Here in Nashville, some think the competition for property managers is FIERCE. While we will always welcome a new client that is a great fit for us, and vice versa, we also understand property management is NOT one size fits all, and often, if a client isn't right for us, or we're not right for them, we'll happily refer them out to other managers we know are killing the game. But how do you choose which manager is right for you? Some may "follow their gut". Others may be numbers-folks who want hard data and decide based on spreadsheets. Whatever your style, there are some not-to-be-missed questions to ask ANY management company you're interviewing. Here they are (along with our answers!):
1. Are You VLS Licensed?
Why: Here in Tennessee, it is required by law and the Tennessee Real Estate Commission that ANYONE managing a property that is not owned by them personally must obtain their VLS license. By working with a firm or agent that does not have their VLS license, you put yourself and your business at substantial risk. First, your company is not being monitored by anyone and second, if they get caught, they will be issued a "stop order" and you'll lose thousands of dollars in reservations. NOT worth it.
Beckon's Answer: Yup! We hold a VLS license for both our firm, and our primary agent, Shaun, as required by TREC and Tennessee.
2. What's Your Cleaning Flow?
Why: Probably the number one reason we take over a property that was with another manager (or sometimes even self-managed) is because the cleanings are hard to get right. Different companies have different flows. Some companies do laundry onsite. Others offsite. Some companies don't do laundry at all. Some companies send in 2-4 people to get the job done as quickly and efficiently as possible, while others have one cleaner "own" each property and spend 4-6 hours each flip. Some owners expect full inventories every flip, or have specific requests that they desire to see for each guest. There is no "right" answer here, just one that works for you (or not).
Beckon's Answer: One of my (Isabeau) passion projects is giving opportunity to moms. This company started when I was a single mom, unsure of how I'd ever provide the opportunity I wanted to for my son, let alone have the flexibility of time to pick him up from school or go to his soccer games. So, most of our cleaners (background checked independent contractors) are, indeed, parents. Our cleaners are expected to spend 3-6 hours in each property they clean, and they typically get the places sparkly clean in that timeframe. Sometimes, they even bring their kids with them. We track our cleaners via state of the art, GPS-enable software, and follow behind their cleans with a goodie bag full of basic stocking supplies and treats for each round of guests. We do a broad visual inventory each turn, and a detailed one twice per year.
3. What Kind of Clients Work Best for Your Model?
Why: Interviewing a property management company is truly a two-way street. The fit needs to be right for everyone, even if the management firm is the one providing the services. In this business trust is paramount, and if it's not great from the get-go, it will likely not get better. Is their average client a hands-off, out of town investor? Or a homeowner who lives in the unit next door? When you know what the expectations are ahead of time, there's less opportunity for either side to be disappointed.
Beckon's Answer: We work best with owners who want to be hands off and want a nearly-passive income stream. For this reason, most of our property owners tend to be investors, rather than home owners. Our owners tend to understand that while short term rentals can be incredibly profitable and exciting, there are high highs and low lows, and they're financially and emotionally prepared to ride out those storms. Our owners do not want to be called at 2:00 in the morning, even for an emergency, and would rather be alerted to a tough situation the next day (if at all). They trust us, our process, our reputation and our software, and while we truly do enjoy one another personally, we check in only periodically to strategize, while they leave the "how" to us. While we love homeowners, and do have a couple of them, we do not work well with those who want to be hands on- not because we have anything to hide, or don't like our owners- but because we have a fine tuned, well-oiled machine and process, and when an owner gets in the middle of that, even with the best of intentions, it can throw off the balance of providing excellent services to guests, responding to maintenance issues quickly and efficiently, and operating the business of their rental in the best manner possible.
4. Are You Insured?
Why: Most Property Managers carry E&O (Errors and Omissions) Insurance, and are otherwise covered by (good) short term rental homeowner's insurance policies (Proper Insurance, for example). Most Property Managers do not carry general liability insurance because it is wildly expensive and hard to write. While we don't think anyone should be discounted as "not a good property manager" for carrying general liability insurance, it's still worth asking and knowing about.
