By learning the ins and outs of short-term rental management, you'll gain the tools to turn your rental into a low-stress money machine. Below, we'll look at three distinct property management styles and the pros and cons of each. You'll see that for any serious short-term rental investor, there is a clear winner.
Do It Yourself
It's rare for a short-term rental investor to go full DIY—most will at least hire a cleaning team. Suppose you stop there, electing to oversee all other aspects of management yourself. Two things will likely be true: 1) You'll pocket the money you would have otherwise paid to a manager, and 2) you'll have a full plate of work, with stress to match.
The only real advantage of the full-DIY approach is that you save money in the short term. But long-term, these savings aren't worth it because they cost you your time. Management tasks steer your attention away from big-picture growth and optimization.
You might consider self-managing if you're just starting out. If you've got lots of free time and a very tight budget, it can make sense to delegate management tasks to yourself. However, we strongly recommend outsourcing management as soon as you can. At the very least, hire a dependable cleaning company, and get a short-term rental management software like Guesty. Hands-on DIY management is not an effective use of your time.
Use a Full-Service Management Company
Of all the full-service management companies for short-term rentals, Vacasa is the largest. Recently, Vacasa acquired its biggest competitor, TurnKey, and now has 30,000 properties under management.
Besides Vacasa, there are hundreds of smaller management companies that focus on short-term rentals. Some of them specialize in a single market, while others cover larger regions. These local managers are a good option for investors who want someone close by to keep an eye on things.
Whether you go for Vacasa or a local manager, hiring a management company makes sense if you want a totally hassle-free investment. Of course, you'll pay a hefty fee for the convenience.
Property management companies charge you a percentage of your gross rental income. It's about 20% on the low end and can end up being higher than that. You definitely get what you pay for here, but you have to admit, 30% of gross income is a lot of money to fork over. Is there a better way?
There is! Enter the Just One Dime Short-Term Rental Strategy.
How We Do It
For Just One Dime's own short-term rental investments, we use a hybrid approach. Instead of hiring a full-service management company, we use software to automate repetitive tasks. For tasks we can't automate, we hire a specialized full-time employee or team.
By replicating this model throughout the country, we've been able to scale with minimal management expenses all while earning high reviews, having consistent occupancy, and saving on property management fees.
The more we use this approach, the more effective we become at implementing it. It's a repeatable process that works in any location. Here are the team players that make it work so well:
The “Real Estate Manager”
Our real estate manager is the brain of our operation. Her responsibilities include:
- Coordinating the cleaning or concierge teams.
- Handling inquiries that our automation software can't answer.
- Locating properties to buy and taking the lead on acquisitions.
- Working with a real estate attorney to finalize our deals. (This eliminates the need for a realtor, allowing us to avoid having to pay commissions.)
- Getting a short-term rental license for each property.
- Setting up each property and creating an attractive listing.
- Managing the P&L for each property.
- Reporting back to our investors on monthly profit or loss.
- Hiring and managing maintenance contractors.
- Responding to and providing guest reviews.
- Maintaining inventory of supplies needed at each property.
If you choose to hire a real estate manager, what you delegate to them is up to you. Some hosts may be very particular about how certain things are done and insist on doing those things themselves, while others may be more comfortable letting their real estate manager take the reins. Our advice is to hire someone you trust, empower them to do excellent work, and support them along the way.
Automation software will make life for you and your real estate manager a heck of a lot easier. It can perform routine tasks in the background and respond to many guest inquiries without the need for human input.
There are a few things you want to look at when choosing a provider:
- Does the software work better with Airbnb or Vrbo?
- Do you get the ability to automate messaging with guests?
- Can you set up auto alerts that coordinate your cleaning team based on your bookings?
- What features are available for managing multiple properties?
- Does the software include dynamic pricing based on seasonality and market trends?
- How much does the software cost?
