Short-term property management companies offer a way for investors to own and enjoy vacation property. In fact, almost 2 Million vacation rental properties across the United States are professionally managed. Should you consider short-term rental management services?
What Is Short-Term Rental Management?
Short-term rentals are typically defined as properties that are rented for a short period (usually 30 days or less). A short-term rental management company would manage the day-to-day operations of this endeavor.
What Does a Short-Term Rental Property Manager Do?
Property managers handle as much or as little as you want them to. In most cases, the owner is completely hands-off, allowing the property manager to take care of all the regular tasks. Of course, these tasks vary by company as well as by what’s agreed upon in the beginning.
Here are the most common tasks handled by short-term property managers:
- Marketing/Advertising – One of the best benefits of hiring a company to handle your rental is that they have the experience to keep your property occupied. They know where to list your property and how to make it look appealing. They will also handle adjusting nightly rates on listings as well.
- Guest Screening and Check-in – Your property manager will do their best to get high-quality guests, maintain the booking calendar, make sure guests can enter the property, and collect payments. In addition, if a problematic guest does make it through screening, your property manager can take the steps to have them removed.
- Check-Out Process – They will also collect feedback, do property walkthroughs, and ensure any extra fees are collected for broken or missing items.
- Property Maintenance – They’ll keep the properties clean & stocked, maintain any common areas (gyms, pools), as well as any necessary landscaping
- Repairs – If anything breaks, they’ll be on it.
- Personalized Guest Service – A great property manager will make the guests feel welcome with timely communication, personal touches in the units (e.g., flowers or chocolates), and top-notch security.
- Accounting and Tax Assistance – A property manager can handle many of the administrative tasks required for taxes as well as delivering your reports to your CPA.
While property management companies range in the services they offer (and in what you need), you’ll need to make sure that you’re getting a highly qualified professional who’s doing everything you’d like to get done on the property.
Should You Hire a Short-Term Rental Property Manager?
Short-term property managers can be a perfect solution for some investors, but for others, it represents an unnecessary cost that eats too much into their profit. Check out the pros and cons of hiring a short-term rental property manager.
| Pros | Cons |
| Professional marketing strategy | Expensive |
| No geographical limit | Added fees |
| Improved guest experience | Less control over the guest experience |
| Consistent occupancy | Relaxed guest screening |
| Freedom from day-to-day operations | Deferred maintenance |
| No purchase limits due to management constraints | Mishandling of funds |
Pros of Hiring a Property Manager
For most serious investors, hiring a property manager is the right way to go. This is the case for a few reasons:
- Professional marketing strategy – An experienced property manager knows how to effectively market a property. They should have connections to a professional real estate photographer, write creative and informative listing descriptions, and know where to post online for the most exposure.
- No geographical limit – With the right property manager, you could own and rent out property in another state.
- Improved guest experience – If you’ve got a regular 9-to-5 and a guest messages you with an emergency, it might be hard for you to get away. A property manager would be able to handle any issues that arise and give your guests a 5-star experience.
- Consistent occupancy – For some investors, a property manager makes them more money, despite the cost, because their properties experience fewer vacancies.
- Freedom from day-to-day operations – Many owners of short-term rental properties don’t have the time, the interest, or the skills to keep up with repairs, cleaning, and landscaping.
- No purchase limits due to management constraints – If you have 15 units, it becomes impossible to manage them yourself—unless you want it to be your full-time job and you’re the one hiring repairmen, cleaners, and other staff.
For many owners, it becomes a question of how much time they want wrapped up in this investment. If you’ve got a full-time job, or want to devote attention to other investments (or to just relax), then hiring a short-term property manager is a no-brainer.
Cons of Hiring a Property Manager
Depending on your specific situation, a property manager may not be the best fit. Here are some drawbacks to consider:
- Expensive – In a highly competitive area, your profit margins might already be low. If your option is to either lose money or manage the property yourself, then the choice becomes obvious.
- Added fees – If the property management service lists properties on sites like Airbnb or VRBO, there are additional fees to pay such as Airbnb host fees on top of any fees the company charges.
- Less control over the guest experience – While you may go the extra mile to ensure a guest has toiletries and a mint on their pillow, a property management company may not.
