The Rise of Third Party Booking Platforms!
Since I started in the short-term rental industry back in 2004, I’ve witnessed a significant shift in how vacationers book their stays. The days of simply calling a local real estate company to reserve a unit seem like a distant memory. Instead, many people now rely on third-party websites that charge exorbitant fees to both vacationers and property owners. While these sites offer convenience in terms of a centralized search platform, they often come at the cost of increased expenses and communication challenges.
Gone are the times when vacationers would browse a local real estate company’s website to find and book their ideal rental. Today, third-party booking platforms dominate the market, promising convenience and access to a wide range of properties. However, the downside is the hefty fees that both guests and property owners have to bear. Despite these costs, vacationers are drawn to these platforms because they provide a one-stop-shop experience, saving them time and effort.
One major drawback of relying solely on third-party booking sites is the lack of direct communication between guests and property managers. Vacationers often have no idea who they are actually renting from, making it challenging to obtain essential information such as property access and check-in instructions. Consequently, they may mistakenly refer to the third-party site as their rental company, leading to confusion and misinformation.
The reliance on third-party sites not only hampers effective communication between guests and property managers but also creates delays in vital document exchanges. These platforms are notorious for their sluggish messaging systems, causing messages to be received hours or even days after they were sent. This delay not only frustrates property managers but also leaves guests feeling ignored, despite the best efforts of property management companies to establish efficient lines of communication.
It’s time for a reevaluation of our approach to short-term rentals. By returning to the basics of directly contacting real companies and individuals, we can save ourselves from unnecessary hassle, frustration, and financial burdens. By picking up the phone or visiting company websites, guests can establish a personal connection with the property management team and enjoy a more personalized booking experience. Moreover, this approach streamlines communication, ensuring that vital documents and messages are promptly received and attended to.
As the short-term rental industry continues to evolve, it’s essential to reflect on the changes that have occurred since the early days. While third-party booking platforms offer convenience, they often come at a high cost and hinder effective communication. By embracing direct contact with real companies and individuals, both guests and property owners can reap the benefits of improved communication, cost savings, and a more personalized booking experience. It’s time to return to the basics and prioritize a more efficient and rewarding short-term rental experience for all parties involved.
End of Season
Labor Day weekend is here and the locals season has officially begun! It’s time to take a deep breath, enjoy a few days of down time and get right back to work! After all, there is only 266 days until Memorial Day & there is a lot of work to do! For those of us in the STR industry, it’s time to regroup & fix the issues from the following year. For owners, it’s time to think about if you are going to stay with your current management company or are you going to cut your loses and move on? If you really want to move on, how are you going to know if the next company is any better? A majority of the companies have the same services, fee’s and even cleaners so WHAT could possibly be any different from your last company? COMMUNICATION would be the number one difference! I know for myself I spend a lot of time on the phone during the summer. By the time my day is over I really can’t talk to one more person so I pick and choose my battles. If an email will fix the problem or communicate in a way that I know will suffice, I send and email. If the issue is something that a phone call is more worthy then a phone call it is! Either way communication (or the lack of) is my number one pet peeve. People are trusting me to handle one of their largest assets and with that I have to be available when they need that peace of mind. With that being said, I do believe that owners also need to have boundaries. If you are so fortunate that your PM has giving you their cell phone, respect their “off time” and only call them during business hours unless it’s a dire emergency. Even in our “off time”, we are still dealing with maintenance calls, lock outs and renters that didn’t read their check in instructions and have no clue how to get in. We also have families that every once in a while we get some quality time with at night.
