Renting out your vacation home can help you earn extra income when you’re not using the property. However, managing a short-term rental takes a lot of time and effort regarding marketing, booking guests, cleaning, maintenance, and rental-specific issues. For these reasons, many homeowners hire professional vacation rental management companies to handle day-to-day operations.
Choosing the right management partner is crucial to maximizing your rental income and providing a quality experience for guests. The best companies have the expertise, resources, and systems to keep your property booked while following local regulations and protecting your investment.
This guide covers key factors to assess when searching for and evaluating potential vacation rental management partners in your area. It aims to help you select a company that meets your specific needs and sets your rental business up for success.
Jump to:
Know What You Need
Research About Local Companies
Understand and Compare Fees
Verify Licensing and Insurance
Tour Sample Managed Properties
Review Technology Capabilities
Weigh the Value of Add-On Services
Review Contract Terms Thoroughly
Key Takeaways
Frequently Asked Questions
Conclusion
Know What You Need
First, clarify exactly what services you expect a management company to provide. Vacation rental management services fall into two main categories:
- Basic services – These include core tasks, like listing rentals online, booking guests, collecting payments, coordinating check-ins and check-outs, routine cleaning between guests, and administer minor repairs. The property owner retains more direct oversight and management responsibilities. Basic services typically have lower commission fees of around 25%-35%.
- Full management services. This is a more hands-off approach as the company oversees everything from marketing, reservations, and customer service to major maintenance issues and dealing with neighbor complaints. Full-service firms may also manage landscaping, pool care, and concierge amenities. Commission rates are usually higher for this premium level of involvement, around 40-50% of the rental income.
Consider how involved you want to be when determining the right level of service for your needs. If you have limited time and availability to manage issues directly, a full-service partner may be worth the higher commissions. Or, if you want help with booking and cleaning between select visits, a basic management package could suffice.
Research About Local Companies
Once you decide on the type of services you need, the next step is identifying promising vacation rental management companies in your desired location. Here are some ways to find and evaluate companies:
- Search industry review sites – Check third-party platforms like Google Business Profiles and Facebook to browse reviews about local property management companies. Look beyond star ratings and read through individual reviews from property owners and past guests detailing specific pros and cons of working with each provider.
- Ask for referrals – Fellow vacation rental owners in your community can provide insider recommendations on companies they have experience with. You can often find referrals by joining local short-term rental Facebook groups or networking with owners. You can also research referrals offline, from local real estate professionals or tourism boards, which might offer additional credibility.
- Check online listings – Search rental listing sites, such as Airbnb, Vrbo, and Booking.com, for nearby properties managed by different companies. Contact a few hosts directly to ask about their experience working with those providers.
- Research Better Business Bureau (BBB) profiles – Check the BBB for any complaints, disputes, or investigations logged against a company you’re considering. Stick to those with A or B ratings.
- Compare online reputation – Type the company name plus words like “reviews” or “reputation” on Google to find any issues reported on other forums or watchdog sites.
Focus your research on providers with consistently positive recent reviews and minimal disputes. Speaking directly to past clients can also provide deeper insights not found in brief online reviews.
Understand and Compare Fees
Pricing and commission structures for vacation rental management firms vary, reflecting the diversity of services and property types. Based on common industry practices, here is an updated overview of typical fees:
- Setup or Retainer Fee: This is a one-time fee for onboarding a new property, including listing creation, photography, and initial setup tasks. While some firms may offer this service for free, others charge sometimes up to $300, to cover the initial marketing and administrative expenses.
- Management Fee: The ongoing fee for managing a vacation rental is typically a percentage of the rental income. This fee covers a broad spectrum of services, including booking management, guest communication, and maintenance coordination. The industry average ranges from 25% to 30%, although some companies may charge as low as 10% or as high as 50%, depending on the property’s location, the complexity of managing the property, and the level of service provided.
- Cleaning Fee: Cleaning fees are either included in the management fee or charged separately for each turnover. The approach to handling cleaning fees varies; some companies include it in their management fee, while others pass this cost directly to the guests. Cleaning fee amounts can significantly vary based on property size, location, and the extent of cleaning required. This flexibility allows property owners to choose a cleaning service that fits their needs and budget preferences.
