Vacation Rental Investment Returns

Fiscally Conservative Monthly Expenses (Not including mortgages and taxes, Amounts shown are area averages or minimum recommended for a home that averages 100K annual revenue):

*Expenses will be incurred by owner regardless of self-management or professional management

One Time Expenses:

Self Management

While there are startup time commitments like building your listings and taking photos, you will also have ongoing duties including taking reservations, screening guests, tracking leads and following up with potential guests, guest communication leading up to, during, and after stay, updating booking calendars on multiple platforms, selecting, managing, and monitoring cleaning crews and maintenance crews, inspecting and re-staging the home between guests, responding to and serving current guests, manage and respond to online reviews, marketing, advertising, revenue management, market research and pricing, etc. You need to calculate these items into your weekly hours.

The value of your time:

*A professional management company can generate on average 29% more annual revenue than an individual operator

Your True Cost of Self Management

The Difference: Self Management vs. Professional Management
If your number is red, that indicates that it will cost you more to manage the property yourself than to hire a professional.

*Data provided by Key Data Report, VRMA 2022

Although this ROI calculator addresses Property Management and Self Management, there are other options (within those options). Read below about some of them, along with more valuable information from industry experts at Rented.com.

Owning a vacation rental property is a great investment. However, owning a rental property of any type comes with a lot of responsibilities. Owners of a rental can expect to do many different jobs when it comes to their property, including:

• Aggressively marketing your property so that you can attract enough clients to make the rental profitable.
• Manage all of the reservations, payment processing, and other related administrative tasks.
• Property maintenance inside and out and cleaning and staging the unit each time a guest leaves.
• 24/7 Guest communication before, during, and after each stay.
• Answer emergency calls for anything that could occur at the property (24 hours a day).

When you purchase a rental, you will need to ask yourself if you are going to handle all of these tasks or should you hire a property management company.

A Look At Property Management
When it comes to deciding on property management, you have four real options. We’ve seen homeowners earn 300% more in rental income by simply using a property manager. All of these options offers different services. The type of service you use will depend on your preferences and what you hope to achieve with your rental.

Full Service Vacation Rental Service
A full service rental service will manage every aspect of your rental property for you for a monthly fee. Their services include marketing, reservations, cleaning and prepping the unit for each guest, and emergency contact services. Some are also including additional services as a way to entice clients such as concierge services, package deals or local attractions, and discounts for dining and other local experiences. These additional benefits encourage many visitors to select their rental units above other available units in the same area. They also provide 24 hour customer responses (which encourages more bookings), 24 hour guest services, hotel amenities (like concierge services) and they provide owners with exposure that can only rarely be obtained by individual owners, resulting in additional revenue for each home in their portfolio.

Property Management Company
A property management company performs a very basic service. They will make sure that the property stays maintained both inside and outside and will provide an emergency contact number for guests who may experience problems. However, they will not manage any type of marketing, reservations, or answer questions for guests.

Booking Company
A booking company offers reservation and guest inquiry services. They will answer questions when someone asks about your unit and will book their stay, but they usually do not offer any additional services. Marketing may be an add-on feature that these services offer, but this is not very common. Booking companies do not handle any type of maintenance and do not interact with clients other than to make their reservation.

DIY Property Management
If you are a DIY person, then you may just rely on family and friends to help you with your vacation property. Anyone that decides to do this, however, should take a very close look at what successfully managing a property entails, the hours and effort involved, and decide honestly if they can accomplish these goals.

Self-Managing A Rental Property
The first step to a successful rental business is being able to get people into the rental unit. On average, a DIY manager will have to devote at least fourteen hours a week to get a minimal response to their marketing efforts.

You will need to be available around the clock to accept calls for inquiries and reservations. You must consider, especially if your property is in a high-demand area, that you will be contacted from visitors who are traveling from all areas of the world. They will contact you on their time zone, not yours.

If you do not live within a short distance of your property, you will have to consider how the property will be maintained. Can you come every couple of days to maintain the property and make sure the interior is clean? Can you make necessary repairs that are within safety and building code guidelines? How hard will it be for you to reach the property in the event of an emergency? These are all serious questions that must be asked and answered honestly.

Can you dedicate sufficient time each week to performing all of the administrative tasks necessary to manage the vacation rental business? Do you understand the tax structure and local fee structures for rental properties? Can you process credit card payments from your home office? All of these things must be considered.

Options For DIY Managers
If you are still determined to manage as much of the rental business as possible, there are options that can make it easier. Look honestly at your strengths, such as your ability to market or make repairs, and then find support services for hire to help with the other tasks. Many companies will devise a service package for you based on how much, or how little, of the services they offer you need. It is possible to piecemeal together any deficiencies you may have. You will want to consider what makes the most sense and in the end, the most net revenue to you for the most endurable effort.