Using Property Management Companies

[Tony K.]

As one of our initial investments, we want to buy a vacation home (probably a condo, maybe a house) in Galveston, Texas. We live a couple hours away so could theoretically use this to vacation ouselves when it's not rented (although we are more interested in having a good investment, knowing we could use our profits to stay in a nicer place if desired). There's lots of foreclosures there now, so we expect to be able to get a pretty good deal.

We're trying to look at numbers and come up with a plan before we start looking at places. It seems like we would really need to use a property management company - first, cause they do a good job down there. Second, we would likely draw more tenants through them. Third, we're too far away to be dealing with day-to-day issues, like leaving a key for a renter.

From what we've been told, the companies charge 25-30% of collections.

Does this sound right? Are we missing something here? Or do we need to be accounting for this type of expense in our plan?

And, what other expenses do you have if you are using a PM company? HOA and insurance, I would think. Anything else?

[Rich Weese]

I have a couple items to input here.

I'm looking at a home in Kauai. The market has been beaten up and there are even a couple short sales. The rental market seems to still be very high. Most mgmt companies charge 25%. I'm not sure you need one.

I've owned vacation condos in Cancun for over 30 years and NEVER had a mgmt company sucking the rental % out of me. I have a maid that does the cleaning when needed and a handyman that does everything else. I came down to inspect and determine what needs to be changed out- toilets, a'c's, cooktops, etc.
I advertise on several large search engines like VRBO. I get all the inquiries I need from there and repeat business.

Now the dilemma- if I buy in Kauai, do I want to skip the mgmt and try for maid and handyman as in Cancun? I have a longtime friend in Kauai that would probably help in an emergency.

FamilyK- being only a couple hours away, you could probably oversee this yourself if you have that interest, and save a large part of the %.

So, there are 2 different thoughts. I've never been sorry about not sharing 25% with someone for doing what is pretty easy. A phone and computer goes a long way to running a vacation rental business. Good Luck. Rich