Are out of state property managers worth it?

[Patrick F.]

Hi all, I'm coming close to buying my first rental as an out of state STR. I have been in contact with a local property manager who charges 18% to manage the listings on their accounts (Airbnb, Vrbo, etc), take care of cleanings, help with stockings, set the prices, and really just let me collect a paycheck every month. Given that this is my first rental (and the nerves are there), this seems like a nice convenience for peace of mind.

However I was crunching some numbers and it looks like self managing could almost double my cash flow. I’m a little worried about finding cleaners and handling stocking of household items. I also worry that having a new Airbnb/Vrbo account could lead to review-volatility as opposed to using a PM’s established account.

Anyone have advice on the above? Any tips on finding out of state cleaners & stockers? (especially in South Bend!) Any suggestions for PM softwares like Guesty, etc? Thank you!

[Avery Carl]

There is NO such thing as passive income, even with a property manager. I have 8 self managed STRs and 200 something LTRs with managers. What I have learned from investing over the better part of a decade is that there is no scenario where you can buy something and then lay on the couch the rest of your life and throw your phone in the trash. You're still going to have to answer when the property manager inevitably calls because you as the owner need to make a decision. Our LTR manager called yesterday bc someone worte the F word with a stick in the fresh sidewalk concrete we put in.

There is a time and place for managers in STR. If you're in scale/growth mode, that is not the time. That being said, I don't know if "doubling" the cash flow is accurate. But it can be the difference between cash flowing and breaking even depending on the deal. You have to decide if answering a few messages and calling a handyman a time or two a month is worth the 18%. When I first started I was happy to answer the "I can't work the remote" message to keep that extra 10k, because I had plans for it. Now, with more properties, what used to be 10k in savings each year is enough for the down payment on an apartment building. So you have to decide which is more important to you at this stage in your life: scaling or being mildly annoyed when a guest can't figure something out and messages you while you're at the movie theater.

And there's no wrong answer to that, by the way.