The Real Cost of Self-Managing a Short Term Rental

We get it … no one likes Property Managers. It’s not a lot of fun to work in an industry that people dislike you before you say anything. Everyone seems to have a story to tell about some terrible Property Management Experience. But we would like to present to you the other side … the Real Cost of-Managing a Short Term Rental.

  • Your Time. Time away from your job (where you make money), or time away from the things that bring you joy (like spending time with friends and family, or travelling, or watching funny cat videos). Time is the big one!
  • Your Freedom: Guests want answers NOW! New Guests send out quite a few inquiries at one time. Whoever answers first gets the booking. A Guest who is locked out and can’t get a hold of you will be sure to tell everyone, and include it in their online review. So just glue your cell phone to your hand … it will make the lack of personal freedom easier.
  • Paying High Commissions: AirBNB and VRBO charge the Guest a 14% Commission. That Guest was willing to pay 14% more for your accommodation. Most self-managers won’t have their own website to accept Direct Bookings. If they do, there is long list of fixed costs for setting up Direct Bookings. It’s not cost effective to have for just one property, so AirBNB/VRBO gets 14% of Self Management revenue.
  • Falling Behind: It is very difficult for Self-Managers to keep on top of every trend, every new technology, every new online scam. Heck … it’s hard for us, and we have a team doing this all day every day!
  • Service to Others: It takes a certain personality type and skillset to be truly committed to serving others. There are people great with numbers — they work in math-heavy jobs. There are people that are great with technology — they work in tech-heavy jobs. Owning a property does not make someone dedicated to serving others. By not being truly dedicated to serving others, Self-Managers will always be struggling to find new Guests. This often means spending more on marketing, or lowering rates, or increased frustration for both the Guest and Self-Manager. We see it time and time again.

We are obviously biased because this is what we do for a living, but please carefully consider whether Self-Management is the best option for you.

Things we have actually seen Self-Managers do:

  • Double Booking: It is our firm opinion that if a property is double-booked, the error must be fixed by finding comparable or upgraded accommodation for the displaced Guest. This is time-consuming and costly for Self-Managers, and quite common. We answer several calls a week from Guests that have been told they don’t have a place to stay by a Self-Manager who double-booked. Each time it happens, that’s one more guest that will never ever stay at a Self-Managed unit again.
  • Getting shut down, or fined: Not getting the right permits, not collecting or remitting the right taxes, etc.
  • Save time by using AirBNB or VRBO “Smart Pricing”: No. no. no. no. no. noooooooooooo. There is nothing Smart about these algorithms. The goal of the algorithm is to sell out the available nights as fast as possible. New Owners turn on SmartPricing and squeal with excitement as they hear the audible ding-ding-ding of new reservations coming in. The New Owner is making more money than they imagined! But they have no idea how much money they lost by pricing the property far too low. A new client recently lost $5000 by having the setting turned on for just a few days. He was lucky — it was during COVID so people were only booking about 2 weeks in advance. If it had been a typical year where people book up to a year in advance, he could have lost about $80,000. Ouch!
  • Falling for Online Scams: Do you know the Pricing Error Scam? The Kijiji Scam? How about the Certified Check Scam? The “I don’t want to cancel, I just want to change my dates” scam? There are many more. The scammers usually know not to try their scam a Property Manager.
  • Renting for too low a rate: Whether it be by accidentally using Smart Pricing, or by simply not knowing what the rate should be, renting for too low a rate creates more than just a Financial Loss.
  • Forgetting to book a cleaning: Guest arrives at dirty unit. Guest demands massive refund. Your options are pay out the nose for an Emergency Cleaning (assuming you can find someone), or pay for the replacement accommodation for the Guest. And then wait for the well-deserved negative review. Ugh.
  • Forgetting to cancel a cleaning previously scheduled for a now-cancelled reservation: Do it more than once, and your housekeeper will either dump you for wasting their time, or will start charging you a Cancellation Fee.
  • Paying too much for “all the things”: The person who buys the most always knows where the best deals are, and gets Volume Pricing. And that’s us. A Self Manager pays retail price for everything, and doesn’t know where to shop. And the time it takes Self-Managers to research/buy one item is the same time for us to research/buy 22 of the same item (saving 22 Management Clients all that hassle).
  • Buying the wrong things: Ask our Maintenance Person what they think of the towel racks we tested that one time. They were terrible, and were constantly requiring maintenance. We made the mistake once at one property, and then dozens of other properties benefited from our knowledge. There are thousands of items in a Short Term Rental.