Should You Hire a Property Management Company?

As an owner of a vacation rental, you’re probably wondering whether or not to hire a property management company to handle your daily operations. The responsibilities and duties of owning a short-term rental (STR) are many, and hiring a professional can help simplify your day-to-day. 

By outsourcing all or part of the operation of your vacation rentals, you can get a monthly paycheck and keep control of your STR. 

Review the different factors that come with doing hands-off vacation rental management and decide if it’s right for you.

What does a property management company do?

You should have a full understanding of what a property management company can do for you before you make a decision. Ask questions before hiring a property management company to see if they perform these services:

Setting the right nightly rates

Property managers perform market research to find out what similar properties are priced at. Management companies also have licenses for dynamic pricing applications that harness big data and AI to come up with the best price/occupancy ratio. These apps make automated changes to the nightly rate, meet the ever-changing demand, and avoid leaving money on the table.

Marketing your property

The vacation rental manager will first take high-quality pictures and write a compelling listing for Airbnb, Vrbo, Booking.com, and HomeToGo. With a property management platform like Hostfully your manager will list the properties on all those sites simultaneously. They might even use a channel manager to increase the number of niche platforms where your properties are advertised.

Creating a direct booking site

It’s likely that your properties will also be listed on the vacation rental management company’s website so that guests who use Google can book directly. This won’t affect your bottom line, but it’s a way for the manager to further reduce vacancy rates, and create long-term repeat guests.

Screening for high-quality guests

Your property manager will likely use automated guest screening software to ensure that no one uses your property for fraud or criminal activities. Property managers need to take this step seriously as, by renting guests, you can be indirectly responsible for illegal activities, or host guests that might potentially damage your property. 

Managing maintenance and repairs

Not all companies offer these services. But even if your property manager doesn’t do this, you should find a vendor that can do this for you. Regular maintenance will ensure that everything is working in tip-top shape. 

Curating a 5-star experience

Many short-term rental property management companies include a fee for improving customer experience. The manager will provide guidebooks, recommendations, and upsells for the guest when they are in the rental. They’ll also answer guests promptly, ensure the property is always clean and ready for the next customer, and shoot for 5-stars reviews.

When and why you should hire a property management company

Hiring a property manager will free you up to focus on other areas of running your STR, as well as allow you to:

Own or manage multiple vacation rental properties

Delegating property management responsibilities to a third party allows you to earn profits while doing less work. This gives you back time to look for more properties and owners to add to your portfolio. So you can grow your vacation rental business without adding tasks to your to-do list.

Manage your short-term rental remotely

Hiring a property manager allows you to live in a different city or country and still have someone you trust to do quality control of your property. 

Increase occupancy rate without losing money

It’s challenging to market your property and find the right nightly rate to boost your occupancy rates. Some people will set the price too low and leave money on the table or too high and have a high vacancy rate. Property management companies balance promoting your STRs across different channels and setting a dynamic rate to capture the fluctuating demand and increase your occupancy.

Increase your profit margins

You should hire a vacation rental company whenever you can spare a percentage of your earnings and still make revenue. However, hiring a qualified property manager can also help you boost occupancy and increase the profitability of your property.

When and why you should NOT hire a property management company

Hiring a property manager isn’t a decision to take lightly. You shouldn’t consider outsourcing this sort of service if you:

Want to scale your Airbnb or Vrbo empire in the next 1-5 years

You shouldn’t hire a professional if you want to start a property management company and learn first-hand how to handle other people’s properties. If that’s what you’re aiming for, you’ll only grow your portfolio and become an expert if you do it yourself with the help of the right technology.

Enjoy learning new skills and software

Managing a property yourself requires you to learn how to use different software and the theory behind how to:

• Market your property
• Write copy that converts
• Optimize your listings for SEO
• Manage different schedules at a time
• Screen your guests

If you have the time and enjoy learning about topics like vacation rental multi-channel distribution, you may prefer to manage the property yourself. 

Have a basic understanding of marketing STRs at scale 

When you manage a vacation rental, you need to use software that helps you make changes in bulk and at scale. For example, a property management platform like Hostfully. Then, you can connect it to your preferred channels and promote your property in different online travel agencies (OTAs) at the same time. 

Live close by to your rental properties

If this is you and you don’t mind doing the boots-on-the-ground type of work, you may be well placed to manage properties yourself. It’ll involve doing periodic quality checks, key handovers, and solving property issues in person. 

You can also handle all operations and get a cleaner to run some quality and maintenance checks for you when they move in to clean. 

Want to have complete control over your operations

Most property management companies will take over your daily tasks but will also take full ownership. That means you’ll only get a weekly or monthly report of your property performance. If you have a hard time seeing someone else make major decisions over your investment properties, you shouldn’t hire a property manager.