- Relaxed guest screening – A property manager may be more focused on filling the unit rather than focusing on who they are filling the unit with. For example, if a property manager doesn’t ask about the purpose of the guests’ trip, you could have a wild bachelor party rent your luxury seaside villa – ending in excessive property damage and a large cleaning bill. Without the proper contract in place, you could be stuck with a portion of the bill.
- Deferred maintenance – Depending on how many units the property manager oversees and the quality of their services, certain maintenance issues can be pushed aside till a later date, potentially exacerbating the issue.
- Mishandling of funds – Without an air-tight contract and clear policies and procedures, a property manager could pocket some of your profit or charge inappropriately for a “repair”.
While some owners can’t imagine not having a manager for their vacation rental, it makes sense for handy people, those who enjoy property management, and those who like engaging with guests to give them a top-tier experience.
How to Find & Choose a Short-Term Rental Property Manager
So now you’ve decided. You need a property manager, but how do you pick a company that you can trust with something so big and so important?
First, you’ve got to find one. There are a few ways to do this:
- Google Search – Yes, this one’s obvious…but it’s also not the best one. After all, often it’s the companies that spend the most on marketing that dominate the rankings and online reviews. They often charge the most, too, to pay for those marketing resources. However, you can at least start putting together a list of local companies.
- Get Referrals – This is usually the BEST option when pricing anything out. Try to find someone who owns rental properties (either short-term or long-term) and see if they can recommend a company to you.
- Ask on Social Media – This works especially well if most of your friends are local, or if you’re involved in some neighborhood or city Facebook groups. This will almost certainly get you a few recommendations. Warning – be wary of social media ads promoting a company as these companies usually charge the most.
- Find a Short-Term Rental and Ask – This works best if you can find a larger location with someone on-site you can ask, like a front desk person. This would be a hotel situation or a large complex of condos in a resort town. Sometimes the building will have a property manager with the individual units owned by different people. If the property looks nice and cared for, that’s a plus. This is probably the hardest and most time-intensive strategy, but can also yield the best results.
Researching Your Short-Term Rental Property Manager
Now that you’ve got a list of potential companies that come recommended highly, it’s time to do your first step of due diligence. You’re going to go online and see if you can look up the following information about them:
- List of Services – Do they offer everything that you’re looking for? Do they have services that aren’t useful to you, but it appears they have a higher price because of them?
- Online Portfolio – Can you see how they manage other properties? Do they have ones that you could drive to and see how the landscaping looks? Also, be sure to note if they typically manage properties like yours. If you have a 10-unit building and they only seem to manage small houses, that’s a red flag.
- Stellar Reviews – Take a look at their Google Reviews as well as Yelp. Is the consensus that they know what they’re doing?
- Insurance – All short-term rental management companies should carry a few types of insurance, so this is more of a “check the box” requirement.
- Fees – Are they in your price range for the services you want? You’ll also get more details about specific fees later in the process, so for now, just look to make sure they’re in the ballpark.
What Questions Should You Ask a Short-Term Property Manager Before Hiring?
At this point, you likely have a pretty good idea of which property manager you’d like to hire. You should have an idea about the services they offer, if they fit your needs, and if they seem to have the chops to do a good job.
Now, it’s time for a solid interview—where you’re the one asking the questions. Here are a few of the best ones to ask:
- What services do you offer? – Ideally, you’ll have already researched online, but now you can get a full scope and have it all explained to you. You can ask questions about specific services you couldn’t find answers to as well.
- How do you market and list properties? – If their plan is uninspiring, that’s a red flag. However, most property managers will likely have an in-depth answer for you here.
- Are you local to the area? – A local will be able to offer insight as to the seasonality of the location, what you can expect throughout the year, and act as a concierge to guests to recommend local restaurants, things to do, and more.
- How do you screen new guests? – You just want to know that they have a plan. A bonus follow-up: “Have you screened a guest and decided to keep them out of the unit? What happened?” This way, you know they do screen guests and can get a feel for how they handle it.
- How long have you managed short-term rentals? – Working with someone who is an experienced professional and isn’t learning on the job can make a big difference.
- How do you make sure guests feel welcome? – Do they bring in fresh flowers or put chocolates on pillows? Are the fridges stocked? Is there a welcome note? Flourishes like these can make a big difference for your guests.
