Introduction

Are you thinking it’s time to hand over the management of your short-term rental to a vacation rental property management professionals? Perhaps you are considering an Airbnb property investment and are wondering who will manage it for you, or maybe you have already been hosting for a while and have found human interaction is not for you.

Vacation rental property management services allow you to earn hosting revenues from your Airbnb or vacation rental property without having to deal with the day-to-day management of the property.

The benefits of using a vacation rental property manager are numerous, with many offering 24/7 availability to both property owners and guests, cleaning, property maintenance, and the promise of keeping your calendar full of bookings. Employing the right property manager can lead to a higher average occupancy rate and higher average nightly prices for your Airbnb.

However, all of this comes at a cost. Airbnb and vacation rental property managers charge sometimes substantial fees for their services, with managers often charging anything between 20-50% of your hosting revenues.

So is it worth it? Or are you better off managing the property yourself, or perhaps having a friend do it? With the wide variety of vacation rental property management software available to hosts, even when on a budget, the amount of time required to be a successful host is falling. With that in mind, can short-term rental property managers be worth the fee?

At JazzMyPad we think the answer is, of course, that it depends. If you find the right property management company, you probably won’t regret it. But what does the “right” short-term rental property management company look like?

What To Look For When Choosing A Vacation Rental Property Management Company

Experience

• How much experience does the company have in managing short-term rentals? Are they relatively new to the business, or do they have years of experience with a number of satisfied clients? If you can ask to speak to some of their clients to find out if they would recommend the company’s services, then make sure you do so.
• Is the company a dedicated short-term rental property manager, or do they also manage long-term rentals? We prefer dedicated short-term rental property managers as they tend to give better results, probably because they better understand the differences and intricacies involved in running a short-term rental business.
• How much experience do they have managing in your specific market? How many listings do they manage in your market? Short-term rental markets vary hugely by geography – every market has different seasonality, different events, and different types of guests looking for different kinds of experiences.
• Do they have a history of compliance with local short-term rental regulations and taxes? We’re looking for property managers who have a track record of playing by the rules, and who definitely won’t book guests who will result in noise complaints, unauthorized gatherings or any other issues that will cause you, the owner, trouble.

Fees

• What is the company’s fee structure? Do they charge commissions on hosting revenues? Or do they operate a fixed-fee model? In general commission fee structures are preferable, as that aligns the property manager’s incentives with yours – they will make more money if they get your listing more bookings, which means more money for you too.
• What is their fee? Fixed-fee rates vary widely by market, but with commission models you should expect to pay anywhere between 20-50% of your host revenues. Some services will also charge you an initial setup fee when you sign a contract with them. Other potential fees can include a fee for each new guest they place in your property, and sometimes even fees while the property is empty (vacancy fees).
• What is included in the fee? Typically the biggest additional fee to cover is cleaning costs, which sometimes is included in the management fee, but is mostly treated as a separate cost. Be sure to ask if the cleaning is provided by an external service, or if it’s done in-house by the property manager. You should check the quoted cleaning fees vs. other providers in the area to see if the property manager is giving you a fair price.
• Does the property manager cover minor repairs and maintenance of the property? Is this provided by an in-house service or an external provider? What incidental expenses will you be expected to cover if (or rather when) a guest breaks something that is expensive to repair? It’s often worth discussing your vacation rental insurance policy at this point, if you have one.

Cancellation Options

• How easy is it to cancel your contract with the property manager? Imagine a scenario in which, despite your best screening efforts, you aren’t happy with the management of your vacation rental. Are you contractually committed to a fixed term agreement, or do you have optionality in the contract? If possible, try and insert a clause that requires a minimum occupancy rate or minimum amount of host revenue that you would be happy with. That way, if you aren’t happy with the results, you can get out of the contract easily.

A Checklist For The Perfect Vacation Rental Property Management Contract

If you’ve decided that you don’t want to handle your own Airbnb management and feel ready to hire a property manager for your short-term rental, the next step is securing the perfect property management contract.

The resources available to property managers allow them to handle all aspects of rental properties: everything from guest bookings to payment and rent collection. When you partner with a reputable property manager, you’ll be able to sit back, relax, and reap (most of) the rewards of renting out your property with none of the hassles.