You have a small portfolio and time to manage them 

If you manage less than five properties and have the time to handle the operations with a good property management software (PMS) like Hostfully, you don’t need to hire property managers. All you need to do is optimize your operational processes and get used to your software.

What to consider before hiring a property management company

Hiring a property manager can help streamline the process and operations of owning a rental property. You need to make sure you can afford it. In this section, we break down the fees charged by short-term and compare them to long-term lease management.

Short-term property management fees

Short-term, or vacation rental, management involves a high turnaround. Depending on the market your properties are in, the management company might have to coordinate 2-3 cleanings and turnovers a week. That’s much more involved than long-term leasing. Also, consider marketing and responding to guest inquiries. And of course, the management company will need someone available 24/7 to handle guest emergencies or respond to mid-stay communications in a timely manner.

All this sounds expensive, doesn’t it?

Vacation rental property management fees generally run to 30%-50% of your overall revenue (with an industry average of 28%). Use the guaranteed model where the property manager is guaranteed a fixed monthly income if you want a more cost-effective solution. 

Long-term property management fees

Typical long-term property management fees range between 8%-12% of the monthly rental cost, with most property fees settling around 10%. Properties with 10 or more units, usually larger apartment complexes, command rental fees in the 4%-7% range.  

Like short-term rental compensation structures, long-term rental compensation structures can also be based on flat rates. However, there is no general industry figure due to the variability in the size of the property and the services required.

Weighing convenience against cost

As Daniel Rusteen of OptimizeMyBnb.com points out “All property managers are not created equal. If you are hiring one, then presumably you want to be 100% hands-off. If you make a poor hiring decision, this can cost you time, money, damage, and even long-term security issues. Learn how to filter for the best local property manager.” So while retaining a vacation rental property manager to manage your properties can help make your life easier as an owner, it’s important to evaluate personal and financial considerations to truly understand if you need to hire one.

Vacation rental property managers can be expensive and take a huge chunk of your revenue. But if you lack experience in hosting, own numerous rental properties, or live far away from your properties, it may help streamline your daily operations.

A more affordable alternative to hiring a property management company

A lot of the challenges faced by vacation rental property owners can now be fixed with the right “tech stack”—the number of software stacked together for the smooth automation of your vacation rental portfolio. 

If you can’t spare a percentage of your profits to pay for vacation rental management services, an alternative is to onboard to the following platforms:

Property management software

A PMS is the hub of your business and performs the following core functions: 

• Manage listings on multiple sites (Airbnb, Vrbo, Booking.com, etc.) simultaneously
• Automate tasks based on conditions or events
• Report growth and performance using analytics
• Integrate with other key vacation rental software tools, like dynamic pricing, scheduling cleaning and maintenance, or automating guest messaging

If you use Hostfully as your PMS, you’ll be able to answer all guest communications from a unified inbox, pay a fixed monthly fee that doesn’t vary with your profits, and get a mobile app for on-the-go management.

Dynamic pricing tools

Dynamic pricing software automatically optimizes your rates based on your surrounding competition to boost revenue and decrease vacancies. Set your minimum rate, activate it, and forget about it. If there is a seasonality change, the software will detect it. Or if there’s a sudden surge in demand (i.e.; a conference is announced in your area), your rates will rise automatically.

If you’re using a PMP to centralize your operations, choose a dynamic pricing tool that integrates with it. 

Cleaning and turnover

This is specialized software that will help you assign cleaners automatically. Essentially, your PMS will send the occupancy calendar to the cleaning software. Based on the gap between check-out and check-in, the software will assign the best cleaning team for the task. This means once you’ve trained your cleaners on how to set up the property after the guests leave, cleaning and turnover can be automated. You might have to do a spot check once in a while, but that’s about it. Note that based on where you are, you might not need this software. In this case study, a vacation rental manager uses his PMS’s automation for cleaning task assignments.

Bottom line: Hiring a property management company

Hiring a property management company is a big business decision. Not only will you incur additional monthly costs, but you’ll be delegating your entire operations to this business. You need to ensure it has good reviews and is able to offer all your required services.

Guarantee the vacation rental management company can:

• Automate dynamic nightly rates 
• Market your property through different channels
• Create a direct booking site to reduce online travel agency (OTA) fees
• Screen guests
• Manage maintenance and repairs
• Provide 5-star experiences

You’ll also need to define whether or not you need to hire a property management company. You probably benefit from hiring one if you handle multiple properties, don’t live in the same city, or want to increase your occupancy rate. However, you might be better off managing the property yourself if you: 

• Own less than five properties
• Want to learn new skills
• Are planning to make a business out of property management yourself
• Can’t spare a percentage of your revenue

If you’re managing your properties on your own, you’ll benefit from a PMP like Hostfully. That way, you’ll get to automate most of the daily tasks and simplify your responsibilities.