Homeowner Education Series: Volume 4 -20 Questions (and Answers!!) for your Prospective Property Management Company

Homeowner Education Series: Volume 4 -20 Questions (and Answers!!) for your Prospective Property Management Company

1 Apr 2018

Questions to Help Vacation Rental Owners select a Vacation Rental Property Management Company

  1. How long has your company been in business? How long have you been in this rental market? Does your company answer to a board of directors or group of investors?
  • Good to know if the company is established in the area and if they know the particulars of the area. Also, historical data is very beneficial when pricing a property or an area for future dates.
  • Who does the management company report to? They may say they report to you, their client, when in reality if they owe money to a group of investors, they’ve already pledged their fiduciary responsibility to those investors. Ultimately, you may not be the primary focus of the goals of the company and you need to know if that is the case. 
  1. How long is your contract term?
  • Preference is, unless you are getting a special rate in exchange for a long term contract, you don’t have to commit to a management company for more than three months. 
  1. How often will you change rates on my vacation rental?
  • If the answer isn’t several times a week, find another management company
  1. How often will my rates vary for my property?
  • If the answer isn’t daily, find another management company.
  1. How do you figure out when it’s a hot market, gauge occupancy, and follow rate trends? How often do you monitor changes in the market and how far in advance?
  • Professional management companies should employ software that allows them a front row seat to hotel, vacation rental, and bed and breakfast occupancy and rates for your area. Also, they should know the area well and know natural and historical highs and lows from being in the area for an extended period of time. Finally, they should be great at forecasting with pricing tools and software that allows them to maximize potential revenue based on several key market factors. If they haven’t invested in the technology to do this, they may claim that they know the area well and are following market trends, but they won’t be able to get you the highest rates based on timing and your property may often go without bookings if they can’t see when to get more competitive with pricing. 
  • Professionals should be looking weekly at future market changes (watching at least six months out at all times). However, the best managers will be pricing your property a full year in advance. 
  1. Are your Reservation Agents (RA) full-time or part-time? Do they live in the area? Have they been to all of the properties? Will they visit or even stay in my property so they can book it effectively?
  • A reservation agent can fall into two categories: 1) Personal Vacation Specialist representing your property(s) or 2) Online Order-Taker. Anyone can be an order-taker. You want a Specialist. If a Reservation Agent (RA) is not full time, or this isn’t their career, then you could be placing your property in a field of potential land-mines. Effective, career RA’s are so familiar with your property (and your desires for your property) that they are capable of making consistently good decisions regarding who will be the best guests for your property. Not only that, but they know their guests. 
  • To be a great RA, you have to be in the area, or at a minimum visit the properties you are booking. Better yet, a great company will encourage their RA’s to go stay in the property for a time that wouldn’t otherwise be booked so they are able to advise potential guests on the experience of a stay at that property. This doesn’t happen if you are in some remote call center in another country or city. They also need to know the area so they can help guests decide what to do while in town. Guests state that the area expertise is a reason they book one property over another. If they trust the company to tell them what to do in town, then they will trust them to place their group into the right property.
  1. Are your reservation agents compensated based on how many bookings they make?
  • You are not likely to want a “take-anything-that-comes-in” reservation agent. To protect your property from would be partiers and troublesome or unruly guests, you need an experienced agent who knows how to weed out the undesirable guests who are likely to demand refunds, leave bad reviews, and cause damage or disturbances. That is a skill that is very valuable and you want it employed for your property! If they have this skill, you want them to use it, which means they shouldn’t take a financial loss if they turn away an inappropriate group.
  1. What guest communication is automated? Do RA’s speak to potential guests before confirming a booking for my property? Do they communicate and reinforce the rules of the booking? 
  • Undesirable guests can cause damage, disturb neighbors, are most likely to ask for refunds, and leave bad reviews for your property. RA’s can’t protect you or your property from undesirable guests if the entire booking process is automated. While you want your property to get the listing placement benefits of being able to take instant bookings, you also want a real person making sure that the instant booking is safe and the right fit for your property. That takes a real-life conversation. Management companies that charge very low commissions are cutting costs somewhere. Make sure it isn’t here.
  • It’s critical that the most important booking rules are also verbalized to the guests on a call. This action ensures that there are no surprises for guests. They should be aware of what to expect, who to call if anything goes wrong, and what rules are most important to that particular property. 
  • A company that says something like, “Very few guests are willing to get on the phone.” is probably not taking the steps required to get guests on the phone. Those companies are what we call high-risk management companies and are more subject to hosting high-risk guests.  
  1. What are the companies internal rules regarding every property? Are you enforcing generally accepted rules to all rentals, regardless of HOA or City ordinance rules? How do you enforce rules? What do you do if guests are obviously breaking rules?
  • This is how you can tell if a company has their priorities in sync with yours. If they take the necessary steps to protect your property from undesirable renters during the booking process, issues are much less likely and should be easier to address. What they do when guests are not following rules can vary from company to company. You need to know what the plan is if complaints or unsettling circumstances emerge. A good company will have a plan about what steps are taken if a guest is not following the rules. You want to know that they will make undesirable actions stop so no one is disturbed, your property is protected, and there are no damages.
