8 Questions To Ask Before Choosing A Vacation Rental Management Company
If you are reading this article you most likely have:
1. Purchased an investment property and are ready to put it on the rental market, or
2. You are about to pull the trigger on an investment property and are being proactive with your due diligence.
In today's blog, we’re going to take a look at the marketing aspect of the vacation rental industry. It's equally as important as finding the property itself. Choosing the right vacation rental management company can make or break the success of your investment property.
It’s important to note that on paper you could have the best suited rental property for the market. However, without the correct exposure through select marketing platforms, or the use of a great vacation rental company, potential renters may never find out about it.
To start the process, you must first compile a list of the top rated companies in the local area where you’re investing. Once you have narrowed down your list to the top three companies, it's time to meet with each one and start the vetting process.
I’ve put together a list of the most critical questions to ask your top
three choices.
Depending on how they answer these questions, you’ll have a good idea about:
● how they run their management company,
● how they will handle your property,
● what their costs are, and
● most importantly what type of returns you should expect
1. What Services Do You Provide?
In your search for a property manager, you’ll need to decide what services are a good fit for your vacation rental. The following list provides the types of services that a vacation rental company offers:Marketing:
These vacation rental companies will solely handle listing your property across multiple OTA’s (Online Travel Agencies). You will typically find a lower commission structure due to the lack of services provided.Marketing + (Contracted Cleaning and Maintenance):
Many vacation rental management companies will handle the marketing and bookings internally, then contract out the cleaning and maintenance services. The management company will typically work hand and hand to help facilitate the general maintenance, repairs, and scheduled cleanings with their chosen contractor.
Full-Service:
A full-service vacation rental and property management company will handle everything required to run a well-performing vacation rental. Their services include:● Photography, SEO optimized listings, and digital marketing
● Managing booking services, check-ins, checkouts, inquiries, guest screening, and addressing guest complaints
● Access to online software with full transparency including your units yearly occupancy, ADR, and future availabilities
● Concierge services
● Transportation services
● Guest review management and generation
● Preventative maintenance and home inspection procurement
● Responding to guest emergencies
● Revenue management and dynamic pricing strategies
2. Can You Explain Your Fee Structure?
In the Riviera Maya, vacation rental management fees range from 15% to 30% of your gross vacation rental revenue. The range typically depends on the level of services provided. Companies with below average fees, usually have hidden costs, so watch out.A property management company should be able to clearly explain what’s included in their fees and how they’re structured. You don’t want to base your decision off price alone, but rather on their attention to detail, professionalism, reports provided, historical returns, and revenue strategies.
3. How Do You Ensure Potential Guests Are A Good Fit For My Property?
Guest screening is a huge part of ensuring the success of your rental property. It’s one of the top reasons homeowners are increasingly using 3rd parties to manage their vacation rental bookings. If vacation rental managers don’t have a thorough vetting process in place to optimize the maximum occupancy over the long-term, the wear and tear of your property can increase quickly hence deteriorating the quality of your home Be sure to ask:● What is the minimum age for guests?
● Do you allow bachelor/bachelorette parties?
● Do you speak with potential tenants over the phone in addition to online?
● How do you conduct your spotlight screenings?
The vetting process should begin with an online inquiry that requests information regarding group size, ages, and the reason for their trip. Some of the top-rated management companies will go one step further and follow up the online questionnaire with a phone call. They will ask the same questions over the phone then compare those answers to the answers they submitted online. This is referred to as spotlight screening.
4. How Will You Clean And Inspect My Property?
Have you ever booked a hotel room or an Airbnb and walked into a dirty space? Have you ever booked a place with a fully-equipped kitchen and then discovered there are no pots or pans to cook with? If so, you can relate to the importance of a clean and equipped rental property. An unclean space and lack of furnishings and amenities could be devastating to your property’s rental potential. You'll most likely lose a guest forever and receive a bad review online, in turn, damaging your home’s online reputation. Be sure to ask the following questions.● How has your housekeeping staff been trained?
● Is there a follow up inspection prior to cleanings?
● How often do you air out the property? These homes need additional care even when guests aren’t frequently staying.
● Do you deep-clean specific areas of the unit?
Due to the humid tropical climate in the Riviera Maya, these are very important questions to ask. Mold can easily grow in dark areas of the home without you ever knowing.
5. What Charges are The Renters and I Responsible For?
Asking this question multiple times during the vetting process is critical. You must be aware of all charges coming to you and your guest whether they are small or large. If not, you could potentially lose bookings. Once a guest goes home and checks their statements and see undisclosed charges to their card, you put yourself at risk for a bad review, or even worse the quiet loss of a return customer.Statistics show that companies who charge guests too many add-on fees will quickly lose bookings. A few popular, yet overlooked fees include credit card processing fees and restocking fees.
Try these questions to discover other hidden fees:
● Do I need to pay for property photos, video, and virtual tours?
● Do I have to pay extra to list my property on multiple distribution sites?
● What property maintenance is included in the fee?
● Do you I have to pay extra cleaning fees?
6. What Systems And Technology Do You Use To Enhance The Owner And Guest Experiences?
Incorporating the newest technology, software, and apps available on the market in your business offers you a competitive strategy. We live in a fast-paced, progressive world. If you're not one step ahead of your competition, you will be left behind. Therefore, be wary of any vacation rental company not utilizing one of the many available tools, such as (Kigo, CiiRUS, Streamline, and Guesty).These technologies provide online booking, CRM, booking channel services, property management tools, and dedicated platforms that will provide full transparency and keep you up-to-date 24/7. Companies that invest in the right technologies can dramatically improve efficiency, resulting in cost savings that can maximize your rental property’s potential.
7. Do you use dynamic pricing?
You will want to know how your vacation rental company is going to price your property. Whether they are utilizing a PMS (property management software) or a revenue management system it is crucial they are using a dynamic pricing strategy. Dynamic pricing is a pricing strategy that vacation rental companies use to set the price of their properties based off of market demands. There are many programs readily available which use algorithms to adjust nightly rates based off of factors like competitor pricing, occupancy, and market supply and demand. These algorithms are created to track specific elements that influence the market in real time.You will typically find most companies are using time-based pricing. What this means is rates will increase during “high season” or during “special events”. In “low season” prices will drop to keep occupancies up; covering your overhead, which is referred to as long-run marginal cost pricing. Everyone you speak with should have a clean and precise short term launch strategy and a long term pricing strategy.
8. Can I See Some Of The Properties You Market Online?
Asking this question is the easiest way to check the validity of the companies you’re vetting. Ask which OTA's they're advertising on along with a list of links to those properties. Look at the quality and consistency of the listings. They may have a beautiful million dollar listing that shows flawlessly, but what about their $150,000, 2bed/2bath condo? Does it have the same quality of photos, did they put the same effort into the property description? Your property shouldn't be discriminated against, regardless of the price point.Next, take a look at how many bookings the property has for volume and read through all of the client reviews. Take the criteria for one of the properties they have published, and do an organic search from home. See how fast and easy it was to find their listing.
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Ryan Gravel
Ryan Gravel is an American real estate broker and developer. He began his career at a young
age working for his family owned construction company.
After graduating college at the University of Central Florida with a degree in business,
Ryan set out to find untapped prolific markets around the world. His search landed him in
Playa del Carmen, Mexico where he founded Virgin Realty Mexico and co-founded the Saatal
Development Group one of the fastest growing development companies in the Riviera Maya.
With extensive market knowledge, professionalism, etiquette, innovation and integrity Ryan
is known as one of the most highly respected real estate advisors in the region.