Beckon's Answer: As you may have guessed, since we suggest asking the question, we bite the very expensive bullet and carry general liability insurance for the peace of mind of our owners, and, frankly, us.
5. How Many People Are On Your Team?
Why: Again, different companies have different flows. Some companies are HUGE, which is great because you'll never be without a voice to talk to. Other companies are smaller, which might mean less availability to communicate about smaller issues. There are some excellent companies that have a giant presence- some of which may not even be in town- just as there are amazing one-man-bands who are thorough and boutique-y. It comes down to personal preference, but it's best to know exactly what the structure is of the team that will be serving you and your property.
Beckon's Answer: We have a team of 5 full time employees who work in our office responding to guests, handling property maintenance and operation, refreshing marketing and pricing, and much more. We also have 11 independent contractors who assist in cleaning, quality control, maintenance and some guest services.
6. How Do You Handle Regular Trash Collection, Basic Maintenance, Non-Basic Maintenance and Division of Responsibilities Between Manager and Property Owner?
Why: Besides guest satisfaction, the most important long-term consideration for your listing and physical property is the maintenance of it. Most property management companies are not property maintenance companies, so it's important to be clear on how they handle maintenance issues that arise (because they will). Will the property manager inform you of things that need to be done like paint touchups, plumbing inspections, or vines growing up the side of the house? Will they just handle those things? It's important to know, so there's a clear understanding from the onset of your relationship. Rolling out the trash, for example, is a recurring weekly task, but what happens when a guest is at the property? Does the guest roll out the trash? What if it's vacant? What if there's extra trash? Ah- so many trash possibilities!
Beckon's Answer: First, the easier question: Trash. We have the trash rolled out and in every week before and after trash pickup. Each of our properties gets 2 trash cans from Metro, and unfortunately, we forgo recycling for now with how complicated it is to get guests to separate the items. If there's extra trash, we do have to charge a fee, and determine if that fee should be charged to the guest or if it's a cost necessary to doing business that's charged to the owner. As far as maintenance, we require owners to do a once-a-year thorough walkthrough, or hire us to do one with our "homeowner glasses" on, rather than our property manager perspective. While we do our absolute best to alert owners to anything going on or take care of it ourselves if we've been empowered by the owner to do so, we still like owners to understand we are not maintenance professionals; we're short term rental property managers, and our first focus is ALWAYS on maintaining the property as a rental, not ensuring that a retaining wall is still effective or that the crawl space is dry. We do, however, contract with Lee & Company to give owners a bulk discount to their membership program that allows for 2 yearly inspections of all systems- HVAC, electric and plumbing. We also regularly change air filters (and of course light bulbs), contract with landscaping pros/lawn mowers, recommend regular paint touch-ups and much more.
7. Who's Responsible For Filing Taxes?
Why: This question could literally be a deal breaker in your property's longevity, as keeping compliant is of PARAMOUNT importance. Currently in Nashville, there is state sales tax and local hotel and occupancy tax. Airbnb currently collects and remits state sales tax only, whereas most other sites don't collect and remit any taxes, so you will be responsible for collecting and remitting hotel and occupancy tax for Airbnb, and sales, hotel and occupancy taxes for all other sites. Nashville also requires owners to secure and maintain a business license and short term rental permit (more on that in the next question).
Beckon's Answer: We collect and remit all required sales, hotel and occupancy taxes on behalf of our owners as long as they provide us with the necessary documentation to complete this on their behalf. We cannot retain or maintain business licenses, so require our owners to handle that separately. We also are not CPAs and bookkeepers, so we cannot remit or advise on property taxes or income taxes.
8. Who's Responsible for Getting/Renewing My Permit?
Why: As outlined above, Nashville requires all short term rental properties to be permitted. The process is arduous, and not going through it can lead to serious consequences- thousands of dollars worth of fines, and in one particular extreme case of negligence, even jail time. Not getting a permit, operating without one for even one day, or letting a permit lapse can have catastrophic consequences for your business.
