Part 1 of the blog post discussed the fully outsourced option to property management of a short-term rental. Below, we will discuss the self-managed option . Even with the help of property management software, which can facilitate the bookings, communications and invoicing, the most time-consuming aspect will be cleanings, pricing and guest communication.
· Cleaning – At a minimum, this is the one area we recommend outsourcing regardless of how you decide to handle the rest of the management spectrum. We suggest you interview multiple cleaning companies/maid companies about handling the unit turnover and focus on 1) quality, 2) scale to handle potential multiple turnovers on the same day, as well as turnovers on short notice and 3) price. Remember, short-term-rentals are a different beast and we are trying to create passive income. If you are inclined to manage your short term rental, stick to only handling the communications and bookings to reduce fees and improve the guest experience, while outsourcing the unit turnover and cleaning. Regardless of whether you have 1 unit or several, the key is to get the units turned over the same day, which can often mean the units need to be cleaned in a 4-5 hour period to achieve this. To avoid having to block the calendar and have lost revenue, the key is to have a reliable and consistent cleaning option. Also, wouldn’t it be nice to have your unit generating revenue while you take a vacation?! Outsourcing cleaning can help with this.
· Pricing - Having an understanding of the proper pricing is one of the most crucial elements to managing rental real estate and no more important than with short-term rentals, where pricing by day could be different. There are pricing tools to create dynamic pricing (beyondpricing.com and pricelabs.com are two that are out there) that are helpful if you want to be more hands off, but they still have weaknesses, given they rely on your competition and don’t have a grasp on your unit quality compared to other units that are nearby with similar bed counts. Some of these are already integrated with the PMS, which makes them very easy to use. These are helpful as a baseline, but we recommend you still may want to make tweaks based on your rental quality and tweaks for major events that might not be fully reflected in the automated pricing estimates (i.e. big festivals, conferences, concerts, marathons, etc. that draw an exponentially high number of visitors at certain points in time). Websites like airdna will help you understand pricing in your zip code, while just research other nearby listings on AirBnB and HomeAway to see what your competing with is a must do if you want to self-manage.
· Communications – In our experience, this is both one of the biggest strengths and weaknesses of a fully outsourced option. The strength is that they respond quickly, and key communications are standardized (like providing guests check-in/out instructions) and handled with ease. The weakness is that unless there is a local employee responding to the inquiries, they can be very robotic and “distant” while guests might be looking forward to their “host” providing local recommendations. When you use a PMS, you are going to be handling all of your communications, so you end up being “always on” as guests expect quick responses.
· Advertising – Even if you want to self-manage, your listing and photos need to look professional (i.e. no camera phone pictures!). Pay for a premium photographer and ensure your listing content is accurate and thorough.
To facilitate the property management process, there are dozens of software options available. The only way to actually determine the best option for you is to 1) take the property management quiz (https://rentalsunited.com/pmsquiz/) and 2) demo two to three options. With the Property Management Software providers, there are options for those with anywhere from 1 rental unit to those with over 1,000. Before finalizing the search, we recommend reading reviews. This site has been very helpful for us: https://www.capterra.com/vacation-rental-software/
a. For those with less than 10 units, we’d focus on looking into Guesty, Tokeet, Lodgify, Uplisting, and Orbirental Rentals United. All of these will have pros and cons and it will be based on your rental types, frequency and needed features that can gear you towards one option or the other.
b. For those with more than 10 units, most investors end up with a combination of Rentals United and a property management provider from what we have seen. This is because Rentals United is one of the industry leaders in linking your listings to all the short-term rental websites, but lacks many of the actual property management functionality like guest communications, accounting tools and website products. Bookingsync and 365 Villas are also highly rated.
While the management of a short-term rental could be daunting for the first-time owner, do your homework and follow these simple steps and you will be well on your way to a profitable short-term rental business. Any comments, we’d love to hear from you.
Happy short-term rentaling!