To self-manage or not to self-manage? That is the main question the mid-term rental management poses to homeowners, no matter whether they are leasing a short-term or a long-term rental.
Sitting somewhere in the middle of the two, a mid-term rental, or MTR for short, can be a great investment in a booming mid-term rental market. Airbnb CEO Brian Chesky said in an interview that rentals ranging from 30 to 90 days now make up 17-18% of Airbnb’s business, showcasing the massive growth of the sector since the pandemic. But with such a tantalizing business opportunity at your fingertips, it is normal to wonder how one should go about managing such a venture.
Read on to learn about property management companies, self-management, and what could be best for you.
What can property management companies do for you?
In a nutshell, mid-term rental management companies take care of most – if not all – of the most work-intensive aspects of running a rental business. Some of the tasks they generally take care of include:
- Property maintenance. This is probably one of the first things people think of when they think of a property management company. Instead of troubling yourself when the paint chips or a washing machine breaks, you can pass up the responsibility of fixing these household mishaps to a property manager. This can help alleviate your own workload. Check out how much property managers charge.
- Finding and vetting tenants. Many property management companies already have pools of vetted tenants who might be looking for a new place to stay. Even if they don’t, they are well-equipped to perform checks on any and all tenants who show an interest in your property, which protects not only the property itself, but also the community where it is located. They can also save you the headache of dealing with a problematic tenant in the unlikely case that you end up with one.
- Marketing your mid-term rental. Property management companies can list your property on their website, opening your rental up to new markets. Property managers can also show your property around to tenants who show an interest in it, which can be especially useful for MTR owners. Given tenants will be spending more time in your rental than in an STR, they might appreciate being shown the space before committing. Hiring a property management company would make this their responsibility rather than yours.
- Ensuring legal compliance. Good property management companies will have a deep understanding of rental laws in their area of operation, and will keep up to date with any changes to local or national legislation. This is, essentially, one less thing for you to worry about, as they will make sure your mid-term rental is operating by the book at all times.
How much do property management companies charge?
While it depends on the mid-term rental management company, most charge anywhere from 15-20% of the income your MTRs generate in the form of a commission. In other words, up to a fifth of your income could be going into paying for a property management company.
Property managers GuestReady, who offer specific plans for mid-term rentals, list commissions ranging from 12-20%, depending on the city where your rental is located. However, they only operate physically in select locations in France, Portugal, Spain, the United Kingdom, and Dubai, and remotely in parts of Ireland, Switzerland, and Saudi Arabia.
For a more US-based option, Hospy Homes, which operates mostly in Southern California and Las Vegas, claims to charge 15% for MTRs in Los Angeles, according to company director Allen Duan on BiggerPockets. He also shares the following insight:
“I always make it a point to emphasize to our new potential owners that they will earn more having us manage their MTR than if they self-manage as an LTR. So they get the best of both worlds, extra earnings without needing to be a landlord.”
What about self-mid-term rental management?
Rather predictably, self-managing a property means that all the responsibilities that would otherwise go to a property management company fall onto you instead. This means you will be responsible for your building your own mid-term rental strategy, property’s maintenance, marketing, legal compliance and tenant screening processes.
But is that all as hard as it seems?
According to many property owners, self-managing your rental(s) has a number of very clear advantages. To start, you get to keep all of your rental revenue. And is phoning a plumber every once in a while really such a big deal?
MTRs in particular are great when it comes to maintenance, as they are less risky than short-term vacation rentals in terms of accidental damage, switchovers between tenants happen less frequently, and tenants themselves will be more likely to deal with maintenance issues by themselves.
As a self-manager, you will get a more hands-on experience of what it means to be in charge of a rental. It will allow you to get a better feel for the market, learn more about the laws that will affect your business and, perhaps most importantly, will allow you to build a better, more trusting relationship with your hand-picked tenants.
Also, consider listing your property for corporate housing.
This is especially beneficial for MTRs, as it is possible that these kinds of tenants – business travelers, for example – will require extended stays in the same area several times a year. This means that developing a good, personal relationship with a one-time tenant might turn them into a trustworthy repeat customer.
And hey, you tried self-management and decided it’s not for you? That’s not a problem: a property management company will always be available later!
Is it possible to manage a mid-term rental remotely?
One of the main reasons why MTR owners wonder if self-management is right for them is that they don’t live in the same area as their property. If this is you, worry not – it is most definitely possible to self-manage an MTR remotely. With today’s technology, it is easy to stay in contact with tenants and maintenance services across the globe in a matter of minutes. Besides, keep in mind that switch-overs between tenants do not take place nearly as often in MTRs as they do in STRs, so there will be less work-intensive moments for you on average.
If the idea of self-managing an MTR sounds appealing to you, there are also a couple things you can do to make sure everything goes smoothly, including:
- Vet your tenants. This is the most important thing you can do. At the end of the day, having a good tenant you get on with is the single most determining factor for whether a rental period will be a dream or a nightmare. Using guest screening tools, such as Truvi’s own guest screening services, will help protect you from trouble-making tenants and scammers long before they get the chance to set foot in your property.
