The Hidden Costs of Renting Out Your Holiday Home Without Professional Property Management - content kindly provided by
Scott James - Rented.com
When my brother and his wife decided to rent out their first vacation home, they initially decided against hiring a property manager, figuring that it would detract from their revenue. Little did they know precisely what they were getting into. It didn't take long for them to realize the value of a property manager, and in fairly short order, they had hired one to handle their vacation rental property.
I know the exact incident that sparked their decision. They'd received a call from the maid service that would clean the house between guests. Apparently, there were no fresh sheets or towels in the linen closet. They had all been stolen. And no, the maid service was not keen on going to the store to purchase new linens. So my brother had to call a neighbor to make a run to buy new towels and a few sets of sheets.
That was the last straw. By the end of the week, they had hired a property manager to oversee the property, as managing their home from across the country just wasn't feasible. Rather than decreasing their profits, my brother and sister-in-law were surprised to find that the property manager actually increased their take-home revenue by cutting out many of the hidden costs associated with renting out their Holiday home without the help of a professional property manager.
Let's explore these hidden costs and how a property manager can help.
The Hidden Costs of Your Vacation Rental
A property manager can seriously boost your rental income by reducing many of the small, unexpected costs that you can't easily foresee until you actually bite the bullet and begin renting out your vacation home. Here are some of the most common hidden expenses.
Theft-related expenses. It's a fact of life that guests will steal things. And curiously, it's virtually never decorative items that disappear; it's kitchenwares, linens, and small electronics. These thefts can cost you hundreds, or even thousands, of pounds per year, and without a property manager to perform an inventory, there's really no point in charging a theft or damage deposit because you'll never know who's responsible for a theft unless you were to visit between each guest's stay.
By having a property manager to oversee your property, you can prevent many thefts from occurring (particularly if the manager performs an inventory in the presence of the guests), and you can identify precisely when an item disappears, which gives you the ability to charge the appropriate guest for the missing item(s).
Damage-related expenses. Just as people will steal things, they'll also break and damage things. Damages can total thousands of dollars in a single year, especially if you own a luxury property. Having a property manager can be beneficial to do frequent walkthroughs of the home to check for damage.
Most property managers will conduct a walkthrough between guest stays, possibly capturing the walkthrough on video to document any new damage that may have been caused by the guest. Having video of the home between guests allows you to better pinpoint who caused certain damages so you can bill the guest for it.
Think of it as the vacation home version of the walkaround that the car rental company employee performs when you rent a vehicle. Just as the rental agent makes notes of any dings or scratches on a car, your property manager can make note of any damage to the walls, flooring, furniture, counters, and other items inside your home.
Making guests aware of the walkthrough reduces the chances that a guest will challenge your decision to deduct from their theft and damages deposit. If you don't have a property manager to perform a walkthrough at some point before or after each guest’s stay, then there's little point in charging a damage deposit since you'll never know who's responsible for a particular bit of damage.
Maintenance and repair expenses. Your Holiday home will require maintenance and care, including maid service, landscaping and lawn care, pool care and maintenance, and miscellaneous repairs. This could range from needing a plumber to fix a running toilet to a roofer who can repair a few missing shingles that blew off during a powerful afternoon thunderstorm.
Hiring these professionals individually or on an as-needed basis can be quite costly, resulting in some significant expenses in the long term. But when you have a property manager to help, the manager can often tend to many of these issues personally. For example, many property managers have the basic handyman skills required to fix a toilet or replace a dripping sink.
For cases when a third-party service provider is needed, you can often see some significant savings because most property managers have contracts or agreements with local service providers. Property managers give all of their business to these service providers in exchange for a reduced rate, enabling them to pass along much of the savings to you.
Marketing and vetting. Marketing your Holiday rental is no small task, especially in highly competitive travel markets. The reality is that guests won't just fall into your lap. You have to market and promote your Holiday home. You could easily spend 20 hours a week overseeing social media marketing campaigns, online ad campaigns, website management, and other tasks associated with promoting and marketing your property. And chances are, you probably aren't a marketing expert, so you're apt to spend more than necessary on marketing fees. Those lost bookings will cost you too.
If you hire a marketing professional to oversee these tasks, there's a good chance you will spend more than you would if you were to go through a property manager. Most property management firms have an in-house expert who handles marketing for their clients' properties. What's more, once you find potential guests, you may wish to screen or vet them --- after all, you're inviting these people into your home. This can be tedious and time-consuming work.
A property manager can help you reduce marketing and advertising costs while boosting bookings and helping you justify higher rental rates. Most property managers are either marketing experts or they subcontract their work to a marketing expert who can promote your Holiday home in a cost-effective manner that provides you with maximum exposure. What’s more, property managers will typically handle any screening or vetting too.
Save Time and Money with a Property Manager local to your Holiday Home.
Managing a Holiday home isn't an easy task, especially if you live a significant distance from your property. Some studies have shown the average owner of a Holiday rental home spends more than eight hours per week managing the property. (And it was not noted whether this includes time spent marketing and promoting the rental.)
That's a part-time job! If you have better ways to spend your time and want to increase your rental profits, while avoiding some of those hidden costs, a property manager can offer a wonderful solution.
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