Pros and Cons of STR Property Managers

[Braedon Page]

Hey all,

I am the cofounder of a new property management group on Oahu. As I start this venture, I want to avoid the mistakes of other PM's and learn from those who provide and excellent service to their clients. I know that many in the bigger pockets community are more the DIY type and self-manage, but for those of you who have used property managers for your short term rentals, what have been the pros and cons of your experience? The general sentiment toward STR PM's seems to be a bit negative, but there are still a lot of management companies and for a good chunk of STR owners there seems to be a need for management services.

Those who have great PM's - what makes them great? How did you find them? What do they do better than others?

Those with negative PM experiences - what happened? What would you recommend to my team and I as we start out to avoid those same mistakes?

[Collin Hays]

With my first rental, I had a PM. But they were awful. Constant housekeeping complaints, bookkeeping errors, them using my property for their personal gain without me knowing it, charging outrageous "fees" that they didn't share with me, which effectively lowered my rents, and questionable repairs and maintenance expenses and quality.  I used them for two years before embarking on self-managing.  I started a PM from chance; a couple of owners next to me asked me to manage their cabins, and things developed from there.

Anywho...

A good PM is going to take care of every single detail, with minimum intervention from the homeowner.  A good PM will also make as much or more money, net to the homeowner, than (s)he would on their own.  So if it's a break-even scenario, why hire a PM?  It's all in the value of the owner's time. To earn good money self-managing, the owner has to stay on top of things.  Inquiries, expedient responses for assistance, repairs, and maintenance, frequent rate/yield analysis, etc.  A good PM takes care of all of this. Most folks unhappy with PMs are co-managing their rental with the PM.  That never works. 

In 2020 and for about 3 years thereafter, self-managing was a cinch, because you could do a really poor job and still be flooded with business. That's when the DIY craze took off, folks started writing books, and it was the land of milk and honey.  

Today, we've returned to reality, which is, you've got to work vacation rentals for them to really pay off.  I am absolutely a proponent of self-management, but only if you have TIE.  Time, Interest, and Energy.  If you don't have TIE, and all of TIE, then you are leaving a lot of money on the table by not hiring a PM.  

Not all PMs are created the same. We are a "boutique" PM. We manage 30-40 and leave it at that. I believe Andrew Steffin's operation is similar, perhaps slightly larger. We've got 3 FTEs, and cabin management is their only job, 365/24/7.  And to give you some context on how "rich" the PMs are getting, in case you are wondering for your own PM business, the margins in this business are incredibly slim: We had about $1.3 million in rental revenues last year, and yours truly bagged all of $32K.  Of course, I don't pay for the company to manage my own places, otherwise I wouldn't be in this business. 

Sorry for my Saturday night soap box; I'm not sure if it answered your question.