CLEANERS are next in line. When interviewing a new management company ask to see the reviews (or where to find them) for their cleaners. A bad cleaning company will absolutely destroy not only your properties reviews but the reputation of the management company. Cleaners are the most important part of a rental. When I hear people say “that is to much for a clean”, well it may be to much if the cleaners aren’t cleaning properly but if they are doing their job, it will be well worth it! Don’t under estimate the value of an excellent cleaning company. Also as an owner, GET A SPRING CLEAN! It helps the cleaners to be able to keep up during the summer and starts your season off nice and fresh. Once again, it’s worth your investment. One thing owners don’t realize, you don’t have to use the management companies cleaners. You can hire your own and pay them directly or you can get the management company to pay them. Like the management company, the cleaners have to been held accountable for their work. Yes, even the best fall short sometimes but if it becomes a habit, it’s time to fire them! The other thing I always recommend, don’t clean up after them, call the office or your cleaner and ask for someone to return immediately. You have that right if you don’t, the cleaners will still get paid for a job they didn’t do. Ask your cleaner or management company for a list of what a regular check out clean entices. Know the difference between a regular clean and spring.
OWN YOUR MISTAKES!! Yes, sometimes I just drop the ball. I may have fixed your maintenance issue but I totally forgot to communicate it with you. Perhaps I forgot to order a clean after an owner hold, YIKES! I will never say that me or my staff is perfect but what I will say is I strive for it. If I fall short, I will own that mistake and move on. The summer’s get hectic and sometimes all the notes in the world will still fail me but I can promise you, we will correct the issue immediately and move forward.
Honesty, integrity and trust is what it takes to have a successful rental property. The most important part of finding a property management company is one that you can trust. Ask the questions but also have a conversation. Get to know the people you are going to trust with your money and property. Sometimes the perfect fit isn’t about the fee’s or services it’s about the connection, trust and understanding. Your perfect management company is out there waiting for you BUT I can promise you asking someone on social media who they recommend isn’t the best way to find them. Do your own research and find the one that fits YOU & just maybe, it will be Karson’s Keys!
HAPPY “Locals” SEASON!
Knowing Your Market when Purchasing an Investment Property
Living and working in a beach area brings so many opportunities for a short term rental agent to share their knowledge when it comes to investors looking for their first property or even for a seasoned investors. The market is always changing in both sales and rentals. Rental/Sales agents are some of the most detailed, number crunching & critical thinking people you will meet in the industry. A great agent can tell you how much they think it will rent for, the estimated occupancy rate, what you would have to improve upon to bring top dollar & even the type of clients you could expect to have. Not all properties are great rental properties & you may not get the ROI that you want. For instance, did you know that in my area, large homes (those like in OBX) are not as popular and are actually harder to rent? Your first time investor thinks “the bigger the better ROI”. This isn’t the case. I can get it rented BUT it typically is for 3-4 nights (weekends) not 7 days. It’s also normally to groups (bachelor/bachelorette parties) & not families so there is more wear and tear on the property, cleaners & definitely the property managers! Did you also know that downtown is a great location for a rental but that many of the properties have limited parking? I like to tell my buyers that there is a lot of moving parts when looking for an investment property. The right agent will guide you on making a decisions that works for you and your needs.
Some markets and real estate offices do not allow their rental agents to sell properties, therefore, restricting the buyer on having all the details needed to make a sound & comfortable purchase. When this happens there are three things a buyer can do. 1) Find an agent who is both sales & rentals 2) Ask your sales agent if you can ask an in house rental agent for advice or if they could work together. Of course, this means that you would want to put your property in said companies rental division. Otherwise the rental agent would not get paid for any assistance they gave you. Remember, they only get paid for reservations & bookings. This is where a lot of folks take advantage of rental agents and their time which is why some won’t offer the advice or offer A LOT of advice. To their defense, more times than not, an agent will assist the buyer and give them plenty of free advice only to have them either sign with another company or decide to rent their property themselves. Please understand that if you come across a rental agent that has been in the business very long, they may not offer up too much help cause they have been burned one to many times. It’s a dog eat dog business! AND 3) You can higher a Vacation rental consultant. Yes they do exist and are worth the money. They can assist you with everything from purchasing your property, setting your property up online if you prefer to rent it yourself, what to prepare for if you decide to owner rent, how to find the right vendors, and if you prefer to let someone else handle all the stress, what to look for in a rental company. The fee’s will vary based on your need. If you would like more information on Vacation Consultants, you can email me @ kim.jones@era.com.