- How many properties do you manage? – Small property managers may be able to devote more time to your unit, while large ones may have more staff on hand to take care of issues, as well as usually more experience. You’ll have to decide what you value.
- How do you collect payments and send them to property owners? – You want to know how the money’s changing hands, right?
- Do you handle accounting tasks? – Many property managers will keep the books, have copies of all records, and track income from the property. It’s a nice feature to have if they offer it.
- How much do you charge and what’s included there? – This one needs its own section. We’ll get there next.
These ten questions are a good start, but a thorough property owner could ask as many as 30 questions:
Short-Term Property Management Fees
You need a clear understanding of the fees your property manager may charge. These come in the form of the standard monthly fee and also in one-off or add-on fees that may be charged as well.
Monthly Property Management Fees
Short-term property management companies generally have three different ways they can charge you:
- Commission Fee Structure – This is the most common because it makes the most sense for both sides. You pay a flat percentage (usually about 20% to 40%) of your income from the rental property. This incentivizes your manager to keep the property filled but also doesn’t penalize you when the unit is empty.
- Fixed-Rate Fee Structure – This means that each month you pay a flat rate, no matter what. This doesn’t incentivize your property manager to fill vacancies, and in slow months, you could potentially lose money because your net income may not exceed your property management fee.
- Guaranteed Income Fee Structure – The property management company guarantees you a certain income each month. Perhaps they promise to pay you $3,000 per month. However, if the property is making $6,000 per month, you’re paying 50% of the management fee. But if you have a down month, you can come out way ahead. This is the safest method, but also the one where you’re most likely to pay the most.
In general, it’s a good idea to only go with a property manager who charges by a commission fee structure. The only time a fixed rate might make sense is if you own a ton of properties, and can absorb a few vacancies here or there, and the company gives you a sizeable discount for charging you this way.
The guaranteed fee income structure may sound nice, but it’s only for the most risk-averse of people.
Additional Property Management Fees
In addition to the monthly fee, there could be other fees mentioned in the contract. These are usually “pay as they happen” scenarios, but it’s good to get these dialed in so you know what you’re on the hook for.
Here are some common ones:
- Direct booking fees – If the rental company books without using Airbnb, Kayak, or another similar service, they will likely charge you $10-$30 per.
- Deep cleaning – Once or twice a year, it’s a good idea to keep the unit vacant for a few days and deep clean it.
- Inspections – Also, a good property manager should have the property inspected regularly to prevent any damage from becoming too extensive, such as in the roof, the foundation, mold, or termites. You’ll often get charged per inspection, but some management companies will include this in their regular service.
- Repairs – In general, you’ll keep a reserve fund that they can draw on to fix things. Or, they can bill you for each incident.
- Stocking fees – If you want your unit to stay filled with perishable goods (such as filling the fridge with food), you’ll have to shell out for that.
That’s just to name a few of the most common ones. Be sure to understand all of these and incorporate the costs into your profit estimates. They may seem like small fees, but can certainly add up over time and can be a big deal if you’re operating on a slim profit.
Airbnb Fees
The roles of Airbnb and your property manager can overlap. For example, if you run everything through Airbnb, then you won’t need to have your property manager worry about keeping a calendar or collecting payments.
However, you would have two separate contracts and fee structures to be aware of. Let’s cover how Airbnb’s fees work as they are often an essential part of a vacation rental owner’s expenses.
- Flat Service Fees – In this model, the host pays a 3% fee while the guest pays about 14.2% (although these numbers can vary slightly).
- Host-Only Fees – You pay 14% – 16% and the guest pays no fees. This is required for certain types of hosts (such as hosts in certain countries or if you’re an Airbnb Plus Host)
Those are the two main structures of pricing, but there are other fees for certain types of properties and hosts, for example:
- Super Strict Cancellation Policy Fees – If you’d like your guests to not be able to cancel within 30-60 days of your booking, they’ll charge an extra 2%.
- Airbnb Experience Fees – If you offer an “experience,” such as taking them out to eat or showing them around the area, Airbnb charges a flat 20% fee (this replaces the two main fee structures).
- Airbnb Luxe Fees – These are for exclusive, luxurious properties. The fees are only 3% – 5%, as it’s expected the owner has to do more in the way of providing for the guests’ experience there. These are also booked less often as they can be remote and expensive.