  • The big one: They should have a cut-off time for the use of outdoor areas for any properties that have neighbors. While this isn’t necessary at all properties, it is respectful for properties that could cause disturbances to the surrounding properties. This is a great way to either incite an uprising of your neighbors against you, or allow neighbors to feel at ease with your planned use of the property. 
  • A make-it-right plan should be in place for neighbors who have had to make a complaint about guests. 
  1. Do you monitor my security footage on a schedule, randomly, or only as needed?
  • A great company will check all security cameras during check in and later in the evening to make sure guests are abiding by the rules of the property or area.
  1. How do you handle issues/broken items/property damage?
  • Damages that are the fault of the guest, will be paid for by the guest, or a damage protection program. Damages that are considered normal wear and tear to a property, should be considered the cost of doing business and will need to be addressed, from time to time, by the owner of the property. Your Vacation Rental Management company will not pay for damages or wear and tear to your property out of pocket.
  • Your goal should be to find a manager who performs a walkthrough after every guest leaves, takes photos of any damages, and ensures the property is in great condition for the next guest arrival.
  1. Do you inspect properties in between every group? Do you do a pre-arrival walk-through? What does your inspection entail? Who pays for this service?
  • Make sure the company visits your property after each guest and covers that cost as part of the management fee. This task has to be performed by someone other than cleaners. If they don’t, you could end up with dissatisfaction during arrival, which negatively effects reviews for your property. Start on the right foot with a perfectly staged property for a happy arrival. Watch out for “periodic” or inconsistent inspections. This means they do it only when they have time or when they are getting complaints about your property. Go with a more proactive company. 
  • If your property has been vacant for more than two weeks, there should be a pre arrival walkthrough to make sure everything is right for guest arrival.
  • Staging should include tv & remote checks, looking in all doors & drawers, lights, refrigerators, ovens, coffee machines, dish washers, and a full property once-over.
  1. What is your commission?
  • Beware of too-good-to-be-true rates. Management companies should charge between 25-40%. Lower and you may want to question if they are profitable and will stay in business. Much lower and you need to figure out what they are not doing to safeguard and serve you and your property. 
  1. Do you cover credit card fees or are they paid for by the property owner?
  • Lots of companies hide this little BIG fee. This alone can increase their fee by 3.5%. 
  1. What are other fees that you will charge me?
  • Management companies can charge fees like linen fees, laundry fees, restocking fees, toiletry fees, welcome gift fees, inspection fees, staging fees, copy fees, photography fees, credit card fees, international credit card fees, listing change fees, advertising fees, cleaning fees, marketing cost fees, and the list goes on, and on, and on. Be sure to calculate these a la carte fees into your management percentage. These fees can make a significant difference. While they advertise a 25% fee, they may actually charge closer to 35% after all required services are provided. 
  1. Can I see a sample owner statement?
  • This is where you will see the extra fees they may be charging. It will also give you a good idea of what their accounting will look like. 
  1. Do you pay for listings on Online Travel Agents (OTA’s) sites? Do you pay to photograph the property and write the listing description?
  • This includes VRBO, AirBNB, etc. 
  • The company should use a professional photographer and offer additional services (possibly for a fee) like twilight photos, 3D tours, and aerial photographs. They should also utilize a professional copy writer to describe the property.
  1. Will I have a dedicated Owner Representative? Who?
  • This is your right hand man and communication lifeline to everything regarding your vacation rental. It is preferable that it is one person, with whom you can get to know and work with. They will also get to know you, your communication style, your preferences, and your goals, and make sure the management team is aware of and working towards your desired outcomes. 
  1. What maintenance is included in your services?
  • Normal maintenance fees for your area should be charged for normal maintenance on the property. Don’t expect free lights, air filters, paint, etc. If plumbers, maintenance, septic, etc. are called out to your property there will likely be a fee attached to that service. However, if a stager sees that a lightbulb is out and fixes it while on site, you should not get charged for things like that. Also, if a guest needs something, there should be no additional charges for visits outside of business hours or holidays by the management company. Guest support should not cost you more. They may not however, be able to avoid those charges from third-party providers. 
  1. What are you doing to prevent and work against restrictive STR regulations in the area?
  • A good management company will be proactively working to prevent overly-restrictive vacation rental rules and ordinances, and should be happy to tell you about all that they are doing. Those things may include building relationships with local municipalities, speaking at council meetings, educating the community on benefits, lobbying at the state level, and being active in local alliances. 
  • You may assume this isn’t a deciding factor. It should be. Losing the ability to book your property can be devastating, and choosing a management company that isn’t actively involved in the effort to ensure that doesn’t happen is equivalent to supporting someone who doesn’t support you. We have to hold management companies accountable and ensure they are invested in this important effort of the industry. Stand up for your property rights and sign with a partner who stands with you.

Things ALL managers should provide (should be an easy yes for any reputable, professional company):

  1. Can I access my financials, reports, and bookings online at any time?
  2. Do you list my property on suitable Online Travel Agents (OTA’s) sites? (VRBO, AirBNB, etc.) 
  3. Do rates change based on day of the week and time of the year? 
  4. Do you manage the cleaning? Do you or the guest pay for the cleaning?
  5. Do you take online and instant bookings?
  6. Can guests pay you with a credit card?