- Keep on top of tenant communications. Be easy to reach and responsive to guest issues. This will help you build a trusting relationship with your guests. If you are not available at certain times or dates, make sure to let your tenant know and provide them with emergency phone numbers to call if anything goes wrong during your absence. A trustworthy plumber or a locksmith are good places to start.
- Write a clear lease agreement. This will help you and your tenant establish exactly who will be responsible for dealing with maintenance issues during their tenancy. Making sure this is clear from the start can help you avoid many a headache, especially when you don’t live in the area.
- Invest in insurance and/or damage protection services. Accidents will happen, and it is better to be prepared for that than to let them catch you by surprise. By investing in a damage protection service like Truvi’s, an operational disaster that would otherwise require your presence on-site will become a quick call to Truvi HQ and a rapid resolution to your claim in typically five business days or less.
- Invest in a property mid-term rental management system. A good PMS will help you manage your listings, adjust prices, stay in touch with your tenants, and otherwise take care of your property, all from the palm of your hand. These tools can be a real life-saver when it comes to remote mid-term rental management.
What kind of software can help you manage a mid-term rental?
Property management systems, such as Hostify, offer a great range of services that can help you manage a MTR, from automated booking processes to custom pricing. This can be a useful piece of software to have under your belt, especially if you manage more than one or two rentals, as doing so can get hectic fast.
Truvi’s Damage Protection Service, which covers damages from US$500 to US$5,000,000, is another piece of software than can provide you with the peace of mind you need when it comes to protecting your MTR. Truvi’s Swift Resolution Process means that, if your property is damaged, you can simply log into our platform and submit a resolution request. What’s more, you can expect a fast turnaround, typically within 5 business days.
We protect against:
- Stained linens
- Smeared towels
- Unintentional guest damage
- Unsolicited smoking damage
- Unapproved party damage
- Delivery expenses of replaced items
We don’t protect:
- Cosmetic damage
- Pet damage
- Wear and tear
- Management fees
- Maintenance expenses
- Approved party damage
Finally, Truvi’s guest screening service can protect you against bad actors by validating private information like a guest’s name, email, and address. This is particularly important for MTRs, given your tenants will be staying at your property for a longer span of time, meaning it is important for you to make sure they are deserving of your trust. With Truvi’s guest screening service, you will be able to tailor your guest screening process to your needs, flag suspicious bookings, screen guests against an internal watchlist, and protect yourself in case of last-minute bookings.
How can you maximize profits and increase operational efficiency when you’re self-managing?
The best thing you can to when self-managing an MTR is to think ahead. Here are our top 5 tips to ensure that your self-managed MTR venture is a success!
- Make sure you have a list of maintenance providers you trust at hand at all times, as this will help you deal with any maintenance issues quickly and smoothly.
- Prepare a clear lease agreement that lays out your responsibilities and that of the tenant.
- Make your MTR appealing to traveling professionals, remote workers, and students by ensuring that it counts with fast, reliable WiFi and comfortable workspaces.
- Advertise your rental on platforms specific to MTRs, such as Furnished Finders, Homads, or Flatio.
- Protect your MTR against property damage and troublesome tenants using Truvi’s Damage Protection Service and Guest Screening Service respectively.
So, are property management companies worth it?
At the end of the day, the choice is yours. Nevertheless, having a think about the following questions can help you decide if a property management company is really for you, or if going the self-management route might be a better option.
- How many properties do you own? The more properties you manage, the more it might be worth leaving some up to property management companies as to alleviate your workload.
- How much do you enjoy dealing with people? If you are not much of a people person, it might be worth leaving that aspect of your business to those who are used to it and enjoy it.
- Are you operating in a foreign country? Foreign markets and laws can be more difficult to get to grips with, especially when there is a language barrier that can make communication difficult. In these cases, having a property management company on your side can be a great add-on.
- How much do mid-term rental management companies charge in your area? Different rental markets charge different commissions for mid-term rental management, so make sure you find out exactly how much of your rental income you would be giving up before you make your choice.
Is self-management or using a property management company the best choice for you?
| Self-management | Property Management Company |
|---|---|
| No added costs. | Costs about 15-20% of rental income. |
| Property owner is responsible for maintenance, legal compliance, and tenant vetting. | Property management company is responsible for maintenance, legal compliance, and tenant vetting. |
| More contact with the tenant can lead to a more trusting, long-term relationship. | Less contact with the tenant might endear them to the property management company instead of you. |
| A more hands on experience will help you learn more about real estate management and the rental market you operate in. | You leave all the real estate management expertise up to the professionals. |
| More time consuming, but very manageable for property owners with smaller portfolios. | Less time consuming, could be convenient for property managers with larger portfolios. |
| Best for in-person or remote management in an area with no language barriers or large time-zone differences. | Best for remote management in a foreign country where language barriers or large time-zone differences can be an issue. |
