Property Management Selection Criterias

[Ray Li]

Hi, what do people look for when selecting property management? Yelp reviews, BBB reviews, major certifications, or even professional-looking websites?

I'm noticing managers on yelp and BBB reviews with no certifications, or certified managers whose companies aren't listed on BBB or have bad reviews.

I know we ultimately need to talk to them to see if they're a good fit, but I'm looking for at least a basic criteria to help me filter them.

Thanks,

Ray

[Andrew McConnell]

@Ray Li In my day job, I mainly interact with individuals who own vacation rental (or Airbnb) properties looking for vacation rental property managers.  Here are a few of the questions I have found that have been very helpful to those owners as they evaluate property managers.

1. What is the Airbnb manager's reputation?

How reputable is this Airbnb manager? Is she a college student who has heard about Airbnb and how quickly it is growing, and wants to ride the wave? Or is she a professional who is licensed to rent out other people’s vacation homes in the relevant jurisdiction?

How many years has the manager been doing this? How many other vacation rentals does she or he manage? How are the guest reviews? Are there owner reviews for your to review?

If your prospective property manager cannot provide a number of references for you, consider it a red flag.

At my company, for example, we certify our network of over 600 managers based on financial, legal, and operational excellence to make sure you’re matched with only the best.

2. Is the vacation rental management contract homeowner-friendly?

When considering a vacation rental manager, take a close look at the Airbnb management contract. Who does the contract really serve—you or the manager? Who is liable for damage caused by guests? Who is taking the financial and operational risk?

Also make sure you know what you are responsible for.

Will you be paying the property manager a commission as most people do?

If so, review the contract, and compare it to other home owner friendly contracts (I have an example of a good one if you are interested). Known for having some of the most homeowner-friendly contracts in the industry, we have our managers assume operational risk while the financial risk and upside is shared between both owner and manager.

Looking for guaranteed rental income instead?

I also have an example of a guranteed rental contract for a better understanding of how to structure a deal where you get a fixed rental income every month and the financial and operational risk falls on the manager.

3. How much can I expect to make with an Airbnb manager?

How much rental income will Airbnb managers make you?

This is not just a product of how frequently the manager can find guests for your Airbnb, but also what price she is able to charge for the nights rented, and perhaps even more importantly, how much of that rental income ultimately flows to you as the owner.

If you sign a guaranteed rental contract with the manager, this amount is set.

If you use a shared success (or commission) arrangement, the calculations can be trickier.

What is the vacation rental manager’s commission rate? Are there any additional fees?

Horror stories abound of owners being tempted to sign with a manager based on a low quoted commission rate, only to be blindsided when the effective commission rate was more than double the amount quoted due to “additional fees and management services.”

Always do your homework upfront, and know how much you can expect to make before agreeing to any arrangement.

Our site has a personalized tool to help you figure out how much your property should be making in annual rental income

4. Is the management company financially secure?

Ultimately this comes down to one question: How deep are the manager’s pockets?

Has the manager ever filed for bankruptcy? Ever been late on payments to owners?

What sort of insurance does the manager carry to make sure she can make you whole should things go wrong, and what type of insurance should you have?

5. How does the Airbnb management company vet guests?

Maybe the manager is great at booking and cleaning your property, but how good is she at ensuring your home is taken care of?

Ask your manager what type of systems he or she has for vetting guests.

Does the Airbnb manager participate in a “bad guest” scheme?

Does the manager do background checks? How does the company check on the property during rentals?

Cleaning up after a mess is made is helpful, but making sure no mess is made in the first place is even better.

6. Will there be an impact on long-term home value?

Is the property manager an “asset manager” or simply someone looking to “churn-and-burn”?

One is not necessarily better than the other, and your preference will likely depend on your objectives for the home.

For example, if this is a short-term investment property on which you are looking to maximize the annual income and depreciate the value for tax purposes, you may prefer a manager who will keep your home filled to maximum occupancy.

On the other hand, if this is a long term investment or even where you plan to retire, you will likely want to find someone very different.

7. Is this manager someone I can trust?

Finally, it is important to remember that this is still a relationship business, and none of the above six factors really matter if you do not like or trust the manager.

Get to know your potential Airbnb manager. Skype if you’re home is far away, or try to even meet in person.

Ideally, your relationship with your property manager will be one you retain for years to come.

We also have a free tool on our site for owners to find local vacation rental and Airbnb property managers in the area if you want to try it by clicking the link in my signature.  You can also direct message or call me as well. Cheers.