Plus: Nine questions to ask potential property management companies before turning your home into a short-term rental
Picture this: You just bought a house, and you love it. You plan to spend a few months a year living in the house, and want to monetize it during the rest of the year. So you look for the right property management company to help manage and monetize your property while you’re out of town.
After speaking to salespeople at various companies, you’re still unsure – maybe you heard all about the benefits of monetizing your home, but not enough about the actual process. You’re likely concerned about protecting your asset and are unsure whether your potential property manager shares that concern. Maybe you heard vastly different estimates on how much your home is expected to make. Or maybe you still have questions and aren’t sure who to ask. So what do you do?
The good news is that there are questions to ask to ensure that a property management company is a good fit for you and your home.
If you think you may want to turn your home into a short-term or Month+ rental and are looking for some questions to ask potential property management companies, read on.
Truth #1: It’s inevitable: A few guests will break your house rules.
Monetizing your home is not for the faint of heart. There will always be mishaps when allowing strangers into your homes, despite vetting them to ensure they will respect your house and neighborhood. However, our vetting process ensures that the likelihood of damage or guest incidents stays extremely low, while still being FHAA compliant.
We use the same vetting process for each prospective guest, while abiding by California’s fair housing laws. Here are the steps our reservations team takes for every booking request:
4 ways we screen potential vacation rental guests
- Work to obtain more information about the purpose of the trip, check their former reviews, and generally look for signs of respect in their messaging
- Look for conversational red flags that suggest that they may be looking for a party house. Tread lightly if a potential guest asks how many cars can park at the house, whether ithere’s is extra bedding for people to crash on the couch, or if they demand that no one checks them in.
- Have all guests sign our Good Neighbor Pledge, providing a written contract in cases of severe damage. Reach out to us directly if you want a PDF version of this document, or use ours as a guide to create your own!
- Consider disabling the Instant Book feature on Airbnb, so you can hear directly from prospective guests prior to exchanging money.
Despite the steps we take, there still is the occasional individual who breaks our rules, or disrupts the neighborhood.
What to ask potential property managers:
Ask them about the details of their vetting process, typical rule compliance for guests, and their check in process. Make sure that they have a plan in place for when guests break rules.
Truth #2: There will be wear and tear, and not every guest will treat it with the same respect you do.
When a guest walks into your home, the space is entirely new to them. They will open cupboards wrong, may not understand that they aren’t supposed to sit in a wet bathing suit on a velvet couch, or may let their dog paw at the beautiful antique door you’d selected for your home.
Everyone lives differently, and you cannot expect that all guests will treat the home as you do. Further, guests are on vacation and may be treating the space a bit more carelessly. We prevent many of these issues during the vetting process, but there will be wear and tear on your home. This is unfortunately the cost of doing business.
What to ask potential property managers:
While wear and tear is inevitable, ask your property manager if they perform an inspection at the end of each guest’s stay. Major scratches or stains should be caught during the checkout inspection.
Further, ask your new property manager if they use the same cleaning company with each checkout. That way you can rest assured that the cleaner assigned to your home will become familiar with your home, and can point out any damage.
Truth #3: Unlike hotels that have several rooms to move guests to, when there is an issue in a short-term rental, moving guests isn’t that simple.
If your A/C goes out during a hotel stay, you can dial the front desk. More often than not, they’ll move you to a vacant room.
When the A/C goes out in a short-term rental, moving a guest to a new home may not be possible.
What to ask potential property managers:
Ask whether the property manager has vendors available for repairs, including for after-hours emergencies. Heating and cooling units, pool and hot tub filters, and plumbing are all accidents that may not wait until morning. Ask them whether they schedule quarterly or yearly HVAC and pool checks, to prevent systems from breaking when guests are in residence.
Truth #4: Setting your rate too high will limit your occupancy rate, and make you less money overall.
We understand how much your home means to you. You designed it with love and care (or worked with a design partner to execute your vision), and genuinely believe that your home should earn top dollar.
However, a good property management company will point out that the supply of rental properties has never been higher and that to compete, many homeowners must either lower rates to achieve high occupancy, or add in some very desirable features that make their property stand out. This is especially true until your home has significant positive reviews and appears higher in the search results.
What to ask potential property managers:
It’s a good idea to ask potential property managers how they ensure homes get the highest possible return. Do they highlight a unique feature of the home? Or use dynamic pricing, i.e. gradually raising rates in relation to favorable reviews and more bookings? Do they lower rates last minute when there is a gap in the calendar?
A great property manager will provide thoughtful tips to increase rates over time. Check out our posts covering the best bedding, kitchen products, and coffee options for your short-term rental. Adding nice touches that show you care will lead to stellar reviews, which lead to more online traffic and bookings, which creates the opportunity to increase your nightly rate.
Truth #5: Insurance on sites like Airbnb and VRBO oftentimes side with guests, and do not cover the full amount of the damage.
