When you first started renting out your home away from home, you may have thought it would be a fun way to create a new income stream while helping others enjoy their stay and managing a vacation rental in a destination you love. However, you may now own and manage more than one property, are noticing that you are not making as much revenue as you once were or are feeling overwhelmed with the prospect of navigating regulatory and compliance changes. In fact, you may be considering hiring a manager to help you run your property.
Avalara, in collaboration with Phocuswright, recently produced a white paper, “The Professionalization of U.S. Short-Term Rentals,” which surveyed over 442 U.S. short-term rental (STR) hosts, and 90 short-term rental property managers (PMs). The study uncovered insights into the evolving role of PMs in the STR ecosystem including the top reasons hosts opt to involve a professional in the management of their short-term rental. From staying on top of new local STR restrictions, mandates and lodging tax compliance, to handling rentals in markets that are newly competitive, utilizing the right technologies aimed at maximizing marketing and profit potential and, significantly, being in close physical proximity to the property, many hosts will reach a point where it makes sense to check these critical boxes and engage with a PM.
Here are four signs that it is time to shift to a property manager for your short-term rental:
1. You are faced with newly implemented restrictions, regulations and compliance burdens. As state, county and city governments wrestle with rules and regulations in the short-term rental space, hosts can find themselves grappling with changing STR regulations and ordinances, as well as compulsory tax requirements. It can be over- whelming, but the desire to be in compliance is strong, with 86% of hosts reporting that they care about complying with local regulations and being viewed as good neighbors. PMs can help hosts fulfill this desire to stay on top of regulatory changes as they have the expertise and experience to navigate changes and ensure compliance for properties, including handling lodging tax compliance, STR licensing, registrations and legal issues that may arise.
2. Your STR is now in a competitive market. As small towns and rural destinations rise in popularity, your STR may now be facing greater local competition. If you find that your STR is no longer consistently booked, or that you are not getting top dollar, it might be because the competition in your area has increased. Property managers utilize the latest technology, including dynamic pricing tools to manage shifting consumer demands, re- booking after last-minute cancellations and adjusting pricing to ensure that the properties they manage have higher occupancy rates and a competitive edge.
3. You are looking to maximize profits. Along with more competition in the area from other STRs comes the challenge of making sure that guests can find your property to rent. This means starting or increasing your digital marketing efforts, which can be time-consuming as well as challenging if you are unfamiliar with digital marketing tools, and because of the broad array of digital marketplaces and sites available today. Of the hosts surveyed, a majority said that in- creasing profitability was their core business goal. From their industry and technology knowledge to their efficient procedures, savvy PMs simply know how to promote properties across channels and platforms to bring in the bookings at optimal prices and manage all other aspects of your STR.
4. Your short-term rental is at a distance. Perhaps you have moved or invested in a destination you love to visit and managing your STR remotely has become difficult. Hosts normally rely on third-party vendors including cleaning services, landscapers, accountants/bookkeepers and more.
A property manager is another type of third-party service, but one that can help manage most other vendors or even provides some services themselves. From overseeing guest turnover to hiring vendors for any maintenance or fixes in-between, there is a tangible relief to entrusting your short-term rental to a local property manager who can quickly address any concerns that guests may have.
Know the Signs and Your Options
Many hosts have already decided to entrust their business to a property manager, and it is easy to see why. Navigating new regulations and ensuring compliance, being competitive in your market by implementing technology tools to increase revenue, maximize profits and promoting the property by integrating digital marketing, and taking care of the day-to-day operation of the property are all things that property managers can do in excellence. If any of these four signs ring true for you when it comes to running your STR, it could be time to consider shifting to a professional property manager.
Pam Knudsen is an executive at Avalara, leading multi-tax teams including Lodging, Beverage Alcohol, Telecommunications and Sales & Use Tax. She serves as a leading voice in vacation rental tax compliance and regulation, in addition to bringing in-depth experience across software/SaaS technology as well as ERP systems.