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To Hire a Manager, or to Self-Manage? That is the Question.
Deciding whether to self-manage or hire a professional property manager is one of the most important decisions an owner can make to impact the bottom line and performance of a vacation rental. In this post we will discuss a few of the “Pros vs. Cons” in the debate between hiring a manager or going the DIY route in the vacation rental market.
If you do not live locally year-round, the decision of whether or not to hire a manager is more or less made for you. However, even if you do live nearby - or even on the same property as the vacation rental unit - the demands of customer service, routine maintenance and accounting can quickly add up. Carefully consider the value of your time and whether or not you are willing and able to answer the phone at all hours to address concerns with your rental property. Is your time worth more than the commission a rental manager would earn?
It has never been easier for a property owner to self-manage a vacation rental than with the proliferation of today’s OTAs (Online Travel Agents) such as Airbnb, VRBO, booking.com. Listing a property takes only minutes, and the communication between guests and owners are streamlined through their well-developed platforms.
Nevertheless, there are often many marketing and technology-related benefits to be gained from working with an established VR manager. Management companies often have a large database of prior guests to draw on which can boost occupancy and ROI. A manager’s experience and dexterity matching current pricing to the ever-changing supply and demand of the market can prove to be very valuable as well, as fewer nights will sit vacant in your home. Finally, a seasoned manager likely has deeper marketing resources such as their own website, SEO strategies, and a social media presence that can ultimately bring more guests to your door.
Some property owners have a difficult time with the idea of handing over the reins to someone else to vet guests, perform routine maintenance and repairs, and to control access to their vacation home. Often times a middle-ground can be met when working with a management firm who would be more than happy to allow owners to maintain control over certain tasks.
Property managers are also generally well-versed in contracts and rental agreements that can protect owners from many areas of liability, as well as recovering funds for any property damages incurred by guests. Conversations with guests regarding damages are almost universally unpleasant and many property owners gladly outsource this task to a manager instead.
Finally, each property owner should thoughtfully consider their investment goals when making a VR management decision. If your goal is to maximize every last penny of potential income from a vacation rental property, then some form of self-management is definitely the direction to go. Pocketing the 20% commission that would otherwise go to a VR manager can make a substantial impact on your income statement and cost structure.
If your investment goal is more aligned with covering carrying costs and allowing for price appreciation over the medium-long term, then hiring a manager makes perfect sense. In effect, hiring an experienced property manager can turn the very time-intensive task of property management into a steady stream of passive income.
The above bullet points offer some basic guidance on how to decide between whether or not to hire a vacation rental management company to care for your income property. Ultimately, the best strategy may be the old tried and true case of trial and error. If you have the time, proximity, and energy to try self-management, why not give it a shot. If later you decide that it’s not the best fit, then you can always interview local management companies to explore transitioning your property to the care of professionals.