Find Out Why Virtual Management is the Future of Property Management (Part 1)

Well, it's no secret that people are managing their short term rentals virtually wherever they happen to be in the world and wherever the owners happen to live in the world, myself included. My team and I have managed tens of thousands of guests in my personal portfolio and I've spent most of that time thousands and thousands of miles away in South America where I spend most of my time. So I want to talk this week about why I think virtual management is the future of property management. Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick, actionable items to acquire, manage and scale your portfolio. I'm your host, Tim Hubbard.

Welcome back to the Short Term Rental Richness Podcast. We're talking about a topic this week that really excites me. And if you've listened to the show for a while, you know that it does because we have lots of episodes on how to better virtually manage our properties and how to do it remotely. Well, this week I want to talk about why I think virtual management is just the future of property management. I want to give you three main reasons why I think this is the case. And I want to end with some questions that you can use to talk to your property manager about or if you're managing your short term rental yourself, questions that you should be thinking about things that you should be doing with your own property. So first of all, let's just start off with like a real quick evolution of property management. I remember when I had my first long term traditional rental and I put it up for rent. I was managing it by myself. I even put a sign out front of the property that said for rent. I put it online, I was taking phone calls, I was taking emails, I was driving to the property to show potential tenants. I was printing out actual lease agreements and getting signatures in person and doing walkthroughs. And it was just a lot of work, right? It used to be that way. It used to be that way for traditional property management, but that has come a long way. Now we have companies like Blackstone, for example, that have acquired nearly $600 billion in real estate. And there's no way they'd be able to manage all that real estate if they didn't have all the tools and the software programs to help facilitate, facilitate those interactions, those transactions. They just wouldn't be able to do it if they didn't have all those tools. And so traditional real estate investment companies and large property managers have adopted a lot of these tools as well. Now when we look at the short term rental space, it's no secret that we have a lot of tools now too. And companies like Vacasa are managing thousands of properties. Companies like Evolve Vacation Rentals has popped up and now they're managing close to 30,000 properties. But not all property managers are managing their short term rentals equally. So I want to talk about the difference between virtual management and traditional short term rental management. Why? I think virtual management is the way to go for a lot of people. And the first reason we kind of just touched on there is that it's just easier to do than it ever was. And you know what? I think it's going to continue to get easier and easier as we have more tools, as our guests become more familiar and comfortable with the way people are managing their properties. It is the future in my opinion, and it's my personal management strategy that I've adopted. However, while virtual management can be a great option, it doesn't make sense for everyone. And this brings me to reason two, why I think virtual management is the future of property management. Because more and more people are going to be using this strategy, working with another virtual manager. So why would someone choose to not virtually manage their property themselves? Well, there's a couple main reasons here. The first one is it doesn't always make financial sense. So I talk a lot on this channel about how you can do this yourself, and that is what I'm recommending. But it doesn't make sense for everyone. And if you want to have a team that's covering your property 24, 7. Well, unfortunately you can't just hire one person. You can't even hire just two. Three. I think it really takes a minimum of five team members that can of course be virtually before you can sort of hand off the operations of your property and let them handle it for you. And to hire five people doesn't always make financial sense. If you're just getting started and you have just a few properties. Even if you have 15 properties, depending on the actual net income that you're making, hiring a full team could take all of that net gain away. And I know this personally. As I grew my portfolio, I wasn't always working with my own team. I was working with some other outsourced providers, different managers on the ground. I tried lots of different options. Fortunately, I'm at a place with dozens of properties now where I have my own team. And they're amazing, they do amazing job, and we just keep getting better and better. So that's the first reason it doesn't always make financial sense for us as short term rental owners to hire our own team. And reason number two, why a lot of people wouldn't want to manage their property themselves, even if it is virtually. And that's because it takes a lot of work to hire a team. So not only does it cost quite a bit or it can cost quite a bit, but hiring multiple people takes a bit of work. And sometimes someone gets sick or someone can't show up and you need someone to fill in for them. So it takes a lot of work to hire your own team. And this could just be creating another job for yourself, right? If you start investing in short term rentals to earn higher returns, which I still believe that we can earn some of the highest returns in real estate with the right properties. If that was your main goal and it wasn't to create another job for yourself, well then hiring your own team is not going to be the ideal option either. So reason number one, why I think virtual management is the future of property management is that it's easier, right? We have way more tools than we ever