Beckon's Answer: While on paper, we advise all owners that a permit is ultimately their responsibility to maintain, we never pay closer attention than we do 30-60 days away from a permit renewal. We're on top of it in at least 3 different ways, and for the most part, we will have our owners' permits renewed by the time their calendar reminders remind them to look into it. As far as new permits, we're able to assist in their procurement (when possible) for an additional fee.
9. What Fees and Expenses Can I Expect to Incur?
Why: Let's be honest: This is probably the question you're leading with. Money is important. Whether it's the most important thing in managing a property is a matter of priority and perspective, but creating a near-passive income stream is likely the reason short term rentals are intriguing to you. It's important to know what you'll expect to pay for services. Will you be charged on pretax or post-tax rates? Gross or net? Will you pay a cleaning fee each turn or does the guest? What about other expenses?
Beckon's Answer: We charge 20% of the pretax gross rental rate, as a general rule. Some properties that are outliers in parts of the city we don't have much coverage might be a bit higher, and investors who have 5 or more properties with us can enjoy a discounted rate of 18% of the pretax gross rental rate. Owners can also expect to see their Lee & Company membership deducted monthly (approximately $13/month), and exterior maintenance (lawn mowing, leaf blowing, etc) which typically runs between $50-$150/month. All other expenses are reactionary- a stained pillowcase here, a package of lightbulbs there, etc. Once a quarter, owners can expect to see a cleaning supply fee for cleaning supplies to be kept onsite for guest and cleaner use. This typically ranges between $75-$130 a quarter.
10. Talk to Me About Inventory. How and What Do You Stock For Guests? What About General Household Items (Batteries, Light Bulbs, Cleaning Supplies, Air Filters, Etc)?
Why: Every new guest requires a new set of stocked items. Between every turn, if you're aiming to qualify for Airbnb Plus, you'll want to make sure your house is equipped with at least:
Beckon's Answer: For guest-facing items, we replenish and charge a restocking fee to the owner for every turn. For house-related items, we bill per item on a per-purchase basis, and for cleaning supplies we charge quarterly for a bulk supply.
11. Talk to Me About Marketing. Do You Host the Properties? Do I? What Strategies Do You Use?
Why: Nashville currently has almost 6,000 Airbnb listings and is developing countless hotels across the city. Competition for lodging is fierce, and showing minimal signs of slowing. As fellow property manager Kevin Copeland with iTrip wisely points out, your property would likely benefit from being advertised across several different platforms, instead of relying solely on Airbnb. Ask your property manager if they manage your property on their Airbnb account, your Airbnb account and why. What other channels do they place your property on and what are the fees associated with doing that? What other marketing strategies are they using?
Beckon's Answer: We manage our properties on our Airbnb profile, which is under our personal names, Isabeau and Shaun. We do this because we've found guests tend to like to put a face and a name with a company, and it adds trust to know there's a person behind the computer screen. We advertise across any platform our clients request, and have access to hundreds with varying conditions and fee structures. What sets us apart is our branding marketing, which helps clients brand their homes through things like websites, social media platforms and incentives, and other secret sauce type things we don't want to give away for free. ;)
12. Question To Ask Yourself: Can I Trust This Person and Company?
Why: Short of caring for your kids, the personal caring for your property needs to feel right. If it doesn't, it's not your person. Move on.
Beckon's Answer: While we always welcome new business, we have a hard and fast rule that we will only do business with folks we'd want to spend our sacred Sunday brunch time with. This is the time of the week we are able to come down, relax, be with our family and love on one another. If a client wouldn't fit into that mix, they may not be right for us, and vice versa. Also hard and fast rule: We never work with anyone who talks down to anyone in our company. This is a hard industry and business with LOTS of moving parts, dynamic changes and tough conversations. Mutual respect is everything to us and the trust our guests have in us.
To Sum It Up
At the end of the day, we always tell our prospective clients, while we understand money is important, if your main concern is the cost of management, you may find your manager coming up short on the answers to questions you didn't even know to ask. Whatever your journey, we hope you find the right fit for you as you venture into this fun, exciting and rollercoaster world of short term rentals!