All You Need to Know About Short Term Rental Property Management

As a vacation rental owner, there are so many benefits that you can get from a short term rental property management company. Read on for more.

“Why pay people to do your job?” is what people usually ask when discussing short term rental property management. And while it’s a valid point, there’s more to it than just that.

Table of Contents

1. What Are Short Term Rental Property Management Firms?
2. 3 Challenges in Managing Short Term Rentals
3. 3 Benefits of Using a Professional Short Term Rental Property Management Service
4. 3 Drawbacks of Using a Professional Short Term Rental Property Management Service

Short term rental property management involves using either a firm or an individual to help you out with managing your investment properties. Usually, multi-property investors consider using short term rental property management companies to help them out in taking care of several different properties. 

If you’re in the short term rental (or Airbnb) business, you already know that it takes a lot of work running the day-to-day operations of one vacation rental, let alone multiple units.

In times like these, a rental property management company comes in really handy. It gives you more freedom and flexibility in your calendar to do other equally important things. Real estate investors with multiple short term rentals tend to benefit more from them. 

In this article, we will discuss the basics of rental property management. We will also talk about how a website like Mashvisor can help you as a vacation rental owner, especially if you’re in the market for multiple investment opportunities. 

What Are Short Term Rental Property Management Firms?

Short term rental property management firms are companies that assist real estate investors in the management of their short term rentals or Airbnb investment properties. 

Long term rental property management firms handle bigger investments, such as commercial real estate and hotels, among others. Short term rental property management companies, on the other hand, deal with vacation rentals listed on Airbnb, Vrbo, and other similar platforms. 

Essentially, both types of firms do the same scope of work, only in different real estate sub-industries. The main difference is that vacation rental properties are usually managed on a smaller scale compared to long term investments.

Short term rental property management firms came along with the surging growth of Airbnb, Airbnb properties, and Airbnb investment properties. Investors were jumping at Airbnb opportunities in different markets across the US due to their high profitability index. 

Related: How to Use Airbnb Predictive Analytics to Earn a High ROI

3 Challenges in Managing Short Term Rentals

Now, just how difficult to manage are short term rental properties?

The answer to this question is: It depends. There is no cookie-cutter answer for it. 

Generally, there are many factors to consider when you’re thinking of starting a rental property business. Most rental property owners ask themselves the following questions: 

• What are your tenants generally like?
• What are your occupancy rates like?
• How many properties are you planning to invest in? 

1. Time-Consuming

Like it or not, one of the most challenging aspects of owning and managing a vacation rental property is how much time it takes away from you. As a vacation rental property owner, your goal is to keep your property’s occupancy rates as high as possible. It entails a packed schedule as you need to attend to the nitty-gritty of things. 

A host needs to do a lot of things to ensure that the property is safe for guests as well as ensure that the overall experience is pleasant for them. A host is typically busy with the following: 

• Entertaining inquiries
• Responding to messages
• Ensuring the property is well-stocked with the essentials
• Performing regular inspections in between guest transitions
• Keeping the property clean and safe for everyone
• Working on the administrative side of things
• Preparing short term rental agreements
• Marketing and promoting the property

In addition, some hosts even give tours and prepare meals as add-on services. So as you can see, hosting a short term rental property is a lot of work. It will fill up your calendar quickly and keep you busy, especially if you set lofty goals as an investor. 

2. Seasonality

One of your goals should be to get a high occupancy rate for your rental property, as your monthly rental income will largely depend on it. As a vacation property owner, you’ll learn first-hand how different seasons affect your earnings. 

When we say season, we don’t just mean winter, spring, summer, and fall. We’re also talking about the local tourism activities in your preferred location. This is where your management skills will be put to the test. Your brand of management will manifest itself in your bottom line at the end of the day. 

Generally, most locations go through peak and off-peak seasons where tourism is involved. The differences depend, of course, on where the property is located. But as a rental property owner, you need to determine which seasons see a high visitor influx and which ones don’t, so you can adjust your management accordingly. 

Your management skills will correlate with the amount of work you need to do around the property. If you have a high occupancy rate, meaning your rental is rarely empty, you’ll have more work to do. If your tenants are usually good tenants in the sense that they don’t leave a mess behind, you’ll have less work to do during the turnover period.

The management of a vacation rental involves you formulating contingency plans for off-peak seasons to ensure that your business remains operational throughout the year. You will need the right strategies, systems, and software in place to do so. 

So, before you enter into an agreement and close the deal on a property, keep the above things in mind and be sure that all of your concerns are addressed first. 

Related: Why Is Property Management Software Important in Real Estate

3. Short Term Rental Regulations

One of the challenges a lot of vacation rental owners face today is the different short term rental regulations in the country. Regulations are important because they provide boundaries that keep owners and renters protected from any form of abuse or mishandling.

However, the degree of protection and favor granted by such rules to both owner and tenant varies by location. 

Certain short term rental agreements may seem stricter and favorable to vacation rental owners, while others seem to be for guests. Either way, as a rental property owner, a big part of rental property ownership and management is keeping yourself updated with the different rules and regulations regarding short term rentals.

Before going into an agreement on a potential vacation rental property investment, do your research first and find out what your limitations are as a rental property owner. Perform due diligence first before you purchase an investment property.

3 Benefits of Using a Professional Short Term Rental Property Management Service

There are multiple reasons why using a short term rental property management service or company makes sense. 