had. But reason number two, I think it is the future of property management. Why most people adopt it is because not everyone wants to manage their property. And it doesn't make financial sense for a lot of people to manage their own property if they want it managed 24,7. So this brings me to number three, why I believe virtual management is the future of property management. And that's that traditional property management is a lot more expensive. Yes, it is. Now, not to say it can't be a great option for a lot of investors. And it certainly is someone that just wants to buy an investment, doesn't want to have to do anything. Working with a traditional short term rental manager can be a great option. And you know what? A lot of times they dominate a local vacation rental market. They might have their own direct booking website or which brings in a ton of traffic. And so they might not even need to rely on Airbnb and some of the other channel managers. So it can be a great option. It's definitely the most hands off. But it all comes at a cost, right? So traditional short term rental managers are going to charge between 20 to even 40%. And remember this, 20 to 40% is coming off your gross income, it's not coming off your net income. So it really affects your return with a short term rental. And there's one other thing to keep in mind if you're working with a traditional short term rental manager, and that's that most of the time they own your listings. So what do I mean by they own your listings? Well, when you put your property up on Airbnb, you start to collect reviews and you're building a history with that property. Remember, every single review that we get for our property helps future reviews. So owning that history and having a good history becomes a very valuable part of your short term rental. But most of the time, when you work with a traditional short term rental manager, they're going to own your listing, so they're going to create their own with your property. They're going to be building reviews. Hopefully they're doing a really good job. But at the end of the day, if they're not and you decide to part ways, maybe you want to do it yourself. Where you're going to have to start over. You're going to have to start from scratch with zero reviews. And that could set you back a little bit. We know that a property that's got 100 five star or great reviews versus a property that has two five star reviews, we know that the algorithms are going to push the property with more reviews up. And so starting over could be a challenge for you if you decided that your relationship, the property manager you're working with just didn't work out. So that's something to keep in mind. Okay, so more and more people are managing their properties virtually because it's easier. They are working with a virtual property manager because they maybe don't want to do it themselves or it doesn't make financial sense. Or three, they don't want to work with a traditional property manager because the 20 to 40% commissions are just too much. So reason number four, why I think a lot of people would want to consider working with a virtual property manager is that they already have a lot of the pieces in place. They have a great property. Maybe they have good housekeeping connections, maybe they have a good maintenance contact on hand and they just don't want to do all the daily operations. Handle guests. Maybe they don't know how to handle guests properly or they don't know how to get reviews removed or work with resolutions with Airbnb, or list the property themselves. Maybe you're just getting started and there is a lot to learn in the short term rental industry. So by working with a virtual manager, you can save a fair amount of your property management expense, but still kind of have the best of both worlds. So if you're one of those owners, you might want to consider working with a virtual property manager. I am super excited to Announce that we are in fact working with other owners. Now we are partnering with other owners and we're using my personal team that I've spent years building to help manage other people's properties. So again, I think this is something you can definitely do by yourself. But once you start to scale 3, 4, 5, 10, 15 properties, it definitely becomes a job unless you pass off some of the tasks. So if you're an owner out there and you have a lot of the pieces in place already for your short term rental, well, you might want to consider virtual management. I mentioned of all vacation rentals, again, they are taking this approach now. They're not necessarily handling your whole guest interaction. From what I understand, they don't handle the middle part. So after a guest checks in, they handle pre and post booking in the middle they are going to coordinate with a contact that you already have. So check out some virtual property managers out there. They're not all equal, they're not all doing the same things, they're not all offering the same services. But it could be a great option for you. Another thing that's come up more recently is that a lot of owners are taking medium term stays which require a little less work. Right. If someone checks in for a month versus an average three night stay, well then there's a lot less going on. But there's still pieces going on. Guests still have problems, they still have questions, we still need to verify those guests and there's some additional things that we need to do with medium term stays. So if that's part of your strategy as well, well then virtual management could be a good option for you too. So we got a great question from a fellow podcast listener and this is in regards to how you can help manage other people's properties. So let me just jump into his question here. First of all, he says, I love the podcast. I listen to it all the time in the car. I probably listened to just about every episode. Yeah, all 170. So thanks Seth. This came from Seth by the way. Glad you like it and I hope that the content going forward helps you to better manage whatever properties you are planning on managing. And for everyone else out there, he says, I've recently started managing my in laws