In a highly competitive industry like short-term vacation rentals, technical expertise and market knowledge in running this business is essential.
Unless you have the time and bandwidth in managing the property yourself, it’s best to let a vacation rental management company manage the property for you.
When considering hiring one, here are ten questions you should ask to help you ensure you find the best management company that fits your needs.
1. What is the scope and fee for their services?
Homeowners should have due diligence in knowing what the property management company will be responsible for and how much they will charge you.
Some may have a monthly fee or setup fee, while others might charge an annual fee. Additionally, some may charge an additional percentage on top of their fees (for example: 10% of rent).
The scope and fee should be clearly outlined in the contract you know exactly what you are paying for and when. It can vary depending on the property, the location and how long it will be rented.
2. What happens when guests break or damage property?
As a property owner, you want to make sure that your investment is protected. One of the main reasons why many people choose to rent out their homes instead of selling them is because they have such strong sentimental value. It’s important to know how your property will be handled in case something happens during your absence or when you’re traveling with guests who might not be as respectful and careful as you would like them to be.
The best way to ensure that your home is well taken care of is by hiring a property management company. Whether you want to rent out your property on a short-term or long-term basis, this can be a great option for you and your family.
3. What is the potential income of the property?
You may have a great location, but if no one wants to pay for it, then you’re not going to make any money. The best way to find out how much money a vacation rental can make is by checking other properties in your area. This gives you an idea of what properties are renting for and how much money they generate per month.
A good sign that a vacation rental property management company has local knowledge and technical expertise in the market is that they will be able to provide you with a comprehensive financial analysis of potential income of your property. They should be able to show you a snapshot of a potential revenue stream depending on location, season, and size of the property.
4. How do they handle guest-related issues and concerns?
Part of managing a vacation rental property is anticipating that guests will have issues and concerns. From the smallest of issues like a broken light switch to more serious concerns like home security, you will need to know that your property management company has their act together and can handle any situation that comes up. How do they handle it? Do they have a 24/7 call center (or at least someone who can be reached at any time)? Do they have a team of property managers on call? Do they have a team of maintenance technicians on call?
A typical property management company should have a dedicated guest service team, maintenance technician, and housekeeping team.
5. Who takes care of the taxes?
Taxes are paid by you, the owner. Some owners pay them directly, while others hire a property management company to do so. When hiring one, ask if they will be responsible for filing the necessary tax filings. If not, how will they help with the paperwork? Remember that the goal of hiring a property management company is making it easy for you to go into this ‘business’… not harder.
6. What other properties do they manage?
A good property management company however, will have a diverse portfolio of vacation rental properties. You’ll want to know how many other properties your potential property management company has. If they manage properties similar to yours, that’s a great sign. It means they understand the market, and it indicates they have the technical expertise with the type of property you have.
7. What’s the season length of my property?
The length of the vacation rental season depends on the property. Some properties such as those in the Hamptons and Martha’s Vineyard have a season length during the summer while properties in New York city are typically available for rent throughout the year.
The answer to this question will help you determine if there is a chance for you (the owner) to stay in your property. The property management company should also provide you insights about season-based demand of your property – e.g. winter as off-peak and summer as peak season.
8. How do they help with home automation?
Home automation is a hot topic in the vacation rental industry. When you hire a vacation rental property management company, they should provide recommendations on how to use technology to help you manage your home. From automated check in, smart door locks to a home security system, smart home technologies will save you and the guests the hassle of manually addressing guest-related concerns.
Don’t forget to ask the property management company for the list of home automation technologies they currently use to manage their portfolio.
9. Do they charge additional fees for advertising?
One of the first things to ask a property management company is if they charge additional fees for advertising. Some companies will charge a flat fee that covers all of their marketing services while others may charge per listing and/or per booking. The cost and benefit of the advertisement will depend on how much traffic gets directed to your property as well as its reputation within the area.
If they do charge additional advertising fees, ask them what those charges will be and how much they’re saving you in terms of revenue. If they aren’t saving you more than 10-20% of your income from ad revenue, then it might be worth considering other companies who charge less but bring in more money on overall sales than just one flat fee each month.
In addition to managing reservations from guests, some vacation rental management companies offer additional services such as marketing support for boosting occupancy rates during slow periods or helping owners understand how they optimize profits from short term rentals.
10. How and when do you receive income from your property?
Most companies will use one of the two methods: fixed income or demand-based income. Fixed income streams means that the owner receives a set amount per month or period based on their contract agreement with the property management company. Demand-based income means that an owner receives money whenever their property is rented out, but can also be charged retroactively fi there are any issues with tenant complaints or damages to the unit during the rental period.
Both methods have pros and cons – fixed income may mean more security for an owner, but this security comes at a cost since most companies also charge management fees that will be deducted from your potential revenue. Demand-based income can allow you more flexibility in deciding whether renting your property out might make sense financially – but as we’ve discussed above, there’s also a risk involved around accounting discrepancies and stress if things go wrong with tenants during their stay at your home.
If you’re ready to go into the vacation rental industry, it’s important to choose a property management company that can provide the right service. A good way to determine is by asking these questions and researching more about the company.
Elevate Properties Management Group is a vacation rental company that can help you succeed in today’s competitive rental market. Book a free consultation today and learn more about how we can help you!