As you can see, vacation rental properties are very successful BUT how successful depends on knowledge. Like the old saying goes “knowledge is power”, in this case it’s MONEY or ROI! Know your market and more importantly, make sure your sales agent knows it! If not, spend a few dollars to be sure you are making the best decision!
Vacation Rentals & Commissions
It seems like when the word “commission” is mentioned in ANY conversation, people get all defensive. It is no different when it pertains to the vacation rental business. The most difficult thing to explain to a person is WHY you are charging the commission that you do! The standard vacation rental fee is 14% – 18% commission yet there are companies out there charging 30% & getting it all day long! So let’s break down what these commissions pay for and exactly how a short term property manager earns their “keep”.
The most important thing to a property manager is their software! It is the hub of our life and without it we can’t function properly. It is our lifeline between owners and renters. Everything we do and that happens is documented within this system! It is also our communication line with vacationers and owners! The price range of these systems start out as low as a few thousand dollars up to THOUSANDS OF DOLLARS. (20-30g). They can also charge a percentage of all reservations ALONG with a flat fee! Then you have the infamous processing fee that allows us to accept credit cards or other online payment systems. The average is between 3 & 5% with some companies charging both the company and the renter. Within this software is also a website that someone has to design & sync it to all marketing tools, make sure it allows direct online bookings, update it as needed and maintain it.
Did you know that VRBO, Airbnb and any of the other booking sites charge a fee for companies to advertise there? These fee’s vary on how many properties the company has but the prices range is from 5% per booking (and up) to 500.00 per property and up. Many of the large companies that have been around for many years don’t use these companies as a marketing tool. Smaller companies, on the other hand, need them to fill as many weeks as they can especially for NEW properties. (PPSSSTTTT…..if you are not an owner but are looking at some of our rentals FYI they also charge you a ton of fees, book direct!) Some properties may also have challenges in getting completely full or even booked which requires us to dig down deep and come up with some unique marketing tools. This may mean buying adds on social media or perhaps spending marketing money in some type of tourism directory or company. Marketing per property can easily cost a few thousand dollars before the first check ever comes in.
As you can see there is a lot that comes off the top of the commission & the agent themselves hasn’t even lifted one finger yet! You can easily assume that 6-8% of has already been claimed by the software and marketing and that’s being very gracious. So, let’s see what the remainder of the commission is used for and what exactly does the manager do. Since a GOOD/GREAT agent does so much, I am going to list their duties.
1. Put all new properties in software (this is a large task within itself as you have to be sure all pricing is correct, taxes, etc).
2. Price all units.
3. Either hire a pro photographer or take quality pictures for marketing.
4. Learn the property inside and out so they can answer any question that renters may have.
5. Make suggestions to owners on things to improve (one of the most difficult task).
6. Market property to all the online sites which means making sure the software is functioning property, so their is no double booking.
7. Vet all possible tenants & communicate your expectations .
8. Send payment links and verify all payments.
9. Make sure rental insurance is valid payments all made and contract signed.
10. Payments & deposits made 30 days prior to arrival.
11. Contract signed & all tenants name’s listed per MD law.
12. Make sure all properties are ready for renters.
13. Put trash containers on curb when renters do not.
14. Schedule cleaners & repairs.
15. Owner statements.
16. On call 24/7 during busy season to answer all calls no matter how small they are.
17. Make sure all marketing complies with rental laws, license’s are displayed according to law & house book is on site.
18. Check pricing often during off season.
19. Inspect properties after check out.
20. Communicate check in and out policies.
I THINK that may be the gist where you can see how much an agent actually does. I’m also pretty sure I forgot a few important things but I feel the need to move on. (Plus I’m getting hungry and need to eat).
As you can see if an agency is only charging between 14-18%, they are making a profit but not a huge one compared to the work they do. If you have an agency that is charging you the average commission, give them a pat on the back if they do an outstanding job! This business is not an easy one and there is a lot of Thankless nights (and days) when every PM wonders “WHY am I doing this”. In a world where everyone likes to criticize and complain, you may want to take the time to thank and appreciate your property manager and all they do. My guess is they don’t get that often enough!
KJ