All Forum Posts by: Ryan Rabideau

I would add as well what additional charges exist that are not covered by the management fee both to the guest and to the owner. A booking fee and fees in general are fine as long as they are value add. Fees are generally inelastic so managers will add tact them on so its good to make sure they add value to the guest. 

For example: 

A booking fee to cover CX/CC/Supplies/Refunds/Charge backs etc is reasonable those would add up to ~6%. If this covers other services it could be higher. 

A cleaning fee to cover labor/supplies/hiring/training/overhead/benefits etc is fair. Dont think in your head 2 hours to clean times $10 and anything above is highway robbery. People need to make a living, get treated with dignity and is a tough hiring environment with additional costs for PPE. 

Another good question to ask is OTA fees, who pays. If your quoting 20% and Booking/Expedia are 15 - 18% for example whos paying that it has to come from somewhere. 

All in all a lot goes into a management fee, is it all inclusive if not what else will there be. Aiming for the lowest cost manager may end up with surprise fees or real basic level of service. You want to be with a manager that isnt living pay check to pay check and can invest in the future but not one that is taking the lions share of the total take. 

@CP Chou 

Totally agree with the Airbnb versus Homeaway, we still see Homeaway/VRBO dominating many markets compared to Airbnb. It is best to have multi channel distribution to gain access to different types of guests. Booking.com is also especially popular to European travelers so depending on how heavy that is in your market or how hotel like your property is that is also a great channel to have. 

Best,

Rayn

I would agree. Generally you shouldn't make blanket statements--except for this one. 

Short Term rentals can offer great cap rates if you are willing to put some work in and get creative. Often what does not work in the long term market can be great for the short term as long as the amenities and occupancy is right, for example that den can be converted into a bedroom or shoving more bunk beds into weird spaces, adding games, looking at what the market lacks and add etc. Keep an eye on what is rare in the market are 10+ people houses rare, are pets rare etc etc and target adding those amenities. 

I would caution that looking at name brand markets can push cap rates down but being close enough to them can help, ie everyone wants a Park City home this can drive negative cap rates be being near enough to capture some of that demand might help on price. 

AirDNA is a great resources though when it comes down to it finding your own comps by hand and evaluating their performance would be the best bet as no two vacation rentals are created equal. 

I would recommend keeping an eye out for HOAs, these can come with restrictions, extra hurdles when it comes to guest process or could add new restrictions/create fines etc. However being right next to the HOA with out all the restrictions can help shift demand to you.

As far as taxes guests booking often pay those so if they are deciding to go to LBJ they should be paying. Check with an accountant but there are some things your can deduct for a short term rental. 

As far as first purchase goes, if he can earn a positive cap rate and get some free family vacations out of it might not be bad!

-Ryan 

@James Wilson

Ive used CBIZ and Proper before for leasing as they satisfy renters insurance and STR. We also use Assurant as that can offer a daily insurance rate, sometimes the numbers work better that way if you dont want to shell out a few hundred bucks or a grand. Vacasa has Assurant Daily Insurance built in so anytime they rent it they can buy the insurance too. 

Best,

Ryan Rabideau 

Hey Brandon,

You might want to check what resources VRMA (Vacation Rental Management Association) might have to offer, it is a collection of management companies so they may be able to give you best practices or recommendations. 

Best,

Ryan R

@Kristy Farmer,

Im an analyst for Vacasa we have a pretty large presence on the island. It might be a good idea to wait till the off season to pick up some properties when they are not so cash rich from summer reservations and you have time to get the home ready for the next booking window.  Im evaluating early ski season markets right now or fall heavy places. If your interested in the island specifically shoot me a message I can put you in contact with our general manager down there who can work with you can help with projections for places your looking at. 

Hello @Kristy Farmer, I would recommend you talk to your mortgage person. I have heard they do to an extent but not at 100% face value. Are you searching in Galveston or another specific market?

Correct when property is scarce prices go up but so does nightly rates. And regardless of luxury class your always selling nights, nights expire and change in value as lead time diminishes. You can look at selling experiences but the unit of measure are still nights that expire. The closer you are to a date the less time you have to sell it. 

With high end luxury properties does come with some higher operating costs sure but your nightly rate is higher and you can start to even out on the expense ratio or drive it down due to selling intangible factors such as luxury. Its hard for people to put a price on experiences sure and thats where photos, content and the mushy feelings come in to play. At the end of the day though you are still selling nights. 

I would not call preferred check in and out times to be concessions but rather part of ancillary fees or up selling opportunities. If the home is clean it doesn't cost you anything to add early check in but the guest values that more so you can place an additional fee on that. I would caution on providing too many discounts on revenue you would of earned otherwise earned. Do you need to provide a returning guest discount for July 4th? Or should you instead increase your discounts for October mid week days. 

HA argues that their service fee is to help with the regulatory stuff they do as well but realistically it comes to the home owners and local support. My firm sends our people to be part of these conversations anytime something arises with the facts. STRs often get turned into the scapegoat for larger systemic issues that are not entirely related. Stay ahead and apart of the conversations but have a back up plan just in case there is not a grandfather clause. 

David,

The economics won't change, some of the cost will be borne by the consumers while some will likely result in slightly reduced rates--the deadweight loss will be marginal (lost demand). Adding marginal fees won't fundamentally destroy demand which is increasing as part of a larger trend. While this move is Expedia pushing HA to be more like Airbnb they are only one player and anytime a giant stumbles other newer options become available. This only makes having good channel distribution ever more important. I would recommend taking this time to evaluate your rates against the competition to make sure you are competitively priced and keep an eye on the comps if they are reducing rates, you may also start to see your channel attribution shift. 

VRs can offer good yields in less than fantastic LTR markets as there are less bidders and institutional money driving up prices. VR investing does not have a lot of big money behind it which is why it still offers some good yields. I always recommend checking the VR comps (check calendars, rate sophistication, review counts and listing population) and checking the LTR rentals around. Some markets its actually profitable to rent from the LTR and list as a VR. Long story short it depends on the market and the property, every property is unique. 

The subscription alone is not what keeps you ranked up top so that is one thing to keep in mind. Updated calendar, quotable rates, photo count and size, reviews, response time, conversion and tier level all play a part. The new paid per booking ads will receive some preferential treatment due to more revenue going to HA as well some it is more important than ever to build an optimized ad if you are looking to keep a larger portion of the revenue.