The Pros and Cons of Self-Managing vs. Hiring a Property Management Company for Short-Term Rentals
So, which is better: hiring a property manager or self-managing your STR? Honestly, there’s no right or wrong answer to this question since different investors make decisions under different circumstances. However, you can make the right choice guided by the pros and cons of using each. This article demystifies all you need to understand before hiring a management company or going in by yourself.
But before we delve into the nitty gritty, let’s first understand the roles of a property manager in your short-term rentals.
What Does a Property Manager Do?
A property manager is a third-party company or individual tasked with operating, maintaining, and overseeing the day-to-day operations of an STR (in this case) on behalf of the owner. The property manager acts as a middleman between tenants and the STR merchant. Next, let’s look at the various pros and cons of hiring a property manager below.
Benefits Of Hiring a Property Manager for Your STR
They Save You Time
Think about the pros of hiring an STR property manager, and saving time will probably cross your mind before anything else. The management tasks are usually daunting. So, if someone else does it for you, you’ll create more time for exploring new investments, managing your company portfolio, and other essential things.
They Bring Exceptional Experience
Seasoned property managers are always aware of the nuts and bolts of short-term rental management because that’s what they always do. For example, their insight into STR codes and regulations will help the property owner comply with all government needs. It will also help minimize tax expenses and other unnecessary costs.
They Have the Best Network of Maintenance Professionals
Apart from bringing their experience, property managers have a rich contact list of maintenance teams, legal professionals, and other experts who can work excellently at the best budget.
Disadvantages Of Hiring an STR Manager
The Question of Cost
Many investors ask, “how much does it cost to hire a property manager?" The answer is the cost can vary but sometimes can go up to 12% of your gross rental income. In addition, you also get charged separately for placement fees, maintenance, and other costs. This interferes with your cashflows.
Incompetent STR Managers
When hiring a property manager, you could land an incompetent one who fails to deliver the advantages you expected. They could manage the property incorrectly, leading to losses. That's why it's essential to take time to find a reliable one.
Reduced Personal Experience
Distancing yourself from managing your property can also be a disadvantage when it's mostly viewed as an advantage. For example, this would not be the best choice if you're aspiring to become a property manager.
Is Self-Managing Your Property the Best Option?
In self-management, the investor not only owns the STR property but also has the responsibility of taking care of daily activities needed to make the property run smoothly, maintain the property, and solve issues. While this can be daunting, it also has several advantages, as explained below.
Advantages Of Self-Managing Your Short-Term Rentals
You Earn More Experience
There's no better way to understand property management than practicing it yourself, especially if you're also the owner. You'll quickly understand the challenges involved, laws and regulations, and other practical management concepts. This can be advantageous, especially if you have a career focused on property management.
Better Tenant Selection Position
Unlike property managers, who may choose not to prioritize your property regarding tenant selection, you'll always ensure that your property is tenanted upon going through the application forms.
There Are Several Financial Savings
As explained before, property managers often ask for between 5% and 12% of your gross rental income plus other expenses. But if you choose to take up the task, you save all these amounts.
Closer Relationship with Tenants
Dealing with clients directly will help you understand them better and build a stronger relationship because you're their only point of contact. This way, you're in a better position to build client retention. When you hire someone to handle the task for you instead, there could be miscommunication risks that may drive them away instead.
You’ll Feel at Ease with More Control
Many people go by the slogan, "doing something by yourself is the best way to get it done well." If you sail in this boat and have all the time, DIY-ing is the best way to go for your short-term rentals. You get to enjoy all control, including making all decisions. This makes you feel more comfortable about how things are run in your organization.
Disadvantages Of Self-Managing Your Property
The Tasks Are Usually Daunting for One
DIY-managing your short-term rentals involves a lot of activities like chasing rent checks, scheduling all maintenance calls, effecting repairs on time, and so on. Juggling these responsibilities, duties, and demands can be daunting, especially if you own more than one property in various locations. This can hinder smooth management.You May Lack the Expertise to Solve All Problems
For effective management, one needs knowledge about a wealth of management skills in areas like legal regulations, the latest property management programs, up-to-date rental information, and other concepts. This isn't something you can assume that most STR owners have.It’s Time-Consuming
While self-management may be satisfying, it calls for a lot of time. Think about all the responsibilities listed above and imagine the amount of time they need, especially when managing more than one property.
The Bottom Line
Your decision on whether to go for DIY or paid property management
will depend on how well you can balance the above pros and cons. Meanwhile, we hope that the property management vs rent by owner comparison above will help you choose the right course of action.