re hiring you for a reason... because they don’t want to see it and remain passive.
@Mike V. This could be market specific but where I am Airbnb no longer allows co-hosting. They now call it “team members” and you can only be on one team.
The work around for managing other people’s properties and not having your licenses was to not touch the money. If you don’t have access to the bank account its a loophole -and Airbnb loves loopholes. But like I said that loophole has closed in my neck of the mountains, and it never existed on Vrbo.
@Lucas Carl team members and co hosts are two very different things in Airbnb. I have never heard that co hosting option was removed from select markets. If this is the case then I would call Airbnb to double check your local market. I do know certain features are available as part of Airbnb pro tools- maybe it’s a settings issue and not an Airbnb policy?
Even still, it’s my understanding that team members would still basically accomplish the same thing. Just slightly different logistics.
The laws specifying what actions are classified as property manager will vary from state to state but the concept should work anywhere- on Airbnb or vrbo- makes no difference. So if the laws in your market also allow the loopholes I mentioned there’s no reason it can’t be easily implemented on both major platforms.
airbnn has a cohost option on their site. Perhaps it is inactive in areas that may prevent this?
I can't remember his name off the top of my head, the guy who posted here several years ago is big into co-hosting. His first name is Eric and I can't remember the name of the company. They got out of Arbitrage to go into co-hosting.
I second the avoid the property manager avenue. To me they're little more than leeches. They're unneeded in 2019 because there is software and automation that makes them pretty much unneeded. They are essentially taking advantage of those are not informed about all that's currently available. I expect them to die off over the next few years anyway.
airbnn has a cohost option on their site. Perhaps it is inactive in areas that may prevent this?
I can't remember his name off the top of my head, the guy who posted here several years ago is big into co-hosting. His first name is Eric and I can't remember the name of the company. They got out of Arbitrage to go into co-hosting.
I second the avoid the property manager avenue. To me they're little more than leeches. They're unneeded in 2019 because there is software and automation that makes them pretty much unneeded. They are essentially taking advantage of those are not informed about all that's currently available. I expect them to die off over the next few years anyway.
I also cannot imagine hiring a property manager who is new to the space. You would offer me nothing and I would be unlikely to trust you if you don't have deep experience yourself or a lot of properties already under management.
I read through this thread a couple of times and I would like to suggest you take a step back and ask yourself Why. I saw the note about quitting your job. But not sure trading 1 job for another is what you are looking for (although 1 may allow more freedom to not have to be in the Library every day). Is the goal to start a rental management company or is the goal to quit your job? My guess is there is some underlying "WHY" to the comment I want to quit my job. Travel more, freedom from 8-5 hours, aging parents to care for, ... Start with figuring out what life you want.
When you match your "Why" to a path of freedom, you may find starting and running your own company does not get you there.
I agree with Ken. Managing properties sounds very much like a job. Even worse as the pay is uncertain, kinda low and you have to work weekends. If money is an issue for getting more properties, then find partners, or the seller finance thing, or start a pool for the down payment and go thru asset based lenders (that's my next play)...
Having said that, as of Dec 1, I'll be managing my own STR since I'm firing my property manager. I finally saw thru the veil...they were doing very little for 30%. I'll do it for awhile to see what is involved. As I add more properties for myself, I'll either keep doing it (hire employee) or find someone at a much lower %.