properties and I'd like to suggest a topic that I would certainly benefit from knowing more about. Would love an episode or two about how to best set up, structure and handle all the different accounts tools involved with managing other people's properties. And there are quite a few. In summary, you touched on some of these aspects in past episodes, but I greatly appreciate an episode dealing with the right best way to structure and handle all the accounts involved when adding someone else's property to your str management portfolio. So let's get into this last piece and this is the questions that you want to be asking yourself or a potential property manager if you are looking to have your property managed or if you are planning on managing someone else's property. The first question is how much experience do they have? And they've been doing this for a long time. Do they own their own properties or what types of properties do they work with? Right. Remember there are lots of different short term rentals from tree houses to villas along the ocean and they do have slightly different management styles. So you want to know about their experience. So another great question if you're looking for property manager is that are they going to own your listings? And so for you Seth, if you're managing your in laws properties, if they already have a great amount of good reviews, then it probably in the owners and your in laws best interest to keep that account as it is with all of those reviews. And they could do two things. They could share their account with you as a co host which gives you access to almost everything except for filing resolutions. If they want you to have full access, well then they could just simply share their credentials with you. So that is a good option if they're comfortable with that. Then the question comes up, how do you handle the money? Do you send it to them directly or keep the same way it is and charge them on top? Or do you have it all come to you and then you send them a payment at the end of the month? That is a traditional way that most property managers do it. That's how my company is doing it. But Airbnb does have the ability to split revenues so that you could have a percentage go to you and you could have the rest of it go to your in laws in this example. But there's no one right way to do it. I've even seen companies now just charging a flat fee for virtual management services. And so that could be another potential option too. Everything just goes to the owner and you may be charged a monthly fee. Another option could be to split profits over a certain amount of income. So let's say your your in laws wanted to earn at least fifteen hundred dollars a month for themselves, but you knew the Property could make $3,000 a month. So you begin working with them, you partner with them, you help them manage the property and when that property makes $3,000 a month. Maybe you both split the difference above what your in laws wanted to earn above the 1,500. So you'd split the $1,500 in additional income, for example. Just one other way that might work for you. Another question that you're definitely going to want to ask a property manager is what tools they're using. So there's all kinds of tools available, pricing tools, digital guidebooks, property management software platforms. Are you going to be able to see your transactions? How is all of the back end working now? A lot of the big management companies have their own proprietary software. While that saves a lot of money on costs, it's not always the best idea because if we think about it software companies, specific software that is popped up in the short term rental industry a lot of times is to serve a specific purpose. And so to have one program that is the go to for everything, that's quite difficult. And I would just say that that does not exist. So if you're working with a manager that's using multiple different software options, that can be a really good benefit for your properties. Seth, you asked specifically how would you structure and handle all the accounts involved with adding someone's property? And so you're going to want to add their property to all these different software sources as well. I think because there's so many software pieces and because there's always new ones coming out that you might decide to switch to that, it's probably easier for you to handle all those costs on your end or charge them back in a flat fee to your in law because those are things that are just always changing. That's how traditional property managers would do it as well. So over the coming weeks we're going to introduce some more ideas, more concepts, some more things that your property manager should be doing for you, or if you're managing your properties yourself, things that you should be doing at every step of the way with a guest reservation. So I hope this information helps you to find the best property manager or to improve it yourself. There are a lot of moving pieces that go into this and as I mentioned, if you're interested in working with us directly, we'd be happy to. This is something I focused my career on for years and years and I've spent a lot of money and I've built an amazing team that I trust that manages my property better than I ever could by myself and also at a discounted price to what I would pay to a traditional property manager. So if you're interested in that at all, you can head to str.

There's property management button there. And stay tuned. In the coming weeks, we're going to talk about everything you or your property manager should be doing before a guest checks in while a guest is in your property, and what you should be doing after that guest checks out. Until next time, I hope you have a fabulous week and I'll talk to you soon.

Want to get on the fast track to financial freedom through short term rentals? Well, it all starts with the properties you acquire, but you want to make sure that you acquire the right properties. I want to give you my ebook that will show you how to do just that. There is no charge. It's my gift to you for being one of our subscribers. Just go to restmethods.com that's R E S T methods dot com.