Why a Homeowner Should Use a Professional Vacation Rental Manager
Posted by Mt Hood Vacation Rentals | Friday, July 2, 2010
Why Use a Rental Manager?
We occasionally hear vacation rental homeowners ask about the tradeoffs between self-management and management services. Obviously managers cost money. Do managers earn it? Yes! Are they cost effective? Yes! This month, we share our answers to the question, Ă˘€śWhy use a manager?Ă˘€ť
RBOs DonĂ˘€™t Save Money; they Ă˘€śearnĂ˘€ť it, doing some of AmericanĂ˘€™s dirtiest work. The challenge is not just finding renters, but Ă˘€śfixing, cleaning, and taking care of the screaming guests:Ă˘€ť Afterall, someone still has to do the work the professional management company is being paid to do. Typical examples:
- Responding promptly to emails by impatient renters who are quick to look elsewhere. In today's marketplace, guests expect a response to their email inquiry within 30-60 minutes of sending the email. Can you do that from work or when you are at your kids' soccer games?
- Answering 10 inquiries for every booking. Again do you have time to spend on the phone or on your computer responding to all of the inquiries?
- Negotiating rent with bargain shopping renters. The Rent by Owner websites typically attract bargain-hunters. Renters who choose to work with a professional management company expect to pay more because they know they will get more, especially when it comes to customer service.
- Responding to renters who argue that a malfunctioning hot tub justifies a full refund. Professional managers are available to ensure there are minimal problems with hot tubs and other amenities at your home. When the unexpected does occur, they are equipped to handle this type of customer without giving away the farm.
- Finding a back up cleaner when the regular cleaner doesnĂ˘€™t show up or is sick. This also applies to finding maintenance workers, handymen and other workers in a pinch.
- Dealing with lost keys at 2 in the morning. Even though it is a pain in the neck, a professional vacation rental manager will roll out of bed and get the guest back into their rental home. If you live several hours away, it is difficult to help a guest who is locked out.
- Finding a vendor to remove unexpected snow that is blocking access to the home. Professional managers have built strong relationships with local vendors, so when they need snow plowed, furnaces repaired, broken water pipes fixed and so on, they usually have a number of licensed contractors they can call upon, even on Sunday afternoons.
- Getting prompt response by an a/c repairman in the middle of summer or a furnace repairman in the middle of winter. Same as above.
- Handling unplanned problems. Are problems rare? Work-order statistics commonly reveal as many major problems per home as rentals! Managers are experts in the problems that routinely arise in putting a non-resident renter into a home owned by a non-resident. We anticipate and avoid recurring problems through preventive maintenance. We put together networks of service vendors who respond to us faster than they would respond to an individual homeowner because we send them so much business. We can keep backup cleaners on call because we have enough homes to keep them busy. Our cleaners serve as our eyes and ears for homes in our inventory, helping us keep properties safe from unruly or unauthorized renters.
- Liability. Many rent-by-owners expose their net worth by failing to inform their insurance companies that they are renting their vacation homes without using a professional manager. In many regions, it is becoming increasingly difficult to obtain homeowners' insurance for vacation rental homes. Many agents are more willing to work with a professional property manager because they of their business reputation.
- Bonded & licensed workers.
- Workers covered by workersĂ˘€™ compensation insurance
- Professional laundry services (do you know how many pathogens survive a household washer)?
- Taking credit cards, assuring more rentals. This is a credit card society where most renters want to either defer payments or earn miles by paying with credit cards--individuals canĂ˘€™t take cards and PayPal or third-party services are only partial solutions as they do not provide chargeback protections to the RBO.
- Collecting and remitting local lodging taxes. No one enjoys dealing with the tax man. It is not uncommon for RBOs to not charge transient occupancy taxes. This may appeal to renters, but local tax authorities are mobilizing and starting to access homeownerĂ˘€™s Federal Tax returns (through PACE agreements) to identify homeowners who have reported the expenses associated with their rental homes. Managers relieve the homeowner of tax collection, tax reporting and, of course, interest, penalties and criminal penalties. In Clackamas County and the State of Oregon, all lodging taxes collected are dedicated by statute to tourism development and promotion.
- Offering Travel Interruption Insurance. Professional managers also earn their keep by relieving homeowners of the infrequent but inevitable nightmares-- where heat or water systems break down and the renter cannot remain in the home or the guest experiences a personal emergency and cannot make it to the vacation rental. The Travel Insurance will cover the unexpected problems instead of the homeowner. RBO sites sell travel insurance, but usually not in a way that prevents uninsured renters from demanding a refund from the homeowner.
- Multiple channels to interact with guests including phone, online bookings, email and mobile devices. RBOs can become slaves to their phone and computer. Most importantly, there is the question of bookings. RBO sites make it easier for owners to market their own properties, at least for homeowners who are willing to chain themselves to their phones and computers. Aggressive RBOs can generate as many bookings as a manager. But most RBOs lack the time or energy to respond promptly to the many non-booking inquiries. And you only need to look at the leading RBO sites to appreciate the challenge of maintaining availability calendars. Professional managers have real time integrated systems for their reservation software and online availability on their websites.
- Maximizing rental revenue for a property. RBO sites attract bargain shoppers which often leads to deep discounting. We have a larger pool of renters who are more interested in getting the home they want than in getting a bargain. RBO site renters often send multiple email requests soliciting discounts. We monitor the booking pattern of a rental program to determine whether we need to give discounts. We have a good sense of when to discount and by how much. With deep discounting, after paying housekeepers, paying for your online listings, utilities, mortgage payments, property taxes and all of the other expenses associated with owning real estate, the RBO is not paying themselves for their time and trouble; they may even end up with negative cash flow.
This article is mostly written by George Volsky, Director of Research at Instant Software, with a few comments inserted by me, Betsy LaBarge, President and CEO of Mt Hood Vacation Rentals.
Another article on the same topic was recently published in the HomeAway Owner Newsletter; Using a Property Manager vs. Renting Your Vacation Home by Owner
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