To self-manage or not to self-manage; this will be your first big decision as a property owner. Enlisting the help of a property management company can save you considerable time and worry. They deal with all aspects of renting, including greeting the guests, kicking them out (if necessary), repairs, cleaning, etc. In the event of an emergency, they can be minutes away. This service comes with a price, which is typically 10 to 20 percent of the gross rental income, sometimes higher; and that can deplete your mortgage paying cash flow. They do offer various packages where you can select to pay only for certain services.
If you don't have the time to handle the issues that will inevitably arise, or the ability to arrange sudden trips to deal with unexpected problems, then the peace of mind gained from using a property management company may be for you. You'll need to consider the following information when making your decision.
Protect your investment: An effective property owner protects their investment. This means you need to take responsibility and be involved in every aspect of the rental.
Keep your receipts: This is a business, after all; keep all your receipts associated with the trip and the purchase. Meet with your accountant to discuss your tax strategy.
Educate yourself: Learn about the Fair Housing Laws in the district of your rental; a violation of the rules could result in a fine as high as $25,000.
It is a rental, after all: Don't get too personal with your rental; your favorite colors may not be as well received by the average tenant. You may need to tone down your decorating style.
Read a book: There are numerous books written on the subject of managing vacation rentals, such as How to Rent Vacation Properties by Owner: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment, by Christine Hrib Karpinski. She discusses how you can cut out the middleman and be successful at self-management.
Be prepared: Make certain you set aside a nest egg in the event of sudden repairs or a season of low rentals. As Karpinski mentions in her book, aim for the magic "17 weeks". You can break even on the cost of your property, if your monthly mortgage payment is no more than one peak week rental and you are able to rent about 17 weeks per year. There are about 12 peak weeks in a rental year, and if you can rent these 12 weeks; the revenue will pay your mortgage for one year. If you have five additional off-week rentals; you will be able to cover additional costs such as phone, power, cable and condo fees.
Keep it Personal: Apart from the financial savings, cutting out the property manager allows you to remain closer to the renter. By making the effort to speak to each renter; you get the opportunity to create a personal relationship with them. Suddenly, they aren't renting a unit from a nameless landlord, and this condo becomes someone's home that they have a responsibility to look after. This simple action goes a long way to alleviate unnecessary damage as well as increasing the possibility of a repeat customer.
Can I bring Fido?: Vacation properties that accept pets increase their occupancy by 10 to 50 percent, and it also provides an additional method of beefing up your rentals during the off-seasons. Although pets do increase cleaning costs, it is customary to charge an additional $20-$25/night, which would easily cover the cost of having the carpet cleaned when they leave.
Look for shortcuts: Signing on with a property management company may give you peace of mind, but you don't need to use them for all your services. Find out where you can cut corners, such as hiring your own cleaning help. During the next visit to your rental, Karpinski suggests speaking to some of the maids cleaning nearby rooms; perhaps they add your unit to their cleaning schedule.