Deciding on who will manage the property you’ve invested so much time and money into is not a decision to take lightly. There’s nothing worse than hiring a property manager and handing over control, only to discover that the terms and conditions set by the company don’t meet your expectations. So, to ensure you make the right choice, here’s the checklist for the perfect property manager contract.

Always Read A Vacation Rental Property Management Contract Thoroughly

Before signing anything, you should always read the specifics of your property manager’s contract. Not only that, it is important to actually understand what you’re reading. If you don’t, feel free to ask questions. And if you don’t completely agree with something, ask if the terms are negotiable and if compromises can be made before considering another company.

The most common mistake for a property owner about to hire a property manager is treating the contract as a formality. You’re not agreeing to an iTunes contract here. This is serious stuff, and it should be treated as such. The contract agreement includes what is provided and what’s not, so it must be taken seriously. The specific terms of this agreement could determine the overall success of your rental property.

Ask Them What Their Expectations For Your Property Are

It’s always a good idea when considering a property manager to ask them what kind of expectations they have for your property. What pricing strategy do they think will work best? What kind of occupancy rate and revenues do they think are attainable? Before asking this it’s a good idea to get an estimate of your Airbnb’s potential earnings so that can benchmark their response.

Must-Haves For Your Vacation Rental Property Management Contract

Before reading the official contract, it is crucial to understand the essentials of all rental agreements between the property owner and management company. For example, one essential of any management contract is the inclusion of specific responsibilities of the property owner.

In other words, what is the property management company responsible for, and what remains in the hands of the owner? Here are a few more essential aspects of any solid property manager’s contract:

• Complete list of services and fees
• Liability terms and conditions
• The specific duration of the contract
• A clear termination clause

Services & Fees

Every property management agreement should start with a comprehensive list of the services provided as well as the fees associated with those services. This is important for both owners and management companies in order for both parties to understand their roles in managing the property.

Think long and hard about the services you’re looking for. This depends on a few things, like whether this property is for reliable long-term tenants or successful short-term rentals. Many property managers will listen to your specific property-related goals and help you develop a plan based on them.

Most property managers will provide a list of the specific services they provide and a fixed management fee, usually in the form of a percentage. If there is a service that you’d like included, you can typically add it to your contract for an additional fee (either a fixed fee or an increase in the percentage).

Most of the problems that arise between property owners and managers have to do with an unclear ‘Services and Fees’ section. These issues can easily be avoided, though, as long as both parties involved understand what is expected of them.

Responsibilities Of The Property Owner

In addition to the services provided by the property management company, there should also be a section designated as ‘Responsibilities of the Property Owner’ within your contract. This gives you a clear picture of your own duties, like whether you are in charge of collecting rent or finding long-term tenants. When you sign the contract, you are agreeing to perform these duties.

Liability Insurance

Nowadays you won’t find a property manager’s contract without a section on liability insurance, also called the hold harmless clause. This section is meant to protect the property manager and not hold them liable for property damages (unless of course negligence is involved).

Property owners don’t necessarily love the inclusion of the liability clause, but it makes sense for property managers to have one. It doesn’t matter if you rent out your property on VRBO, Airbnb, or you have long-term tenants, there is always a risk of property damage. Even if your rental property caters to seniors who are quiet and respectful, things happen. For this reason, property managers will always try to protect themselves.

Reasonable Care Clause

As a property owner, there is a way to protect yourself within the liability section of a contract. A ‘Reasonable Care Clause’ states that a property manager must take “reasonable care” when hiring a third-party. In other words, if damage occurs because your manager did not take the proper measures in hiring a repairman or contractor, the manager will be held accountable.

Contract Duration

Another essential aspect of any contract is understanding the amount of time you’ll be bound to the property manager. Many property managers require you to commit for an entire year unless the contract terms are broken by the property manager. You might be able to participate in a trial run before committing to a full year, but this is not common.

Termination Conditions

Just because you have a “contract duration” does not mean you are 100% bound to a property manager no matter what. Every solid property manager’s contract will include a termination clause, also called a cancellation clause. This basically states that both the property owner and manager have the right to terminate a property management contract in certain events.

For example, if the manager fails to perform all of the services listed in the contract, you’ll most likely be able to terminate the service altogether. In most cases, though, you must give between 30 days and 90 days of notice before termination is completed. If you can, try to find a management company that allows you to end your contract without penalties or fees.

As long as you follow this checklist before signing a contract, you should have minimal issues with fostering a conducive partnership between host and property manager.

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