The many reasons that a property management professional is a must for your rental.
There are those among us for whom the American dream isn’t just about owning their home. It’s also about owning a vacation property with a spectacular view of the Atlantic Ocean, a large deck, a hot tub and a pool. It’s about having a vacation retreat that’s meticulously maintained and always awaiting their arrival. Such homes can stretch nearly everyone’s budget, especially budgets for those unable to pry themselves away from their jobs for only a few days out of the year. After a quick cost/benefit analysis, some may believe that the dream of owning a vacation home might forever remain solely a dream.
But here’s an open secret: You don’t have to be Warren Buffett to afford this particular luxury. If your leather wallet isn’t a cash-filled cow, and yet you treasure the idea of vacation home ownership, you might consider engaging a sound property management company to market your home to vacationers. As a bonus, they will also care for it while you’re away. By renting out your vacation home on a short-term basis, you’ll gain two things: revenues to help pay expenses, and access to the property itself.
Property management is a cottage industry here on Hilton Head Island. Why here of all places? The island offers a perfect formula: a brand-name vacation destination with a long rental season and an abundance of local property management expertise.
The business model for vacation property management, however, is somewhat involved. Think of it as creating a “three-way benefit balance” among the owner, renter, and the property management company. The renter gets a furnished property with a kitchen instead of a hotel room, while the owner gets a large portion of the total revenues generated. A property management company gets a portion of the gross revenues (anywhere from 10 percent to 30 percent) in exchange for providing a lengthy list of necessary or desired services. So what does a property management company do to earn its lunch? The short answer is: a lot.
The services they provide can be broken down into several categories. Bear in mind that not all companies offer all of the services listed here, nor do they all allocate the same level of resources to a particular category. If, say, your company takes only 10 percent of gross revenues, then it is likely not going to have the same marketing budget as a company that takes 25 percent. In any case, here’s a thumbnail sketch of what property management companies can do:
- Market your property. This includes outreach through brochures, direct mail, ads and various Web sites. Use of the latest technology and marketing tools is becoming increasingly common for many property management companies. Not only does this enable them to reach a greater pool of prospective buyers, but it also allows them to establish a more trusted presence in an often insecure marketplace.
- Provide a staffed front desk, with check-in and check-out services. Again, the level of service varies widely, with some companies providing personal assistance with a smile, while others offer little more than an envelope containing keys, directions and a map.
- Coordinate home maintenance. This is especially necessary in the humid, maritime environment of Hilton Head Island, where critters, salt air, and mold are a constant threat to an absentee owner’s home.
- Coordinate housekeeping. This service also varies widely from company to company, with some offering first-rate services to guests, while others offer the basics.
- Accounting. Property managers are responsible for rent collection, tracking deposits, and many offer administrative work, such as ensuring mortgages, taxes, insurance premiums and maintenance bills are all paid on time. Many also provide financial consultations to property owners. It is challenging work, but financial service is invaluable, as it allows for the delineation of expenses and revenues, and delivers the all-important bottom line to the owner.
- Perhaps the most valuable aspect of having a property management company manage your home is its availability to you when it’s not making money. Long-term rental, on the other hand, means your vacation home is effectively someone else’s for the duration of the lease. Renting it out by the week allows you those wonderful times, especially during the spring and fall, which the rest of the world doesn’t associate with Hilton Head Island. But that’s just as well. Let that be your secret.