Many homeowners who rent are often left considering renting through a management company. If you have an asset such as a holiday home or spare property that you are looking to rent out, it can be really daunting when figuring out how to get started. Many new hosts often wonder “Should I rent my Airbnb with a management company?”. Let’s discuss.
Vacation homes have mortgages or other fees such as maintenance costs that need covering. These can be too much to stomach on your own as spare properties are liable to tax, fees or recurring bills that need paying.
I’ve written a post on whether to let our your property via a lettings agent or via a short term hosting platform which you can read here and it’s worth a read if you’re not sure where to go.
If that’s swayed you and you’ve thought about a short-term hosting platform, handing everything over to management company is without a doubt heaps less stress for you as the owner, but are they really good value for money?
What do management companies do?
Essentially, they take over the running of the property as a rental so it makes it pretty hands off for you.
They take bookings, provide guests with the check in information, adjust pricing, handle complaints or issues during the booking, organise for the cleaning, take a cut of the money through fees and then give you the rest.
Management companies are common for both vacation rentals and business bookings but will often specialise in properties in a given location.
This is ideal if your rental property is in another country as a vacation/holiday home as you won’t be able to actively be there to resolve issues in person should they be needed. If the management company is actively in the location of your property, this can make more sense for you.
However, there are many management companies that are based abroad and nowhere near the properties they represent and simply act as a central account to handle the admin. They then outsource this to companies local to the property.
I’d be wary of using a management company that isn’t able to get a representative to your properties location.
I’ve been on the Airbnb platform for several years. I have been approached via the platforms messaging system several times with propositions from companies. These were always offering to handle the running of the property for me.
It’s incredibly easy to find someone to take over this part of the rental business for you. People will bite your hand off to represent your property.
So why have I said no?
High Cost
They take a huge chunk of whatever earnings there are. Overseeing the property, preparing it and management everything does take a little bit of effort. Given that they don’t own the asset but are doing all of the work, their cut reflects this.
By the time their fees have been removed from the money earned, the owner doesn’t always walk away with a substantial amount.
The owner is the one putting down substantial risk in the form of their property and potential damage and to me, this just doesn’t seem worth it.
Without a doubt you can get a better return for your time invested by managing everything yourself.
Host on their own account
Management companies will often take their own images and host your property on their own account on their chosen platforms.
This means that if you ever do decide to terminate your relationship with them, they’ll have all the reviews they’ve accrued from hosting your place.
You have a better understanding of the property than they do as the property is yours. Likewise you’ll have a better understanding of the space, the local area and how things work in the property.
Not only would you be able to show it off better, but as it’s yours you’ll be more likely to have a better passion for showing it off. Ultimately this will give guests a better experience.
Risk vs Reward
Without a doubt, Given the high cost, the high risk might not be worth it for you. You can make so much more money hosting stays yourself.
Once the guest is in the property and settled, you’re really just on a countdown until they leave. Many books go by without a hitch and guest contact during the booking requesting assistance doesn’t always happen.
Not only this, but you’ll get to bank all of the money rather than pay some away in management fees. Believe me when I say, it’s not that scary to self host and it comes with greater reward.
So when should I use a management company?
As touched on above, if you aren’t able to be close to property i.e. if it’s across the country or in another country entirely, having a company close by to the rental to oversee everything makes sense. If you have no choice but to use one, find reviews and recommendations online.
It’s possible that if you own a holiday let, other properties around you may also be holiday lets. This is particularly true of tourist heavy areas.
Speak with neighbours for recommendations. Most management companies will actively want to take on properties on the same street or in the same area.
Don’t get me wrong, I recently stayed in a VRBO property that was ran by a management company. This was on behalf of a private owner and it was one of the best I’ve stayed in.
It seemed to be managed on the owners VRBO account but the cleaning and immediate support was done by a local management company in case of emergency.
As it so happened, we didn’t need to contact the management company. A half and half approach like this seems to be the better way to go rather than handing over your property in its entirety.