With more than $57 billion in revenue expected in 2019, the short-term rental industry continues to grow at an impressive rate. For example, prices for short-term vacation rentals can range anywhere from $186 to $978 at the most popular vacation spots across the United States. Even in less desirable locations, short-term rentals provide a valuable alternative to hotels for travelers looking for a more exclusive, home-like environment and privacy.
The Main Points
- The quality and skill of property management companies can make all the difference in the number of guests enthusiastic about booking your rental in the short term.
- Property management companies can provide a short-term rental investor hours each week, but they also require communication and supervision to ensure your needs are met.
- Fee structures can be fixed or by commission, and it is important that the investor ensures that they understand exactly what services are included in their initial fee and what additional costs may be in the future.
- Real estate management companies can allow investors to expand their short-term rental business to more than one property and allow them to travel with higher returns than long-term rentals.
Unlike long-term rental properties where tenants usually sign a lease for several months or more, short-term rental properties involve fast turnover rates and, therefore, more hands-on maintenance and ongoing management.
For those looking to invest in short-term properties for the first time or expand their rental inventory, a property management company may be the key to saving time, keeping guests happy, and improving bookings and investment returns.
In this guide, we cover everything you need to know about property management for short-term properties, from what to look for in a property management company to the services they provide, and how to find typical pricing structures.
What Do You Know About Investing In Short-Term Properties
As many investors across the United States grapple with the short-term rental craze in urban cities, coastal vacation spots, rural retreats and even suburban neighborhoods, travelers are also becoming more familiar with sites like Airbnb, HomeAway, and VRBO to book and are comfortable using them. Accommodations for leisure or business travel.
Unlike typical hotels, short-term rentals are often available in the form of a single condominium, house, duplex, or townhouse. This means that they often include full kitchens, shared living space, and multiple bedrooms so that families or groups traveling together can stay under one roof. This is often a win-win situation for both tenants and landlords, as tenants can often save money by not paying for multiple expensive hotel rooms, and landlords can make more money per night than they would rent to a long-term tenant who pays monthly rent .
The option of converting a second home, vacation property or long-term rental property into a short-term rental business offers real estate investors more flexibility and the potential for much higher returns than long-term rentals. For a property to be considered a short-term rental, the unit is usually rented out for a period of between one day and one month. This generally gives owners more control over how often their property is booked, so that they can still use the property for their personal use throughout the year as they like. In addition, with a market growth rate of 6.9%, the short-term rental market is expected to soon outperform the traditional hotel hospitality industry.
Short Term Property Management Services
To maintain a short-term rental business, investors must complete regular tasks and stay on top of operational logistics. They must advertise the rental online through sites like Airbnb or VRBO, manage communications with guests, oversee the booking calendar, clean the accommodations among guests and take care of guests’ needs and any issues that may arise. They must make sure to follow any local laws and regulations, pay any necessary taxes and collect payments from guests.
With all the tasks that come with running a short-term rental business, property owners who want to keep their investment as passive as possible may consider turning to a property management company.
Services offered by short-term property management companies include:
- Using online platforms and their marketing and advertising strategies to attract tenants and secure reservations. This can include taking professional photos of the property, writing property descriptions, and adjusting nightly rates to keep up with market demand.
- Communicate with potential guests, accept reservations and act as a point of contact for booked guests from the moment of booking until the guest’s departure. The property management company can ensure that guests are aware of the house rules and check-in procedures and respond to any guest complaints or issues as they arise.
- Perform housekeeping and cleaning duties before each new guest arrives and restock inventory such as linens and other household items
- Property and lawn maintenance
- Update your booking calendar
- Conduct property inspections to ensure that guests are not causing any damage and that appliances, plumbing and electrical features are functioning properly.
- Garden maintenance
Short-Term Property Management Costs
Fees for short-term rentals can come in one of two basic types. This includes a flat rate and a percentage structure that varies based on how much income the property generates.
At a flat rate, real estate investors pay their property managers a predetermined fee each month, no matter how much cash or reservations the property brings. The services included in this price are also predetermined, but may not cover everything an investor might need. It is important to ensure that at least the most important administrative tasks are included in the fee and that property owners are aware of the costs of any additional services they may require property management to perform.
The second type of payment structure is through commissions, where the property management company makes a certain percentage of the revenue received through managed bookings. With this fee structure, investors can rest easy knowing they will be paying less out of their pocket in the slow rental months. Commission rates can vary widely, typically ranging from 10-50% of monthly income plus repair costs, depending on factors such as the location of the property (properties in desired areas may incur higher fees) and the actual rental property management company.
How Do You Know If You Should Hire A Property Management Company?
Property owners need to realize that while they leave the actual management of short-term rental properties to outsiders, they are still responsible for managing the property management team of their choice. They must remain able and willing to communicate their rental business vision and preferences in terms of booking rates, guest rules, decor choices, maintenance standards and cleanliness.
A short term management company is probably the best solution for the following types of investors:
- Those who travel frequently
- Those who live in cities, towns, states or even countries other than their rental property
- Those who sometimes want to use the property as their personal residence or vacation spot
- Those who have many characteristics and cannot manage all of them easily
- Those who prefer to spend time looking for new properties to invest in or work on other projects
On the other hand, hiring a property management company in the short term may not be a good idea for:
- Investors who own only one or two properties and enjoy hospitality and property management and wish to avoid paying a third party to perform this task
- Those who feel uncomfortable delegating tasks to outsiders
What To Look For In A Short Term Property Management Company
When looking for the right short term property management company, investors should keep a few things in mind. As an investor, you are ultimately responsible for any injuries or problems that occur to your property, so make sure the company you hire is reputable, communicative and committed to high quality standards. You want to make sure they are aware of local laws and regulations, which can vary from city to city, and that they have a system in place to communicate with you about any issues in a timely manner.
Short-term property owners should take the time to research and interview more than one property management company before making a final decision on who to partner with. Just as every property is different, every investor has their own unique preferences and values when it comes to looking after their business and home. For some, keeping costs low may be a top priority, while for others, quality of service and high levels of communication and engagement may be best.