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Should you use a short term rental management company?

Updated: Apr 12, 2023

How airbnb management companies work and potential benefits of using them.

Perhaps you’ve just bought your first rental property. Or maybe you’ve built up a hefty supply of properties and are looking to add more to your portfolio. You’re considering how to maximize your ROI and think having an Airbnb or VRBO could seriously improve your cash flow from these properties. Seems simple enough, right? Just throw your rental property on a booking platform and let the dollars roll in.

Not so fast. There are a host of things (no pun intended) property owners need to keep in mind before diving into the world of vacation rentals.

Two daunting enemies await: time and hassle. First and foremost, time is money, and having to manually upkeep and run a short term rental property is no small feat. From communicating with guests, to managing your booking calendar, to scheduling (or manually doing) maintenance when something breaks, there’s seemingly always something needing your attention.

Many initially try to run airbnbs themselves and quickly realize the hassle it takes. Who wants to take the 2 a.m. phone call to go fix your guest’s toilet? Who wants to deal with accounting, bookkeeping, or ensuring your units are compliant with city regulations?

Hiring a property management company is like going to a fancy hotel and getting room service. You get to enjoy the full perks of the hotel because someone else is preparing the food, bringing it up to you, and waiting on hand and foot for you. Not hiring a short term rental company is like going to a budget hotel, fixing the leaky shower yourself, and having to cook all your meals because you don’t trust the downstairs cafeteria.

As the name implies, it’s full-service management dedicated to helping the ship run smoothly and making you money with your investment property. In return, a percentage of your monthly revenue (often ranging from 15-40%) is given to the property management company. Think of this like the tip you’d give your room service attendant.

But maybe you’re still not convinced. You’ve already invested enough money as it is…why not just DIY it and save a few bucks?

While some will ultimately opt to do that, the time saved, energy conserved, and stress reduced could be more than worth it. Beyond that, you could actually make more money by using an experienced property manager, thus offsetting the costs to use them in the first place.

Here are a few benefits to consider if you’re on the fence about using a short term rental manager.

Advantages of using property management services

As we mentioned earlier, the time savings of using a property management company are huge – especially if you own more than one rental property. Imagine the time savings if you were to hand off the following areas:

Listing Curation and Optimization: Many property management companies optimize your listing on numerous sites, such as Airbnb, HomeAway, and VRBO. They ensure your rental property is optimized for maximum exposure and bookings.

Check-in, Safety and Guest Communications: A management company will handle guest screening and guest communications, including answering inquiries, giving directions for check-in, and resolving any problems that may occur while a guest is there. You won't have to answer visitor calls and emails or deal with any unforeseen issues, saving you time and headache. Guest communication is one of the most crucial areas for getting a good review, as a confused, unattended to guest is an unhappy guest.

Housekeeping and Upkeep: The company will also take care of cleaning, restocking supplies, and taking care of any repairs or maintenance concerns for your property. You won't need to manually supervise these duties or communicate with cleaners, maintenance techs, or utility companies. Your Airbnb will most likely be scrutinized on cleanliness, so having reliable and professional cleaning services is key. A cheesy decor item won’t lead to a one star review, but a disgusting bathroom just might. Moreover, having reliable housekeeping means quicker turnover and more days able to be booked out.

Revenue Management: Based on market demand, seasonal patterns, and other variables, a short term rental manager can assist you in maximizing your rental prices. You don’t constantly have to refresh, monitor, evaluate, or modify your rental prices. On the accounting side, the company can help manage your profits and losses and send it to you in a tidy owner’s statement every month.

Regulatory Compliance: Every city and state has different laws when it comes to short term rentals. For example, San Francisco may have different regulations than San Diego or Orange County, despite all three areas being in the same state. The rules can vary quite drastically even if the two cities are close together and seemingly would have similar laws. You can face hefty fines or reprimands for not complying with these rules, so the property manager does due diligence to ensure your listings are in total compliance.

Cost structures of property management companies

So, what’s this gonna cost me? Valid question. Every short term vacation rental property management company is different in how they set up their pricing structures, but most commonly you’ll see commission-based or a monthly fee.

Commission-based pricing models: In a commission-based arrangement, the management company takes a percentage of the rental revenue every month, ranging from 10%-40% depending on how extensive and comprehensive the services.

For example, a short term rental business like Evolve charges 10% but only handles the bare minimum, like property marketing, dynamic pricing, guest communication, etc. More hands-on services like cleaning, restocking, or furnishing the property are not included. On the flip side, you may sacrifice your share to go with a 40-50% commission fee, but in return receive white-glove services that handle everything from top to bottom. You’ll see more premium services like free restocking or free maintenance in a higher percentage package.

Pro: The management company is incentivized to make you more money. When your listing does well, so too does the property manager taking the cut. If they were only taking a fixed-rate every month, they may not be as motivated to optimize rental rates, occupancy, guest experience, and beyond.

Con: Some short term rental property management companies that are rigid in their pricing models and the services they provide don’t justify the cost. More often than not, this is the exception and not the rule.

Flat-fee pricing models: On the flip side, this pricing model is more predictable from the get-go. The management company charges a flat fee that stays the same for however long the contract stipulates. It’s less common that you’ll see a property manager operate with this structure, but there are still some out there.

Pro: You can easily budget that the company will cost, say, $500 per month. You’re able to predict your yearly expenses on management (which in this case would be $6,000 per year.)

Con: As mentioned before, some companies may feel less motivated to maximize the property’s ROI. Aside from making you, the customer, and local staff happy, they may not have as many financial incentives. Or they may wish they’d had a commission based structure if Property A is grossing three times Property B but both have the same management fee.

