All Forum Posts by: Collin Hays

Airbnb is drunk on covid koolaid and has lost their way.  Good luck to ‘em.

They are custom, hickory, and quite substantial.  I’ve never had an issue. 

Julie thank you, I took no offense.  :) 

Of course guests were angry, but we aren't insurers. Cancellations happen all of the time for a lot of really good, valid reasons: Death in the family, illness, job loss, pandemic, earthquake, flood, tornado, hurricane, and many more. That is why there is a trip interruption/cancellation insurance market - there are insurers willing to accept risk of these in return for a premium. But it is unfair (and a breach of contract) for us to put our homeowner clients in the position of insurer. They have enough risks of their own, without bearing all of their guests' personal risks!

"Rent shifting" is the practice of management companies (and VRBO and Airbnb) of getting a share (or a bigger share) of homeowner rents by imposing heft "booking fees" on guests. I call it a stealth tax, and it can add up to $10,000 or more per year lost by the homeowner at a busy property.

Management companies are often advertising rent/management fee splits of as little as 85%/15%. I can tell you, no management company can survive on 15 percent. They bolster their revenue - at the expense of the homeowner - by charging outrageous booking fees to the guests - sometimes $200 or $300 per reservation - that they do not share with the homeowner. So what's the problem with that?  Get out your calculator, you'll be shocked! To keep the grand total for the stay within reason, the management co has to reduce the homeowner's rent to compensate for huge booking fee. Yes, the homeowner is getting 85 percent - but he's getting 85 percent of a significantly reduced nightly rent, and isn't getting any part of that booking fee.

This whole thing goes way over most peoples' heads, because they fail to see how these fees put significant downward pressure on their rents, but this is stealthy and it is real. 

 Not to derail the thread, but any PMC that is only charging 20% is rent-shifting, guaranteed.  Their real take behind-the-scenes is probably 30 to 35%.

Daniel, we negotiated our own contract with a merchant bank.  Our credit card fees are not only 25 percent less than what we were paying through VRBO, but their assistance and track record with charge backs and disputes are much more robust than VRBO.  Charge backs can and do occur.  If you are going to preserve your revenue, you've got to be ready to fight them, and do so properly.

When you are self-managing, the merchant bank aspect is huge and usually overlooked. All merchant banks are not created equal. As an example:  Airbnb took it upon themselves to refund $ tens of millions to vacationers during COVID who had not purchased trip cancellation insurance.  Airbnb unilaterally and arbitrarily moved homeowners into the position of insurer, and forced them to indemnify guests who had made reservations by refunding.  In other words, they reassigned damages related to COVID from the guest to the homeowner.  

We did not do this, because our fiduciary obligation is solely and exclusively to our homeowner clients.  We do not serve two masters.  Guests who purchased trip interruption insurance from us were of course granted refunds, as they should have been - they bought insurance!  The rest, we charged them and paid our homeowners, as they should have been.  We fought a lot of charge backs and won most, preserving the incomes for our clients. 

Luke, we utilize our own website + VRBO.  Any management co. that is not paying for a VRBO subscription for each property is doing their client a disservice.  However, we do not utilize VRBO's credit card processing.  It's 3 percent, which is very high.   

I am that "lightweight" management co. that Julie referenced.  ;)  

Folks are always surprised to find that I am a proponent of self management.  But only if you have the time.  We manage around 30 properties, and most clients previously self-managed.  They just decided they didn't have the time.  Time is money.  I could save probably a $ thousand a month doing a few things myself - mowing my grass, changing my own oil, grooming the dogs, fertilizing my trees, ironing my shirts, etc.  But I pay people to do these things because I don't want to screw with it.  Self management is a part-time job.  If you have time for it and enjoy that sort of thing, do it!

We have lost one client to another property mgt. company in 9 years of operation, so I like to think our homeowners think we do a good job.  The other company I highly recommend is Kirkland Cabins.  Chris Kirkland is a competitor, but he's a no-nonsense guy and I consider him a trustworthy friend.  

I have found that the vast majority of PMs in the area are skinning their homeowner clients every chance they get.  Outrageous fees of various kinds, as well as rent-shifting which costs homeowners a ton.  All of that isn't necessary and gives the rest of us a bad name.

Finally, don't assume that when you self-manage that you are saving the entire amount of whatever the management fee is.  There is a cost of doing business when you self-manage.  Advertising, credit card fees, professional photos, etc., etc.  

Just my $.02.

Thank you!  I went through 2 contractors and eventually flew to TN to hire a crew to finish the job myself.  Lived out there for a month and worked 6 days a week sun up to sun down!  Nightmare. 

Here are my Smokies STRs.  My Cosby cabins don't do as much, but they don't cost as much either.  

2400 square foot 3/2 cabin on 3 acres on Cosby Creek:  $42K-ish a year

1100 square foot 2/2 cabin on an acre on Cosby Creek: $33K-ish a year

700 square foot 1/1 cabin on an acre on Cosby Creek:  $25K-ish a year

1400 square foot 2/2 cabin on Roaring Fork in Gatlinburg:  $60K+ per year

900 square foot 1/1/loft in Black Bear Falls Gatlinburg:  $38K-ish

1100 square foot 1/1/loft in Pigeon Forge:  $35K-ish

The 1400 square foot cabin in Gatlinburg is a premium cabin so it's going to command a lot more.  It's right on the river, a true log cabin, Andersen wood windows, handmade furniture, high-end finishes and decor.  I spent $20,000 on just the doors and windows...yikes!

Here's a peek inside!