January 30th, 2014 8:54 AM by Mike and Susie Berra
It's one thing to manage a rental house when it's nearby. But it's another process entirely when the rental is in a distant vacation retreat. Unfortunately, many second-home buyers find that out the hard way.
According to a survey by HomeAway, an online marketplace for vacation rentals, owners spend an average of 8.6 hours a week managing their properties. That's one full workday a week. And even then, it's doubtful that the typical owner can market his vacation pad, maintain it and do all the other things necessary to have a successful rental regime.
That's not to say you can't be successful going the do-it-yourself route. You can. But think of the things professional property managers can bring to the table. The list includes their full time and attention, along with marketing, screening, housekeeping, record-keeping, periodic inspections and more.
Of course, this doesn't come cheaply. Fees are all over the ballpark, depending largely on geography, says Mark McSweeney, executive director of the Vacation Rental Managers Assn., based in Indianapolis. "There's a pretty wide range, based on your region. The average is from 15 to 40%" of the monthly rent.
But what's going out shouldn't be as important as what's coming in, according to Ben Edwards of Newman Daily Resort Properties, a rental management company in Miramar Beach in Florida's Panhandle region.
"Everybody asks about our fees, but 90% isn't high if you are delivering revenue," he says. "That's what the focal point should be."
Edwards, who is also president of the rental managers group, says that in today's market, it's not difficult to nail a few rentals, particularly in your area's prime rental season. But to fill the place week after week or month after month, year in and year out, with people who return over and over again? Well, that's another thing entirely.
"We book more," the professional manager says. "We wouldn't be able to survive in these very competitive markets if we didn't."
The Vacation Rental Managers Assn. doesn't have any figures to back up its contention that the pros book more tenants than individuals, or that they generate more revenue to offset the expense of hiring a manager. But a survey in 2012 by PhoCusWright, a travel and hospitality research firm, found that the split is pretty much even.
That is, whereas the rent-by-owner segment was responsible for 51% of the bookings, says Vice President of Research Douglas Quinby, the managed segment took in 51% of the revenue. But the trend, he adds, is toward professional management.
"When the market was very strong, owners could be choosy. And they didn't have to take a very professional approach," Quinby explains. "Now, they have to be much more engaged."
It's impossible to discuss all the benefits a professional manager brings to the table in the space allotted here. But let's take a deeper look at just a few:
•Marketing. You might be able to fill a few weeks or months through word-of-mouth or local advertising. You might even be able to create a website.
But the pros can place your property in the local multiple list service, and they can advertise not just in local papers but in those ubiquitous weekly real estate magazines you see on newsstands, on television and online. Then there's email marketing, social media and online listing sites.
"Some of the biggest advantages to partnering with a professional are the in-depth programs designed to market their inventory," the Vacation Rental Managers Assn. website says. "Companies may invest in high-resolution property videos or photos, guest surveys, contests, promotional trade outs, brochures, rack cards and more to drive business."
•Screening. This is more than determining whether the potential guest can fog a mirror. The pros make sure the tenant is qualified by income, age and background.
"I don't put just anyone who can come up with the first month's rent and security deposit into your home," says Joan Medeiros of Royalty Rentals and Property Management in Fort Myers, Fla., who handles only year-round leases, not seasonals.
"I screen them carefully," says the longtime manager, who takes the first month's rent and 10% of the monthly rent as her fee. "I do a full background check, including credit and criminal."
Medeiros also asks for three current pay stubs and looks for prior evictions. If the prospect has been evicted anywhere in the previous five years, she turns them down flat.
That may be a little much for weekly rentals, but certainly not for anything longer. "You have to be tough to get the right people," she says.
•Inspections. It's difficult, if not impossible, to lord over your place when you live hundreds of miles away. But on-site managers are around all the time.
Medeiros inspects the inside of her properties every three months and the outside every month. She also does a walk-through before tenants move in, when they move in and when they move out. Again, perhaps a little much on a weekly rental. But you get the idea.
•Services. Can you respond at any time, even when something goes bump in the middle of the night (like it always does)? The pros can.
"You won't have a tenant calling you in the middle of the night, weekends or holidays. They'll be calling me, and I'll be answering, no matter what time of the day," the Fort Myers manager says. "You won't have to search for contractors to make repairs, because I have them on speed-dial."
January 26, 2014, 5:00 a.m.