As with most things in life, we all have choices. If you own a vacation rental property, that choice is to either manage it yourself or to pay a local vacation rental management company to undertake this on your behalf. Within that option, there will be a number of competing management companies only too pleased to take on your hard earned asset and add it to their rental portfolio. On the face of it, vacation rental management companies may all seem the same, but scratch the surface and you’ll discover there is much more to it. Owners who seek to bring their property asset under management with any firm should start by asking for key performance and strategy metrics. So what factors should go into making the decision?
It has long been part of our real estate investment strategy to diversify our own portfolio here in Charleston, SC to include a mix of both long-term rental properties, balanced with legally permitted, short-term rental properties, starting with our own personal vacation home and building from there. We have achieved solid success with this strategy, and as our Luxury Simplified Retreats vacation rental division has grown, we have grown the portfolio of luxury vacation homes that we represent to include those of other owners. Earning their confidence and trust comes from sharing our own asset management goals, and outlining the systems we have in place to deliver sound results.
Let’s get a few of the more obvious questions and clichés out of the way here:
Do they manage any of their own properties and would they care to share their performance?
Undoubtedly your property should perform at least as well as the returns they achieve for themselves. Transparency of performance, fee structure, maintenance schedules and year-over-year revenue are metrics they should be willing to share.
What listing software do they use and how do they view the changing relationship between managers and the big players like VRBO or HomeAway?
VRBO and Homeaway are currently penalizing management companies in favor of owner-operators, though that is not common knowledge. Being proactive in the face of this challenge means management companies are becoming sophisticated marketers at marketing rentals and leading travelers to book directly on their own websites. There are strong advantages to some software systems over others, and this technology sector is evolving at the speed of light. Understanding the changing landscape of OTAs (Online Travel Agencies) and the importance of balancing the use of them as a listing service as well as the benefits of having a robust, well optimized, e-commerce website representing your asset.
Who owns the rental history and client data?
This important information can affect financing options, re-sale, and impact your financial planning in the future. This should be your property to take with you if you change management companies.
Now let’s examine some of the less obvious criteria.
Is it legal?
Some of the larger vacation rental management companies in Charleston have grown mainly by riding the wave of short-term rentals that have just been designated as illegal under the new City of Charleston code. Moreover, with the new STR guidelines put into place by Charleston City Council in July 2018, both the owner and the rental management companies of these properties have been defined as culpable for illegal operation and in turn, will be regularly fined to the point that continuing to rent them is no longer a viable option. The City of Charleston is serious about this, having spent the better part of 18 months developing the new rental codes and putting enforcement personnel in place. As a result, some currently successful rental management companies will have to look at substantial downsizing and restructuring to survive. No matter what city you are located in, STRs have come “front and center” on many city council agendas. Make sure to ask about the regulatory restrictions and management ideology in your interview.
More than just bookings
Next, what do they understand about the fiduciary responsibility that comes with asset management, or are they simply interested in the churn & burn of bookings?
Marketing has the ability to put a spin on most matters. We’ve seen claims of “dynamic pricing” and “market matching” that all sound good but what do they actually mean and how does it operate? Ask for examples, probe under the marketing spin. Can the data be extracted and manipulated off-line or is your business dependent on a single third-party vendor to make it all happen?
The Importance of Hurricane Prep
Additionally, here in Charleston, as well as most of the eastern and southern coast, when the winds blow up during hurricane season, should your property sustain any damage, you will want your investment to get first place for attention if any damage potentially affects your rental income. A good choice for managing your home would include a firm with a dedicated repair/maintenance team, or better still, a construction division. Our experience managing beachfront vacation rentals on Folly Beach has taught us to have a highly coordinated plan in place when hurricane warnings have been issued, and to be prepared to quickly mobilize our teams once the storm has passed.
Note: Whether you’re investing in your first property, tired after years of self-managing, or dissatisfied with the results from your current Charleston SC vacation rental management company, discover the difference in partnering with Luxury Simplified Retreats. View our FREE case study booklet and find out why we’re the best at what we do…