Corporate rental units have started to pop up all over the country, especially in thriving metro areas. Companies like Airbnb and VRBO have made renting out your investment property on a short-term basis more popular in recent years. Everyone is now ready to get in on the action to earn some extra money on their rental – whether they’re a first-time or seasoned real estate investor.
But, are the owners jumping on the short-term corporate rental bandwagon prepared to manage and operate their units at maximum efficiency? Operationally, there are many things to consider before listing your unit as a corporate rental. This article explains why you need to hire a property manager to oversee that process.
Why a Property Manager Is Right for Your Corporate Short-Term Rental
If you’re thinking about leasing your unit on a short-term basis, here are four key reasons to hire a property manager. They are experts at: 1. Being legally compliant with local short-term leasing laws2. Maximizing rental returns3. Using technology to improve repairs and maintenance4. Providing great customer service while turning units quickly Without further ado, here are the four main reasons to hire a property manager for your short-term rental.
1. Being Legally Compliant with Local Short-Term Leasing Laws
One of the most compelling reasons to hire a property management company is to help you navigate short-term leasing laws, which can vary greatly by municipality. For instance, you can only host short-term rentals in San Francisco in the same dwelling where you’re a permanent resident. You must reside in that dwelling at least 275 nights per year. If a property features multiple dwelling units, then you can only host short-term rentals in the same dwelling unit where you also live as a permanent resident. The next step is to register as a business to operate the short-term rental.It’s practically a full-time job to remain legally compliant if you’re operating a short-term rental. Wouldn’t it be easier to have an experienced property professional to navigate these complicated laws for you? With the compliance piece under control, you can focus on growing your rental portfolio and boosting revenue.
2. Maximizing Rental Returns
Property owners who lease their units on a short-term basis seek the highest rental profits possible. Perhaps they operated their property as a long-term rental and noticed short-term rentals in the market that appeared to outperform long-term rentals.
Analyzing a Rental Property in an Urban Market
Mynd Property Management recently analyzed the financial performance of two apartment units in the same building in the Lakeside submarket of Oakland, Calif., a popular destination for millennials and travelers. For a year, we operated one unit as a long-term rental, and another as a short-term rental. Even though the property management fee was higher than the management fee charged for operating a traditional rental due to frequent turnover, cleaning costs and other daily management oversight, the short-term Lakeside rental outperformed the long-term rental in the same building. Based on Mynd’s research on a short-term rental unit vs. a long-term rental unit in the same Oakland apartment building:
- The increase in annual revenue was nearly $18,000 or 69.7% for the short-term unit, compared to the long-term rental unit.
- The increase in annual profits was nearly $10,000, or approximately 40% compared to the long-term rental.
3. Using Tech and Data to Improve Repairs and Maintenance
Property management firms with a large footprint tend to have more resources to scale, including more professionals and techs in the field. In Mynd’s case, we can attract the highest-quality vendors, such as cleaning crews, as well as repair and maintenance crews, at reasonable prices.Negotiating low cleaning costs is a major factor in hiring the right property management firm for your short-term rental, since cleaning has to be done so frequently. A skilled property manager also diagnoses potential repairs and maintenance needs at your rental unit, instead of dispatching a field tech immediately. They can then pass those efficiencies and cost savings on to their property owners, which maximizes their rental returns
4. Providing Great Customer Service While Turning Units Quickly
A high-quality property manager also provides the best customer service for their most valuable asset: their residents. This is especially important when you have to turn units more frequently than you turn long-term rental units. It’s also important when dealing with a more transient group of renters, such as vacationers, millennials or thrill-seekers looking for great entertainment and cultural experiences. Taking great care of your residents attracts prospective short-term renters and improves your online reputation. Positive, genuine online reviews from Google Business and other websites helps you attract other residents to your short-term rental unit.
If you’re operating a short-term rental but you’re located far from the property geographically, great customer service is absolutely critical. That’s why a property manager should offer these services to their residents and prospective residents:
- 24/7 responsive customer service, both online and by phone
- SMS-enabled communication and chatbots
- Smart locks to provide secure, easy and seamless access to rental units
Up Next: What’s Best for You? A Short-Term or Long-Term Rental
When determining the best use for your rental asset, an investor should hire a property manager who understands local leasing laws, how to maximize immediate return returns and one who understands how important customer services is. In the meantime, stay tuned! We will soon launch a new blog that compares which type of renal property is right for you as an investor: a long-term or short-term rental.