Airbnb uses an insurance system called AirCover, and VRBO uses one called Accidental Damage Protection. Our insurance partner through Open Air Homes has proven to be better insurance, which is why we are moving towards more direct bookings. We have a great relationship with our insurance provider and have found that their insurance is far superior to the major booking platforms’ plans.
The industry used to rely on Security Deposits, but the industry has moved away from this trend and now relies on home insurance plans. There are pros and cons to each, but as the industry matures, insurance seems to be the path that more guests are comfortable with.
It is important for property managers to be completely upfront with you about their insurance, along with their experiences with AirCover and Accidental Damage Protection.
We’ve found that despite taking the necessary steps to file claims with AirCover, they may not pay out the full amount necessary to cover damage. They may side with the guest or pay out less than what you or your property manager feel is owed.
This is an imperfect system – Airbnb is a public company trying to reduce expenses. It’s important to know that there will be some unforeseen costs of doing business when there are damages.
Note: While we have had better experiences with VRBO’s system for damages, we still face issues when trying to collect the entire damage amount.
What to ask potential property managers:
Ask your property management company a few pertinent questions regarding insurance: do they prioritize direct bookings, and who is their insurance partner? Have they successfully filed claims through Airbnb, VRBO, and their own insurance provider? Do they inspect homes directly after a departure and file claims within 24 hours when there is damage?
A good property management company will also confirm you have the correct insurance policy in place to act as an additional layer of insurance, should anything terrible go wrong.
Truth #6: You should never, ever cancel a booking.
Once a booking is confirmed, unless there is an extenuating circumstance, you should never cancel. As you may have seen on social media, hosts who cancel are a poor reflection of the vacation rental industry. Further, as mentioned above, oftentimes there isn’t a comparable home to move the guest to.
Cancellations also affect your or your property manager’s ability to maintain SuperHost status on Airbnb. Costing your property manager SuperHost status affects the status of every other home they manage. Inversely, another homeowner canceling can have a ripple effect and tank your home’s status.
Our service agreement contains a clause that homeowner partners cannot cancel confirmed bookings. While this may seem harsh, it’s necessary to be seen as a great partner and receive better placement for homes on sites like Airbnb and VRBO.
What to ask potential property managers:
Ask for the details of their cancellation policy, and whether they allow other homeowners to cancel confirmed bookings. If the answer is yes, this could affect your home long-term.
Truth #7: The Instant Book feature can be bad for the industry and your neighborhood.
Sites like Airbnb and VRBO often tout the benefits of enabling Instant Booking for your home. It’s a factor their algorithm takes into consideration when determining the placement of your home on their site.
At Open Air Homes, we advise every homeowner to disable instant booking. While Instant Book offers the benefit of higher placement is a benefit, we believe it’s also inherently bad for communities.
Instant booking may attract guests who feel entitled to treat homes poorly. We firmly believe in doing all we can to mitigate that, especially amidst backlash against short-term rentals in residential communities.
We believe that guests should be required to have a conversation prior to booking. While we strongly believe in fair housing laws and anti-discrimination measures, we are equally committed to mutual respect.
What to ask potential property managers:
Do you enable Instant Book on platforms like Airbnb and VRBO? If so, how do you vet guests or handle issues? If not, how do you attract renters?
This is one of the reasons we take the design of our homes so seriously and strive to offer highly desirable properties for our guests.
While we see a slight decline in our placement as a result of turning off Instant Book, we make up for it with a 4.96 average rating on Airbnb, SuperHost status, and truly remarkable homes for rent, priced within the current market demand.
Choosing to use the instant book feature ought to be your decision, not your property manager’s.
Truth #8: The vacation rental industry lives and dies by reviews.
The short-term rental industry is a review-driven business. Reviews for your home likely matter more than anything else when it comes to placement in the algorithm on sites like Airbnb and VRBO.
Negative reviews should be handled carefully and with hospitality expertise. Steep discounts may need to be given in order to mitigate guests who are upset because something did in fact go wrong during their stay.
What to ask potential property managers:
Ask your property manager what their stance on refunds is when issues arise.
A good property management company understands that successful long-term monetization of your home lies in your reviews, and will be fair and balanced between the guest and homeowner. This includes finding a fair refund amount that shows the guest that they care about their experience.
Truth #9: Proper maintenance of your vacation rental property is a business expense you’ll need to plan for.
The proper maintenance of your property is a business expense you will want to plan for, because issues do come up, and they are not always the fault of the guest.
We have seen homes descend into a downward spiral of low maintenance and bad reviews. We have dropped homeowner partners who are unwilling to fix known, major issues that each guest brings up. At some point, it becomes almost impossible to bounce back from the bad reviews. Proper maintenance of your home will prevent issues from arising and lead to better reviews.
It also has the added benefit of allowing you to sell your investment property more easily, with the knowledge that it’s fully maintained and up to date.
What to ask potential property managers:
Ask your potential property manager whether they have a protocol for regular maintenance inspections. It’s also important to ask what steps they take to limit potential maintenance issues.
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