Airbnb Property Management:Ultimate Guide
Investing in vacation rentals can be an extremely profitable opportunity as long as it is executed right. To optimize return on investment, your Airbnb property management strategy is as important as the market in which you invest and the property you choose to purchase. How you manage your short term rental will determine your occupancy rate and monthly revenue as well as your operating expenses and – ultimately – your profitability.
In this article we will discuss what property management means in the Airbnb industry, what services are included and what services are not, and the different types of property management. We will also cover the typical costs and fees associated with property management, the pros and cons of hiring a professional property manager, and how to choose the best company for your investment property.
What Airbnb Property Management Is
Airbnb property management refers to the planning, coordination, and execution of all tasks and activities related to running a vacation rental business. In brief, this relates to keeping the rental occupied, making sure guests are safe and happy, maintaining the property in a good condition, and maximizing profit.
If you have experience with long term rental management, you should keep in mind that vacation rental management is a much more active and demanding process than managing a traditional rental. Because Airbnb properties are rented out on a daily basis, managing them requires day-to-day involvement.
The most important services that managing an Airbnb requires include:
- Listing the property on short term rental marketplaces
- Marketing
- Setting up a pricing mechanisms/guidelines
- Communicating with guests before, during, and after stays
- Taking care of check-ins and check-outs
- Handling guest issues while on site
- Cleaning, doing laundry, and restocking supplies between guests
- Property Maintenance
- Managing Finances
- Assuring compliance with national, state, and local Airbnb regulations and tax requirements
Vacation rental property owners can choose from three main types of property management. Their decision should be based on whether they invest close to home or out-of-state, their familiarity with the local vacation rental market, their skills and competencies, and how much free time they have.
Short term rental property management is broadly divided into the following levels:
Self-service: If you self-manage your Airbnb, this means that you are personally responsible for performing all the tasks needed to have your property rented out. As a DIY Airbnb host, you have full control over your business, but this requires a lot of time and effort. To support your Airbnb management, you can use certain services that help streamline listings and automate communication.
Half-service or hybrid: Sometimes an owner can hire a property manager or a company that handles some of the tasks, while the rest of the activities are dealt with by the investor or their team. In this way you retain partial control over your property, but it might get complicated assuring who’s responsible for what. In general, hybrid property managers leave the difficult tasks, like maintenance, to the investors and take care of scalable tasks like bookings and communication.
Full-service: You can hire a local professional property manager or an Airbnb property management company to run your rental business on your behalf. Most firms offer national or even global coverage through local experts and property managers who work under their umbrella. Hiring a full-service property management company gives investors a hands-free approach but takes away control over business decisions. We at NomadSTR are a full-service management company, but boutique. Meaning we are selective about the properties we manage and limit our properties to specific areas to ensure we are able to provide top of the line support.
Airbnb Property Management Services?
Our research on the top Airbnb Management Companies shows that most of them offer the same set of services. There could be some differences though, so we recommend that you get a detailed list of all the services that a firm provides before signing a contract with them.
Most short term rental property m management companies take care of:
Vacation Rental Marketing
First, property managers typically create listings on leading vacation rental platforms like Airbnb, Vrbo, Booking.com, and others. They might also list your property on their own website if they have a marketplace or direct booking site. Ideally, listings are customized based on best practices for each listing platform. They include professional photos of your space and an attractive description. Some companies will also add a 3D tour of your property to maximize bookings.
Next, Airbnb property management companies may market your property outside the platform where it’s listed. They use a range of channels including social media, paid and display ads, travel magazines, and email campaigns. This is an important step to make sure that your short term rental gets maximum exposure to interested guests and stays occupied throughout the year.
Guest Communication, Service, and Management
Vacation rental management companies handle all tasks related to the guest experience. This starts prior to a stay and continues while guests are on site and even after they check out.
Property managers need to review incoming booking requests, screen potential guests, and approve or disapprove requests. They need to provide guests with all necessary information prior to their arrival. This includes things like how to get to the property, check-in and check-out times, smart lock codes, wifi passwords, what is available on the property, and a list of local attractions. Moreover, all questions by future guests need to be handled in a timely manner. It’s best if guest messages are responded within an hour, under 15 minutes is the gold standard for short-term rentals.
During a stay, a property manager needs to be constantly available to address any guest questions and address any problems that might arise. Airbnb guests expect 24/7 support during their visit. Many local regulations – like the Austin short term rental laws – require the responsible person to be able to reach the property and implement solutions right away, usually within a certain time span.
Check-ins and check-outs are also handled by the property management company. These can be done in person or through smart lock systems, keypads, or lock boxes.