Considering how much time they save you, Lodgify, Guesty, and iGMS are all surprisingly affordable. Guesty costs between 2–5% of each booking. Lodgify has monthly payments that range from $12–$48, plus a 0% booking fee for their more premium monthly options. iGMS has a variety of payment options; their pro plan costs $14 per property per month. As you can see, this is a huge cost savings compared to a full-service property management team. However, it still allows you the flexibility to determine how you interact with guests, ensuring positive reviews.
This should be your first hire. You need a solid cleaning team ready to go from day one, or your short-term rental adventure will quickly become a nightmare.
Without a reliable cleaning team, you won't be in business for long. Poor quality cleanings are the easiest way to lose points in reviews, and as we know, a few low reviews can significantly impact your profitability.
If you use a management company, you're stuck with whatever cleaners they hire on your behalf. If you avoid the management company and instead let your real estate manager do the hiring, you'll never get stuck in a bad arrangement. If you have a terrible experience with one cleaning company, you can move on to a new company and negotiate a better deal whenever you feel like it.
When you hire a cleaning team, you want to look for cleaners with experience cleaning Airbnbs or at least other types of short-term rentals. Once you’ve made a hire, you should provide them with a cleaning checklist. The checklist will ensure that cleanings are performed to exacting standards every time. For the first few cleanings, have your cleaners send you pictures or do video calls to show that the space has been properly cleaned.
Your cleaners will see the inside of your property more than anyone else on your management team. Make sure they understand the importance of alerting you to any problems that they find. You should be able to rely on them as the eyes and ears on your property.
Lastly, make sure they understand your intentions to scale. You’re growing your business, and if they do great work, it’s likely you’ll have more work for them in the future.
Building Your Maintenance Rolodex
Managing maintenance contractors is less involved than managing your cleaning team. It's unlikely that you'll ever need to hire full-time maintenance employees. Instead, you'll build relationships with contractors and use them on an as-needed basis.
When starting out in a new city, leverage the real estate contacts you already have to build your network. If you worked with an agent or real estate attorney to buy your property, see if they have recommendations for contractors or inspectors. The more locals you get to know, the more people you can ask for recommendations.
In addition to word-of-mouth recommendations, you can also check Angie's List, Facebook Marketplace, Craigslist, and Yelp for electricians, plumbers, and whatever other type of contractors you need. Try working with several different contractors, and don't settle until you've found a trustworthy person who does excellent work. This is especially important if you're managing properties remotely and cannot keep a close eye on your contractors. Whoever you hire, you'll rely on them to be fair and honest as they diagnose problems, order parts, and make repairs.
If you have many properties in one city, you may be able to work out some kind of bulk deal or retainer arrangement with certain contractors. You may also look into hiring a handyman who is skilled and adept at solving a wide range of maintenance problems and who can take the lead on preventative maintenance.
Empower your real estate manager to delegate work to contractors, manage a preventative maintenance schedule, and get eligible repairs covered by insurance. It will make your business that much more hands-off.
The Bottom Line
If you are a serious, growth-oriented investor, the JOD approach to property management is the way to go. It allows you to keep management expenses low and the quality of the guest experience high.
When it comes to cost, our method is the middle-of-the-road option—more expensive than DIY, but a lot cheaper than hiring a full-service management team.
DIY may be cheap, but remember that you can't ignore the time-cost of going full DIY. The DIY approach is stressful and takes a ton of time away from more productive activities. It's definitely worth paying someone for help.
In most cases, the JOD approach will end up being less expensive than hiring a full-service management company while still resulting in a high-quality guest experience and five-star reviews. The full-service company will give you a more hands-off experience, but you will pay a higher rate for this convenience. If you want a totally hands-off investment, it may be best to go with Vacasa and let them take a massive chunk of your gross income. But this is not the route that we would take.
Once you become proficient at JOD-style management, it gets much easier to scale your business. Master the system in one city, then use it across the county, wherever short-term rentals are earning the highest returns.