1. They Have the Right System, Software, and Technology

To begin with, rental property management services usually have better software and technologies. They will most likely enhance the experience for the property guests and drive down the costs of certain potential expenses if you do it yourself. It means that your profit margin can increase, improving your cash flow.

Most rental management companies use software to make property management better and more efficient. In addition, rental property managers have the expertise to devise and implement strategies that make it easier for property owners to earn a decent income without having to exert too much effort. 

2. They Offer Better Services Than You Could Do by Yourself

Additionally, at times, short term rental property management firms offer better services than you could. It is especially true if you’re a busy real estate investor and cannot always guarantee 5-star service to your Airbnb guests. 

Short term rentals are a service industry, after all. So, if you cannot provide the best quality service, using a short term rental property management company is definitely a good idea. It is, actually, quite common to those who own multiple properties. They see the wisdom in it compared to spreading themselves too thinly for maximum profit. 

Ask yourself this: Do you think that using short term rental property management services will help you get better Airbnb reviews for your property? Generally, the answer to that is usually yes. And positive Airbnb reviews are very important.

So, all in all, if you feel like using short term rental property management will improve the quality of your Airbnb rental, boost your Airbnb reviews, and increase your profits, by all means: go for it!

Allowing a property management company to run the daily operations of your rental business frees you up to go after equally important pursuits. Of course, you will incur an added expense in the form of management fees, but the tradeoff is worth it.

3. They Keep Risks to a Minimum

Another reason to use short term rental property management companies and pay for their fees is the reduced risk factor involved when dealing with them. It is especially important if you’re just starting out or are less experienced in real estate property management. 

Short term rental property management firms are equipped with sound business plans and improved strategies for real estate investments. 

Moreover, they can often help you out with any legal documents. They can better help you prevent legal issues from arising, especially with today’s sensitive Airbnb laws and regulations. It alone makes paying for their fees absolutely worth it. 

3 Drawbacks of Using a Professional Short Term Rental Property Management Service

Using short term rental property management is definitely beneficial, but there are some drawbacks to it. 

1. Their Fees Aren’t Cheap

First of all, the service could end up costing you more than it would profit you. Services offered by short term rental property management companies are not free. You need to pay a significant amount of money monthly for their fees. That’s one more real estate cost that you need to consider. And it’s quite a significant one.

Keep in mind, though, that you aren’t just paying for the hours they spend maintaining your rental business. You’re actually paying for their expertise, the systems they put in place, the software they use for greater management efficiency, and the guarantee of exceptional service. 

Before signing an agreement with a property manager, make sure you fully understand their fees and what you’re getting in return. After all, you’re in the rental property business to make as much money as you can. 

Short Term Rental Calculator

As an investor, you need to know if a particular subject property can earn you enough to cover your mortgage (if you take out a loan), the upkeep, and earn a profit at the same time. You can easily do so by using Mashvisor’s short term rental calculator. 

Mashvisor is a real estate website that helps investors make the wisest real estate investment decisions by giving them access to the right information and tools. One such tool is its investment property calculator, which allows you to crunch the numbers using only the most relevant real estate market data in its system. 

As an app, Mashvisor empowers you to make the right decisions by helping you figure out your possible return on investment on a subject property. It shows you which properties can offer a lot by way of cash on cash return. 

Using the calculator will greatly increase your confidence as an investor since you’re armed with accurate and realistic information about the market you’re considering. 

To find out more about Mashvisor’s Airbnb calculator and its other tools, sign up for a 7-day free trial now, followed by a lifetime discount of 15%.

2. Not All of Them Are Created Equally

A part of the due diligence process is finding out the different management companies in the area of your choice. It means digging deep into their backgrounds and knowing their track records. 

You need to realize that as good as working with a property management company seems, they’re not all the same. Some are better at others in certain areas. It’s a matter of knowing which property management company works best for you and your needs.

3. You Might Miss Out on Personal Growth Opportunities

Lastly, you may miss out on the experience in real estate investing if you rely on short term rental property management to do most of your work. It also comes with the risk of missing out on making connections with people in the real estate world. 

Additionally, even though you’re still your own boss, you exert less control when it comes to making many decisions since you are essentially delegating them to others.

It’s true that we said that short term rental property management firms offer better services, but that’s not always the case. Many companies offer generic services for all properties and don’t really mind the unique differences between each of them or the specific needs of the tenants.

Do You Need Someone Else to Handle Short Term Rental Property Management?

The decision is entirely yours.

If you feel like you can juggle the responsibilities of being a real estate investor and managing multiple properties at a time while maintaining quality service for your tenants, you may not need short term rental property management services. But you should definitely weigh the advantages and disadvantages of your specific case.

Consider the costs of short term rental property management services. After giving it some thought, does it still make sense to use short term rental property management services? If your answer is “yes,” then, by all means, go for it.

Just make sure that the monthly rental income you make on a rental property is enough to cover all of the expenses and costs needed to keep it running, including management fees. 

To help you find the most profitable rental properties in any location in the US, you can always head on to Mashvisor.com. The platform will give you access to a massive database of the most updated rental market information that you can use to your advantage. The site also gives you access to real estate investing tools that will help you as an investor.

It provides tools like the investment property calculator, property search tool, and real estate heatmap. With such tools, you are sure to find the right investment property that aligns with your goals as a vacation rental owner. 

To know more about how Mashvisor works and what it offers real estate investors like yourself, schedule a demo today.