After renters leave the short term rental, the property manager needs to finalize the guest communication process. They should review guests and ask guests to review the property. Having a five-star ranking and lots of positive reviews is a crucial factor in optimizing the performance of a listing on Airbnb and other platforms. This helps get your listing higher in search results, can earn you Superhost status, and convinces travelers to trust your rental over competitors in the area.
Legal and Financial Assistance
Some short term rental property management companies provide legal and financial support to real estate investors. Specifically, they have expert knowledge on the local Airbnb laws and can advise you on how to ensure that your property meets all requirements and regulations. Some firms go the extra mile and do the licensing for you. NomadSTR can assist investors and owners in navigating complicated local short term rentals laws and permitting, and even have contacts we can refer to for assistance on things like LLC’s and tax laws.
Top property managers will also provide rental property analysis which includes expected revenue, recurring expenses, cash flow, and profit margins. NomadSTR provides potential clients with a complete analysis spreadsheet as well as a short-term rental revenue calculator they can use to analyze potential properties.
Dynamic Airbnb Pricing and Revenue Management
Adjusting your daily rate according to seasonality and demand is important for optimizing occupancy and income. Airbnb property managers appreciate this and thus implement smart rates within their services.
They need to have excellent knowledge of travel trends in the local market and also analyze the performance of comparable short term rentals properties, known as rental comps. Then they need to set up custom nightly rates for every single day on your property’s booking calendar. Airbnb daily rates need to go up when demand is strong (during weekends, holidays, local events, and high season) and go down when demand is weaker (weekdays and low season).
By applying dynamic pricing for your Airbnb rental, top property management companies will manage revenue in the best possible way. Avoid property managers that only use algorithmic pricing without human review, as it’s prone to errors and can result in lost revenue.
Liability Insurance and Damage Protection
Having proper rental property insurance is your responsibility as an investor and a property owner. However, top Airbnb property management companies offer additional security to owners.
Furthermore, property managers take care of your short term rental and your guests in such a way that minimizes the risk of potential liabilities both for them and for you.
Property Preparation
Another short-term rental property management service provided by professionals is getting your Airbnb ready for guests. The related tasks include cleaning, doing laundry, and restocking supplies between stays.
Airbnb guests expect properties to be perfectly clean, to provide clean sheets and towels, and to offer amenities like coffee, tea, soap, shampoo, dish detergent, toilet paper, tissues, and others. To meet guest expectations, someone on the property management team needs to visit the rental before and after each guest and ensure that everything necessary is in place.
Cleaning and other services are performed either by the company’s local employees or by local service providers with which the company partners.
Property Inspection and Maintenance
In addition to the daily cleaning and restocking check-ups, Airbnb property managers are expected to visit the rental on a regular basis to conduct inspections, make sure that everything is fine with the property itself, there are ample supplies of paper towels and toiletries, and that nothing has been damaged.. Short term rentals are prone to more wear and tear than their long term counterparts due to the constant change in renters.
During these regular inspections, vacation rental management company representatives need to make a list of all necessary fixes and repairs. If needed fixes are relatively small in nature and do not require a major budget, they can go ahead with them right away. For major repairs the property manager will need to get owner approval. Given the short timeline between guests, this can sometimes be problematic!
Reporting
Last but not least, professional property managers are responsible for making available regular financial and operating reports to the owner. This is usually done on a monthly basis or through an online portal that the owner has access to.
Reporting should include the number of bookings, the daily rates, the monthly revenue, a breakdown of the operating expenses, and the work that the property manager has done. Such reports are a must in the vacation rental property management industry to ensure that investors are aware of the performance of their rental and to build trust between the owner and the property manager.
Most airbnb property managers don’t handle:
Advice on Property Interior Design
Airbnb property management companies don’t typically help owners get their property ready for renting out. Investors should consider an interior design team familiar with recent global and local vacation rental furnishing trends. They know what styles and amenities are most in demand to assure that your property is competitive.
Property managers may suggest different amenities and options to increase revenue, however, they are usually limited to adding major features like a hot tub or a pool. NomadSTR has both free consultative services available for owners/investors as well as local partnerships with interior design companies for a more hands on approach.
Mortgage and Property Tax Payments
Airbnb property managers won’t transfer the monthly mortgage payments and pay property taxes. These remain the responsibility of the property owner. However, top companies in the industry should be able to provide owners with tips and support in this.
Selecting The Best Airbnb Property Management Companies
When choosing the top short term rental property management company to hire, you should consider the following criteria:
Online Reviews and Ratings
The internet has made it extremely easy to check out the reputation of any business. Visit a few different online review websites like TrustPilot, TrustRadius, Capterra, BBB.org, and Google to see the average ranking of the property manager that you are evaluating. Make sure to read through individual customer reviews too, especially the negative ones. Keep an eye for any red flags. That’s one of the most efficient ways to decide whether it’s a smart decision to go with a certain company or not.
