5 Short-Term Rental Property Manager Headaches
Founder & CEO
Short-term property management can be very profitable, but before you get started it's important to know about the unique challenges that you will face.
Managing properties at scale – whether it’s real estate, hotels, rentals, or something else – is certainly no easy feat, but short-term rental property management comes with its own special set of challenges.
First, many vacation rentals in the U.S. are owned by individuals and managed by a property management company (PMC). This adds a layer of fiduciary responsibility for the PMC to accurately report and distribute its owners’ income as well as its own. And second, unlike long-term rentals, where guests are under contract for months or years, the nature of short-term rentals is to be a high-frequency, high-traffic business.
Even for those with experience in property management, it can be easy to overlook small details that compound over time in this fast-evolving business environment. To help you prepare for the road ahead, learn what challenges you’re likely to encounter as a vacation rental property manager, particularly as you continue to scale your business.
Damage & troublesome renters
Unlike renting to someone through a lease, you can’t do background checks on every renter that books out your property. While Airbnb does provide a limited vetting process, this can’t be said for every platform, and you should have as many protocols as possible in place for potentially troublesome guests.
For starters, make sure that your homeowners are properly insured so that claims can be easily filed in the event of damage. Furthermore, it’s important to have on-call, on-site personnel that can look in on any complaints or other situations that may arise.
Carefully-enforced guest policies are key to avoiding the troublesome renter situations mentioned above. Make sure that each of your guests signs a rental agreement prior to booking that indicates the consequences for damage, cancellation, no-shows, fraud, and beyond.
Keeping yourself and owners protected through a blanket contract that covers rules and regulations for all the properties you manage is the best way to ensure you stay covered in the event of legal action.
Moreover, it also helps you deal with day-to-day circumstances like last-minute renter cancellations. If you have a clearly stated cancellation policy, you can avoid any gray areas with changes in bookings.
Maintenance & contractor management
With vacation rental property management, there is a good amount of maintenance required. High turnover means more opportunities for wear and tear, so having a well-trained and experienced maintenance staff is vital. Your housekeeping crew should be instructed to keep an eye out for new damages between renters, and routine checks should be done to ensure everything in a home is working properly.
Your maintenance crew might be employees or they might be contractors. If they’re the latter, you’ll want to have effective contractor management procedures in place, including separate accounting for them and your full-time employees. Using a flexible vacation rental accounting platform can help keep these expenses separate.
If you’re managing a vacation rental property, then chances are you’re overseeing a tourist-heavy destination. This means that seasonal fluctuations are a reality of the business. If you’re managing vacation rentals near a ski town or a beach, you’ll probably want to consider a multitude of factors, such as protecting the property against heat or freezing temperatures as well as the effects of seasonal demand for rentals.
Not only should you implement special maintenance procedures for each season (such as pipe thawing in winter or stronger pest control in summer), you should consider staffing availability. Many vacation rental property management companies hire seasonal employees, but figuring out how to factor these employees into your existing accounting operations can be complicated.
This is another area where having a knowledgeable vacation rental accounting service can help.
Monthly accounting cycle
Accounting for vacation rentals is unique because the business has so many different moving parts. Most entrepreneurs who approach short-term rentals with a basic knowledge of accounting and a can-do attitude will quickly (and sometimes painfully) realize that it’s more work than they thought.
The need to allocate funds from guests to owners, the allocation of expenses and vendor payments, the need for trust accounting, and the push for detailed, accurate, and on-time owner statements, all make the monthly accounting cycle painfully slow for a business that thrives by staying on its toes.
In fact, frustration with owner statements is one of the most common reasons our clients say pushed them to revamp their accounting and finance processes.
With the recent launch of the Owner Statement Portal within VRPlatform™ by Ximplifi, property managers now have a way to speed up and simplify the monthly accounting cycle.
The Owner Portal builds on the accounting automation within VRPlatform™ to instantly calculate and post management commissions, owner revenues, and owner expenses, prepare detailed owner statements, and share them with owners through an online interface. Most importantly, the PMC can customize how revenues and expenses are grouped and labeled, which is a key piece of functionality that other apps miss.
Short-term rental management might come with a few headaches, but you can set yourself up for success by having the right systems and strategies in place to mitigate them before they become an issue. This includes documenting policies to protect you and your owners from damages as well as implementing an automated accounting system to help you easily manage income, payroll, bills, vendor payments, and owner statements, all in one place.
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