- Maintenance and Other Fees: Maintenance, restocking supplies, and other services like concierge or emergency repairs are often included within the management fee. However, specific arrangements can vary, with some companies charging additional fees for extensive maintenance work or emergency services. The approach to these fees depends on the company’s pricing structure and the service agreement between the property owner and the management firm.
When comparing options, look beyond the management commission rate alone. Consider the full picture of projected income minus all fixed and variable fees each company charges. Run sample scenarios with expected rental rates and occupancy to see which firm offers the highest potential profit.
Be clear on what is and isn’t included in base management fees, too. Many businesses bundle services, like cleaning, guest communication, and 24/7 support. But some burden owners with myriad add-on fees, so watch for that.
Also, ask whether management commission rates are negotiable, especially for multi-property owners or longer-term contracts. Aim to negotiate commissions down, but make sure the company doesn’t inflate other fees in response.
Verify Licensing and Insurance
Unlike traditional long-term rentals, short-term vacation rentals are subject to unique regulations, permits, and taxes that vary significantly by city and state, and of course country if you are not based in the US. Therefore, it’s crucial for management companies to be fully compliant with all local laws governing vacation rentals.
Before entering into any agreement, ensure that a provider has:
- An active business license to legally operate as a management company in your area.
- A vacation rental permit or license for your specific property, considering that some cities impose limits on the number of permits available.
- Comprehensive knowledge of and compliance with local zoning regulations, noise ordinances, and rental taxes, to avoid any legal complications.
When it comes to insurance, it’s vital to confirm that the provider carries:
- General liability insurance with sufficient coverage for your property and guests. While a recommended minimum of $1 million is commonly cited, many insurance providers offer policies tailored for short-term rentals, offering up to $1 million in liability coverage, which can sometimes be extended to $2 million per occurrence. This coverage is essential for protecting against guest injuries and property damages.
- Coverage for lost rent and liability claims. In addition to general liability, look for policies that cover loss of income, which is crucial for recuperating lost earnings during periods when your property cannot be rented out due to covered damages or other insurable events. Some insurers offer comprehensive policies that cover the unique risks associated with short-term vacation rental properties, including loss of rental income.
It’s advisable to avoid companies that are hesitant to provide documentation proving valid licensing and insurance. Working with an unlicensed firm can expose you to fines and legal actions, and inadequate insurance might leave you responsible for covering expenses related to damaged property or injuries on your own. Always verify the insurance details and ensure they meet your needs to avoid unnecessary risks.
Tour Sample Managed Properties
While online reviews can provide initial insights, there’s no substitute for seeing a company’s work first-hand.
Ask prospective management firms to tour some properties they currently oversee. Pay attention to:
- Cleanliness – Look for dust, stains, pet hair, or other signs. Units may not be thoroughly cleaned between guests. Check if adequate amenities and supplies are stocked.
- Condition – See if properties appear well-maintained with things in working order. Look for repairs needed or signs of wear and tear.
- Organization – Note if units feel thoughtfully organized with labeled amenities, guides, and rules readily available for guests.
- Curb appeal – Judge the outside area, landscaping, and signage to see if the property makes a good first impression.
- Decor – Assess the furnishings, colors, and design for the vibe or ambiance created. Consider whether it matches your property’s style.
Chat with the owners of places you tour about their experience with responsiveness, communication, marketing success, and overall satisfaction working with the rental management firm.
Visiting sample rentals in person reveals far more about standards and service levels than looking at photos or descriptions alone. Never sign on with a company without seeing their work firsthand.
Review Technology Capabilities
Vacation rental management relies heavily on online marketing and booking platforms, dynamic pricing tools, and centralized property management systems. Ask potential partners detailed questions about solutions used for:
- Listing and distribution – Tools, like Airbnb, Vrbo, and Booking.com, to promote available rentals across major booking platforms.
- Reservation management – Software to automate booking across multiple listing channels in real-time.
- Revenue management – Dynamic pricing based on demand, local events, and seasons to optimize rates.
- Guest communication – Multi-channel tools to engage guests before, during, and after stays.
- Owner portals – Dashboard to view bookings, costs, payments, and performance data in one place.
- Maintenance – Apps to rapidly submit and track repair requests.
- Automation – Smart home technology like remote entry codes or locks, WiFi management, and lighting control.
Evaluate the features offered and how adept staff are at using those tools for peak operational efficiency. State-of-the-art technology only matters if employees have proper training to leverage it.