Transparent Fee Structure and Reporting
You need to work with an Airbnb management company that you can trust. One way to check whether a property manager is worth your trust is to check their fee structure and reporting mechanism. If a company is unwilling to share their pricing model with the wide community on their website, this might be a sign that there could be other things that they will want to hide from you in the future as well. When choosing, go for a company that displays its fees on their website and that is willing to share with you a copy of the written agreement as soon as you ask for it.
Financial Projections
While most property management companies promise to increase your revenue with an average of X%, the best one should be able to provide exact estimates of your income after starting working with them. As experts on the local vacation rental market, they should know exactly how much occupancy your property can get and what average daily rate you can charge. If a property manager is unwilling or unable to forecast your property’s performance, that’s a strong signal to turn somewhere else.
Local Market Presence and Knowledge
One of the major differences between small property managers and large companies is their degree of familiarity with the local short term rental market. This is not to say that national companies are not aware of local market dynamics and do not have their own network. To evaluate this aspect, it’s best to ask about their local team and your future dedicated property manager. Where are they located? What does their experience look like? What are their credentials? The expertise of the on-the-ground team is just as important as the global reputation of the company. We pride ourselves at NomadSTR on being market experts in each of the markets we decide to manage short-term rentals.
Customer Support and Communication Effectiveness
Being a good Airbnb property manager is about excelling at providing customer support services. You should expect midnight calls with urgent issues that you need to be able to handle successfully within a couple of hours. To test the communication and customer support effectiveness of the company you are considering hiring, check out how quickly and how well they respond to your questions and inquiries as a potential customer. If they are too sluggish with you now, chances are they will be the same with guests in the future.
Value for Money
Make sure you hire the vacation rental management company that promises the best value for money. When you have the projected monthly income and the exact fee, go for the property manager that will bring you the biggest cash flow and the highest return on investment.
Hidden Fees
Do not work with a company if you think they might be charging hidden fees. Check their website in detail, read through customer reviews (customers always make sure to complain about unexpected costs), ask to see a copy of the agreement, and talk to a representative directly. You want to know exactly how much you will need to pay and what services you will get for this fee before signing any property management agreements.
Pros and Cons of Airbnb Property Management
Resorting to hiring vacation rental property management services offers both advantages and disadvantages. Let’s take a look at both.
The most important benefits of working with a vacation rental property manager include:
- Potential to boost Airbnb revenue: Airbnb property managers are familiar with the local market, so they can adjust the daily rates in an optimal way, pushing your income up, month after month.
- Passive income: Since someone else will be fully in charge of all day-to-day tasks at your property, you can lie back and enjoy your passive source of income.
- Local market knowledge: Knowing the local market and the players in it comes with many advantages. In addition to maximizing revenue, property managers can also get discounted rates from supply providers and contractors when restocking or fixing up your vacation rental. This will drive your rental expenses down.
- Hospitality experience: Running an Airbnb is as much a hospitality business as a real estate investing one. Property managers bring experience in meeting the needs of short term visitors and tackling guest requests in a professional manner.
- Access to additional marketing channels: As a host, you will probably list your property on Airbnb and Vrbo and share it on your personal social media accounts. Property management companies have devoted marketing teams with expertise in the travel industry.
- Discounted operating costs: Property managers take care of several rentals, so they buy all products and services. This means that they have access to discounted prices and rates, which will help increase your real estate cash flow.
The biggest drawbacks of hiring an Airbnb property management company include:
- Fees: On average, you have to pay 20%-30% of your monthly rental income to someone else. This could mean that there would be less money left for you.
- Less control over your property: An external person or team will be in charge of most day-to-day activities and decisions related to running your vacation rental business. That’s why it’s crucial to hire a company you can fully trust.
- Less personal approach: Property managers are professionals, and as such they have no personal attachment to your property. Sometimes this less personal, more automated approach might be a disadvantage. To remedy the impact, make sure to work with a company that is paid a percentage of the revenue. This will motivate them to optimize performance and income to boost their own profit.
- Contract terms: When you hire a property manager, you become subject to the terms stipulated in the agreement. You have to make sure that you stick to your end of the deal. The good news is that most short term rental property management contracts can be dissolved relatively easily.
Takeaway
Working with an Airbnb property management company is a straightforward way for investors to free up their time while reaching the full potential of their vacation rental. However, the result depends on the quality of the company that you select. Choose a property management company like NomadSTR that is professional, knowledgeable, honest, driven, and that charges a reasonable fee (ideally, 15-20% of the monthly income). Once you’ve done that, you can either enjoy the real estate income in your free time or work on expanding your real estate investing portfolio.
Short-Term Rental Profit Calculator