Short-Term Rentals: Self-Management or Property Management Companies?

Unless you’re a real estate prodigy, your start with short-term rentals is like learning how to ride a bike. You forget to look at the road, lose hold on the handlebars, fail to continue pedaling and keep falling over and over again. In our rentals, we sometimes forget to answer messages, not update our listings, fail to maintain our units properly, or worse, unintentionally give a poor experience to our guests.

However, when you fall off the bike, you just need to get up and go at it again. You keep going for five seconds, ten seconds, fifteen seconds, and before you know it, you can already claim that you know how to ride a bike. In your rentals, you figure out what guests want, which cleaners are the best, prepare for unexpected circumstances, price listings accordingly, and many other tricks until you’re confident with your ability to become a great host.

Let’s bring a little complexity to our analogy. Some people love riding their “bike,” as many young investors do in the short-term rental space. But other veterans in the game have other people ride their bikes. And yes, “bikes” in the plural form.

You might be in the middle of becoming one of these people. You may enjoy entertaining guests and the money they bring, so much so that you decide to buy another property. Then one more. Then maybe two more? Until you get to a point where the fun no longer comes from being a host but rather managing this entire business you’ve built for yourself.

Yeah. You’re that person who might want to have other people ride their bikes. You got so many bikes that you want to keep buying more instead of riding them. And there’s nothing wrong with that! That’s why we’re here to introduce you to a solution to that issue. Keep reading to learn more.

Self-Management: Frugal Freedom

For this article, we’d be talking about two common ways for you to manage your short-term rental: (1) self-management and (2) through a property management company. First, we’ll tackle the DIY aspect of the trade, where everyone (except billionaires or children of billionaires) starts from.

The name doesn’t even need much explaining to understand. Self-management is handling the rental by yourself. If you’re reading this and are just planning to start, here are some things that you would expect to be doing on a regular basis:

1. Keeping listings updated (so the platform favors your listing)
2. Coordinate bookings across multiple platforms, ensuring that you’re not getting bookings on the same date between Airbnb and HomeAway. If you’re not listing your property on other platforms, you might want to look into it.
3. Answering messages and inquiries from guests. The faster the response, the better.
4. Getting cleaners, maintenance personnel, or other service providers to “refresh” your units after a guest checks out.

(Note: It might be good to keep in mind that there are apps that can help you do things on your own. We’ve written an article specifically to introduce that idea here.)

We highly recommend doing things on your own if you only have a few properties to manage. One to two units on some platforms should be manageable. Handling three might still be okay, depending on your capacity to multitask and keep everything in mind. Going for the DIY mentality at the initial stages of your short-term (or even long-term) rental career may prove to be beneficial in the long run. Because you’ve done it yourself, you’ve developed a sense of which property management company to go for.

However, for those of you who (1) want to travel, live in another state/country/planet, (2) have other attention-demanding business ventures (as if real estate isn’t attention-demanding enough), or (3) are starting to have too many properties to handle, you might want to consider delegating some of your responsibilities to someone else. This is where property management companies come in.

Property Management Company – Expansive but Expensive

The general notion with property management companies is that they do everything for you. While this is most often true, others do offer packages where you only get them to do only a part of the process (i.e., Marketing, messaging, maintenance, and many other m’s out there). But even if the idea of turning your short-term rental into a passive source of income sounds enticing, its disadvantages may outweigh the benefits.

While you’d be liberated from the responsibility of taking care of your business, you either risk your business being improperly handled by sketchy companies OR getting hefty rates/commissions from trusted ones (10%-50% of your revenue). “You get what you pay for,” as the saying goes.

A “hands-free” source of income also means that you’re letting go of the wheel. If you’re the type to deliver a personal touch to your business, then this isn’t the one for you. With all that said, we recommend going for property management companies ONLY if you plan to use short-term rentals as a passive source of income.

You give them the bike. They ride it. You give them the house. They manage it for you.

When finding a property management company, please make sure to do your research. If they have an online presence (which is probably essential in this day and age), check their reviews to see how they work. They should be giving both the owners and guests a good time. Watch out for a pattern of negative comments in a sea of positive ones. If there’s smoke, there’s fire!

This is a serious relationship you’re trying to build here, so make sure you’re leaving your business in the right hands.

You also might want to check how they specifically do their work:

1. Where they would list your properties.
2. Where they would advertise your listings.
3. How quickly they respond to messages.
4. How quickly YOU can get a hold of them when needed.
5. How you get paid. (Probably the most important one.)
6. The process for dealing with damages.

Generally, you should keep track of what they’ll do and what things they won’t do.

But what if you want something a little more in-between?

Hiring a Property Manager – The Middle Ground

This is where you can combine the two. You can hand off your properties for someone else to handle at a more affordable rate while still having some sort of control. We’ll be diving into this topic next time, but we’ve also written an article comparing and contrasting property management companies versus hiring a property manager. While it’s more geared towards long-term rentals, some of the principles you’d find there apply to short-term rentals.

If you’re on the self-management game and trying to get to the point of hiring a property manager/management company, you might want to invest in a few more properties. You can try things out with Shorefront Investments! We’re Florida-based real estate investors looking to buy and sell properties fast. You could be one of our buyers by joining our buyers’ list! Are you thinking of doing things the other way around? Trying to sell your property instead? You can also give us a call at (850) 713-4866, send us an email, or fill a form on our front page!