So you are thinking about going into short term rentals and you have probably heard all sorts of conflicting information on the profit and viability of the market. If you read our previous article on the pros and cons you are clear that you will either pay out a large part of your profit to a property management company or choose to Self Manage. This article will lay out everything you need to start self-managing your short-term rentals.
Our experts Avery Carl and Spencer Bailey both advocate Self-Management in the short-term rental market. They are currently leaders in the field and own Property Management businesses. Chad and Ashly Bailey recently made the jump to short term rentals starting with one property. Chad and Ashly originally were Runway members in the North Georgia market. They dove into short term rentals because they wanted to turn rehab and wholesale into more lucrative passive income.
Why Self-Manage over paying a Property Management Company?
The bottom line is money. The average property management split is 20% of your gross.
The more properties you own the higher the amount you pay out to management.
In addition, not all property management companies are created equal. If you pay less for the property management company your property most likely will financially suffer.
It is important to note that managing a short term rental is significantly different from long term rentals. With the constant turnovers there is quite simply more to do more frequently. That being said, with the right systems and modern technology, you can manage efficiently from your phone.
There are three parts to Short Term Rentals:
1. The initial investment in the property and flipping or prepping the property,
2. Ongoing Property Management, and
The Tech You Need:
The first thing to do is buy what is called a PMS or Property Management System. This sets you up with multiple short term rental platforms and hooks your property into the entire ecosystem. You list your properties across the entire marketplace from one central location. You can price, keep track of calendars, automate customer service and manage guest interactions all from your PMS.
Both Spencer and Avery recommend PMS system Guesty for two key reasons:
1. It handles automated communication and syncs your calendars. One of the most time consuming aspects of managing is sending out emails to your guests corresponding to check in and check out as well as emails to your house cleaner. This app allows you to automate and schedule all necessary communication to your guests across all platforms. This automated communication puts the customer first, is a massive time saver and goes a long way to smooth and successful property management.
2. It’s Scalable. Guesty has a starter system called Guesty Host if you are diving in with one property. It easily transfers to the larger Guesty platform which is important because it can be challenging to switch PMS systems when you scale.
Your automated emails are making sure your guests have all the information they need at the right times. But what about those extra calls? How do you navigate the renters with the special requests or the ‘emergency’ call when something breaks after office hours?
The first two people you are going to hire as a property manager are your cleaner and your handyman. Set up the expectation ahead with renters that you have other jobs and a family and your office hours are set. If a call happens after office hours it will be answered the next business day. For the most part you can’t get a handyman out to fix anything in the middle of the night anyway. Many people allow their guests to manage them, rather than setting the proper expectations. Once you scale, we recommend a phone service called Grasshopper.
Grasshopper is a phone answering system that partners with a virtual receptionist company called Ruby. You can offload the majority of your customer calls to this service and it will save you a great deal of time and energy. Build a calling tree system with the receptionists that allows them to direct the call to the appropriate person on your staff to handle the issue such as your cleaner or your handyman.
Build your system, manage your system, and set expectations for your customers ahead of time rather than allowing them to manage you.In addition to these tech platforms when scaling, you can hire a VA to help manage your workload. Avery uses the company My Out Desk which is a real estate specific VA company.
As the market changes it is also important to price your booking accordingly.
We recommend the pricing manager system Price LAbs: it regularly updates your booking by comparing pricing across the market and adjusting your rates accordingly.
The average monthly cost for these tech systems is $100.
Outside of the known rental platforms you can also find Facebook groups that are area and vacation specific. Like anything else, identifying your ideal customer plays into how you market your property. Is your ideal renter in a higher income bracket? How would they like to experience their vacation rental? What is their ideal experience? When you get this ideal renter and meet all of their needs, the five star reviews will start flowing in.
Knowing how to grow your Reviews and understanding how the algorithms work on short term rental platforms is key. Another major downside to hiring a property manager rather than self managing, is if you do make the switch down the road to save yourself money, you lose all of your reviews.
If you find yourself in this predicament now, there are tricks that use SEO and knowledge of your hosting sites to your advantage. For example: You can ask friends to go on the sites and ‘favorite’ your property. This raises rankings. Also when you ‘re-post’ your property after firing a property manager, most hosting sites will give you a grace period because the system sees you as ‘new’ and ranks your property higher to give you an opportunity to build reviews.
The Marketing End Goal:
You have already saved yourself significant money by managing your own property. Next you create your own website to cut out the middleman and the fees you pay to list on external sites which can be as high as 30-40%.
Being a successful manager of short term rentals is understanding every expectation your guests have and giving it to them in advance through preset emails. As a successful marketer, when a guest leaves, you ask for feedback and simultaneously direct those guests to your company website to rebook directly. This shows you are invested in your guests leaving happy and increases the chance they will return directly through your site increasing revenue.
Short term rentals increase in profit over time. The best customer is the one you already have so cater to repeat customers and cut out the middle man.
Our experts say:
The success of your short-term rental property depends more on how you manage it than the property value itself. We hope we have given you enough information to begin managing your short-term rental successfully. To manage does require a degree of production and hospitality skills however with these automated systems you can gain significant revenue by self-managing and experience the benefits of seeing renters enjoy the experience of a property you flipped again and again.