My husband and I bought a second home on the Big Island in Hawaii back in 2005. We were in our forties and wanted a place where we could spend half of our time during retirement. Perspective is a funny thing. Although we talked with lots of vacation rental homeowners who were actually selling their home because it was too difficult to maintain, we still felt strongly that this was a good idea. We jumped in with all four feet.
Why Choose the Right Property Manager
We gave vacation rental considerations a passing nod for our second home. As long-time property owners and managers, we thought this was a non-issue and that renting it out when we weren’t there would be a breeze. How hard could it be? Upfront, we knew we were going to replace the existing property manager who was charging 50% in fees, with a less expensive one. However, we had no idea that the new company would only end up saving us ~10% after all of the ticky-tack fees and expenses were added to our bill.
The Journey in Choosing the Right Property Managers
We learned that we need to choose the right property manager for our second home. We first went with a far cheaper company that charged 15% in fees. The problem with this company was that they were headquartered 30 minutes away from our condo. This proved to be a challenge as they couldn’t service the home properly, and were often given poor reviews by guests because they weren’t close enough to quickly address issues that popped up. Given the reviews, we noticed a steady decline in bookings that resulted in lost revenue.
The next company we hired for our second home was a fabulous boutique agency. They updated the look and feel of the property, helped us to price it correctly, and consistently rented it out. They also took great care of the home. While we were concerned about value erosion, given that there were multiple guests coming in and out of the home, this manager alleviated our worries by keeping the property in pristine condition. They charged a higher commission, but it was well worth the cost due to the increased cash flows and appreciated home value. Most importantly they removed all of our headaches from the equation.
Unfortunately, we owned our second home in 2008 when the bottom went out of the real estate market. During this time, visitors to Hawaii dried up, and our occupancy rate plummeted. Eventually, people started coming back to Hawaii, and we were able to get the occupancy rate up to about 50%. Then, unfortunately, our beloved property manager decided to close their business, and we had to find a new agency.
The new company charged less in fees and commission, but they also charged less per night, which attracted a completely different clientele. Occupancy was okay, but the rate and traffic in the property increased. We noticed however that renters were consistently calling us to flag broken items. A faucet in the kitchen, a chair in the dining room, a stains on the carpet, a broken window in the garage. Ultimately, we were tired of the phone calls and knew it’d be hard to find another great property manager. We decided to close up shop and sold the property in 2019.
Things to Think About Before You Buy
- Before you buy your property, make sure that you have someone who can help you choose a strong property manager.
- Consider all the costs of owning a vacation home, including homeowners fees, property management commissions & fees, taxes, turnover costs, cleaning services, electric & gas (AC in Hawaii was extremely expensive!), and any other expenses.
- When you choose the right property manager, be willing to pay a little more money. They are worth the additional cost, and will do wonders to drive demand and, more importantly, allow you to sleep well at night!
Looking to find a top property manager for vacation rental or buying a property? Topkey is a free service that will help you find the right manager quickly and efficiently. Get started today