Qualities to look for in a property management company

Experience and reputation: Though this is the first one on the list, it isn’t necessarily the most important, as there are many newer, innovative companies crushing it in the Airbnb management world. However, it is important to do your homework and make sure whatever company you go with knows what they’re doing. What are their reviews? What do other clients say about them? Make sure to ask lots of questions and probe both their knowledge and experience with short term rentals.

Availability and communication: It would be ironic if a company claims to help you manage communication with guests, but yet doesn’t communicate with you. You want to have a reliable line of communication with your property manager and be able to contact them for any reason and (within reason) at any time. A bigger property management company may have more employees, but said employees might be handling a huge swath of clients. On the flip side, a newer, smaller company may have less employees to address issues but could provide more intentional, hands-on, local service.

Technology and innovation: A company can have a general understanding of Airbnb, VRBO, and beyond, but are they keeping your listing active and competitive by leveraging pricing tools, market data, or the Airbnb algorithm? A savvy short term rental manager will continually be in the know about Airbnb updates, new technologies, and dynamic pricing strategies to ultimately make you, the owner, more money.

Flexibility and customization: No one likes feeling trapped, yet that’s often the norm with other service providers: our cable company, our car loan, our streaming service…the list goes on. Some property managers make it easy to opt out of your contract, while others may want to lock you in for a certain period of time. Given how much the market and your needs may fluctuate, having a company that’s willing to be flexible and tailored to your goals is crucial.

Regulatory compliance: Last, but most certainly not least, a vacation rental management company makes sure you’re in compliance with the local rental rules. Like we said before, every area carries different rules and regulations. You don’t want to get stuck with legal fees, fines, or reports from neighbors. Beyond that, many platforms will penalize you if you list with them but are not in compliance.

How Stay Flourish goes above and beyond as an airbnb management service

There are a wide range of airbnb property management companies out there, and there’s a sense of kinship, not competition, when it comes to vacation rental management companies. When the Airbnb space as a whole succeeds, everyone benefits. That being said, we at Stay Flourish believe we distinguish ourselves from the crowd.

Here are some key differentiators:

We charge less management fees. Our most popular package, the Starter, is currently commission based 25% (a discount from the normal rate of 30%), and our most affordable package, the Basic, is currently 15%. We’re open to your specific situation and are willing to negotiate pricing.

We use technology to make you more money. We use an array of dynamic pricing strategies to determine nightly rates, as well as our own dynamic pricing algorithm, SPARK, to pull all available short-term rental data. Our team develops unique price strategies for each individual property to maximize ARPAR (Adjusted Revenue per Available Room). After that, SPARK monitors your airbnb listing and makes adjustments to give you the highest ROI. The pricing algorithm pulls real time data on local demand, and instantly changes the pricing to capture peak revenue. It also adjusts for holidays, peak travel, and seasonal variations.

Our company specializes in the airbnb algorithm and optimize your airbnb listing accordingly. Airbnb actively hides listings that are not optimized correctly. We study the Airbnb algorithm to make sure your rental property is continually updated and ranks higher. We are specialists in SEO listing optimization and will do a full audit of your listing before it goes live. We use professional photography on our listings so they're aesthetically appealing. If someone only has a few minutes to choose where they're going to stay, they're likely to go with the place that looks the nicest.

We have an experienced, dedicated team that genuinely cares. So many companies make the claim that they care about you, the customer, but don’t put their money where their mouth is. We genuinely care about you and treat your rental property like it’s one of our own. Our team is composed of experienced, dedicated real estate investors who set out to help others minimize stress and maximize ROI.

We ensure cleaner scheduling is reliable, whether you’re local or far away. Like we talked about earlier in this blog, a cleaner no-show is not good for business. Even one lost night can be a major hit to your revenue projections. If you are a local client in the Greater Seattle area, we have a team of in-house cleaners ready to clean your unit(s) with professionalism and efficiency. If you’re far away, we partner with trusted, reliable cleaning partners and coordinate seamless scheduling.

We confirm your listing is compliant with local regulations. You won't be hit with any surprise fines or fees on our watch. Before signing a contract, we send each owner a comprehensive list of what they need to do to be regulatory compliant in their specific city.

We offer insurance resources and advising. The last thing you want is someone trashing your unit and having to foot the bill. Luckily most situations are covered with AirCover if you're on Airbnb -- but there are some unique insurance areas to be aware of. We help educate you on damage coverage, liability insurance, and the ever-important errors & omissions policy. This can help protect you from unwanted lawsuits or legal issues.

We provide flexible, understandable contracts for peace of mind. Oftentimes a Terms & Conditions contract looks like a daunting list of clauses that absolve the company of any wrongdoing. That’s not the case with us. We set clear expectations that are fair and attainable for both parties. Our contracts are flexible and can easily be opted out if you decide to go a different direction.

We offer in-house property maintenance through our construction company. Another unique aspect about Stay Flourish is we own a sister company called Flourish Build. We have discounted access to them, allowing us to helping you save money on maintenance and remodeling services. This can be a game changer, as many short term rentals can improve their occupancy and ROI if they add square footage, updated decor, or remodeled living areas.

We believe it’s crucial for property managers to have a reliable property management company if they plan on venturing into the world of Airbnb or vacation rentals in general. We know firsthand how frustrating it can be to be the sole party responsible for a guest’s happiness. If you’re interested in learning more about Stay Flourish's airbnb management services, give us a call at 206-486-6642, or schedule a free consultation here.

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