Real estate is one of the most lucrative ways to build wealth and achieve financial freedom. In fact, ventures like short term rental investing allow you to make millions in real estate in a relatively short period of time.
But, with this type of investment comes the decision of whether or not you should hire a property manager. Well, like other services that you would use in the real estate business, there are certain advantages and disadvantages to this move.
Let us explore the pros and cons of property management to help you make a wise decision for your investment. So, read on!
When Should You Use a Property Management Company
This would depend on the size of your rental portfolio, as well as the amount of time you are willing to dedicate to managing it.
If you only have a single property and can manage it yourself, then there’s no need for a manager. However, if you are a busy professional and have a large number of vacation rental properties, using a property management company would be a great way for you to ensure everything runs smoothly without much effort from your end.
Not only can they take care of marketing your rentals to potential guests and rent collection, but they can also handle maintenance issues and legal matters if any arise. Plus, you don’t need to be onsite round the clock—a property manager can do it for you, freeing up more of your time.
5 Pros of Using a Property Manager
Hiring a property management company for your short-term rental can offer you some priceless benefits. The following are reasons why it is a sensible decision.
1. Time Savings
As already implied, having a property manager can save you time. You will no longer have to spend several hours handling reservations, collecting rent, and maintaining the property.
It is also essential if you are investing in another state. This is because your manager can be your eyes and ears in that area, and they will help you make informed decisions. You do not have to spend a great deal of time traveling to the property just to keep yourself updated with what is going on with your business.
A good property management company will bring professionalism to your vacation rental properties, which is especially important if you have guests who require different levels of assistance. They will know how to handle different types of queries responsibly and professionally, making everything look seamless.
In a way, this company ensures your property will be attractive to travelers, as well as to businesses that may want to rent it for their events. This makes it easier to get more bookings and minimize vacancies.
3. Reduced Workload
As your property manager handles almost everything for you in running your vacation rental, you will have more time to focus on other aspects of real estate that you are passionate about. For instance, if you are also into flipping homes, you can use your free time for investing in it and improving your profits over time.
Or perhaps, you have another important business to run other than real estate or are employed in another sector. You can be sure to manage your time better and focus on other things that matter because you have a property manager taking care of your short-term rental business.
4. Increased ROI
Generally speaking, having a property manager can help you reduce expenses and optimize revenue, and increase returns on investment. They know the vacation rental market inside out and will strategically position your rentals to attract more guests and make more money from it.
An experienced property management company also knows the necessary steps to make your property highly visible and appealing to ensure high occupancy. For example, when you put your rental on listings, they know how to make it look excellent with enticing descriptions and professional photos. They would also know when your property already needs some updating.
Plus, they can adjust your rental rates accordingly to maximize profits. This is something you may miss if you are not familiar with the rental market. Without question, having a property manager can give you an edge over other competitors.
5. True Passive Income
Short-term vacation rentals are popular for being passive investments, but how much of that is really true when you are managing it yourself? With a property management company, you can enjoy true passive income as they handle all your rental tasks for you.
You don’t need to worry about filling vacancies or ensuring that your guests are getting a great experience while they stay at your property. Everything is covered by the company, and all you have to do is sit back, relax, and collect profits at the end of the month!
3 Cons of Using a Property Manager
Of course, there are also disadvantages to hiring a property management company. Here is what you need to keep in mind.
1. Additional Expenses
The first drawback that comes to mind when you hire this type of company would be the cost factor. Property managers charge a percentage of the rental income, so it is important to consider this before you decide if using their services will be worth it or not.
Calculate how much money they will be charging versus how much extra income you can make with their help. If you still gain the amount that you expect, then hiring them should be considered.
2. Limited Control
Another issue is that when you have a property manager handling your rentals, you may have limited control over what is happening with your properties. This means that there are certain decisions that require more consultation and discussions between you and the company’s staff. Such an arrangement might not work for everyone, as some investors might require more control over how things go with their properties.
3. Missed Opportunities to Meet New Interesting People
Owning a vacation rental will supposedly give you the chance to meet new people and even make new friends. But if you have someone doing the management on your behalf, then this will be limited as they are the ones who handle guest bookings and their stay.
So, “Should I use a property management company?”, you ask. When you assess the pros and cons of property management, it would be easy to say that using this service for your short-term rental investments is definitely worth considering. While there are advantages and disadvantages that come along with it, overall you can benefit from having someone knowledgeable and experienced to help you manage your rentals more efficiently.
You will save money in the long run, have more free time, enjoy increased ROI, and truly experience passive income with their services. So, if you think this is something that fits your needs, go ahead and hire a property manager today!
Hiring a Property Management Company: Important Tips to Keep in Mind
Now that you know the advantages and disadvantages of using a property management company, it is time to hire such a service. To make sure that you get the best out of it, here are a few tips to keep in mind.
- Look for a property manager with good experience in short-term rentals.
- Do your research to check if the company provides satisfactory customer service.
- Make sure you are aware of all fees and charges before signing a contract.
- Check references from previous clients.
- Read through their management agreement thoroughly and ask any questions that come to mind.
- Get a clear understanding of how the company will handle various tasks, such as marketing, bookings, maintenance, etc.
- Always communicate with your property manager to make sure things are running smoothly at all times.
- Have a plan on how you can take back control of your properties when needed or desired.
Aside from these, you can also gather some useful pieces of information from an 8-Step Hiring Process article that also offers tips on how to attract the best candidates for your short-term rental property management needs.
Investing in short-term vacation rentals requires proper understanding and experience. And, when it comes to managing your investment, hiring a team to help you run and take care of your property could be the best decision you can make.
Considering the pros and cons of property management will help you determine if their services are worth investing in or not. But if you think this is what you need to get your rental business up and running, then go ahead and follow the tips mentioned above for successful results.
For more information that you can use for investing in real estate, feel free to check out the rest of our posts. Good luck!