At the same time, consider your own comfort level with technology when selecting a management partner. If you prefer a minimal interface with complex systems, seek a company whose solutions prioritize ease of use for owners.
Weigh the Value of Add-On Services
Basic vacation rental management covers the core necessities to keep your property booked and operational. But many firms offer enhanced services for an additional cost or commission, including:
- 24/7 guest communication via phone, text, and email
- Daily or mid-stay cleaning or tidying between guests
- Concierge services, which include airport pickups, grocery delivery, and restaurant bookings
- Special welcome packages or amenities
- Local activities and destination recommendations
- On-call maintenance techs available around the clock
- Light handyman and landscaping services
- Smart home tech like WiThese add-ons improve the guest experience and reduce day-to-day work for owners, which can help earn 5-star reviews and repeat visits. But enhanced services also bump up management fees and overhead.
Pick just the enhanced services that will differentiate your property and provide the highest return on investment through better reviews and occupancy rates. Evaluate your:
- Budget – Factor in the costs of bundled add-ons versus handling certain things yourself.
- Target guest – Research what amenities they most expect or appreciate. High-end clientele may expect extras standard hotels offer.
- Desired involvement – If you want to outsource all aspects fully, add-ons give you total peace of mind.
- Property specifics – Daily tidy service makes more sense for condos than a 3-bedroom house.
Review Contract Terms Thoroughly
Before committing to work with any vacation rental management provider, have their full contract reviewed by an attorney specializing in short-term rental agreements. Ensure it spells out the following:
- Services – Details on what specific tasks are covered under management fees versus what incurs additional charges.
- Cancellation policy – Under what conditions can you or the company terminate the contract, and with how much notice?
- Responsibilities – Exact division that handles ongoing costs, like maintenance, utilities, and restocking.
- Payments – Schedule and process for the company collecting and distributing rental income minus their fees.
- Insurance claims – How liability claims and damage disputes will be handled.
- Regulation changes – Protocols if local laws change, impacting the viability of renting the property.
- Peak season requirements – Any minimum night stays or rate premiums imposed on holidays or busy events.
- Rate guarantees – Defined terms should back any promised occupancy rates.
- Authority – What decisions or actions the company can take regarding your property without your approval?
Avoid contracts with undefined vague language or one-sided terms heavily favoring the management company. Reputable firms will negotiate provisions as needed.
Key Takeaways
Here are the key steps for choosing the right vacation rental management partner for your needs:
- Determine your ideal level of service and involvement as the owner.
- Thoroughly research local providers and speak to their past clients.
- Compare full fee structures with all costs included.
- Verify necessary permits, licensing, and insurance.
- Tour current properties overseen by each company.
- Evaluate technological capabilities and owner portal experience.
- Consider extra services that provide the most value.
- Carefully review contracts and negotiate terms.
The best management companies have the expertise to maximize your rental income through high occupancy rates and optimal pricing. They also offer responsive support to protect your property investment and give guests a memorable stay. With the right management partner, you can sit back and optimize profit from your vacation home.
Frequently Asked Questions
Should I manage my own vacation rental?
Self-managing your rental can be complex, requiring marketing, customer screening, accounting, cleaning coordination, and 24/7 availability for issues. Unless you have extensive experience, hiring a management company is usually wise, especially for rentals in high-demand areas.
How do I know if a management company is legally compliant?
Ask for documentation of all necessary business licenses, permits, registrations, and insurance policies in your city and state. Only work with companies that can provide proper proof of validity.
What questions should I ask before hiring a management company?
- What specific services are included?
- How do they handle maintenance requests?
- What systems and software do they use?
- Can I see sample properties they manage?
- What are their exact fees and cancellation policy?
- Can we negotiate contract terms?
What management contract terms are non-negotiable?
Avoid companies unwilling to negotiate or compromise on any provisions to protect you. In addition, pay close attention to cancellation terms, clarity around all fees, and owner rights regarding changes that affect profitability. Get a legal review.
Conclusion
Choosing the right property management partner requires thorough research and direct inspections of their capabilities. However, taking the time upfront to evaluate multiple companies will pay dividends through maximized rental income and minimized headaches.
Interested in reading more ?
- Head over to read all our blog articles about Airbnb here
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