The short term rental industry has seen significant growth in recent years. With so many companies offering their services, it's easy for property owners, developers and investors to be lured by Property Management Companies that promise the world: low fees, robust operations and smaller portfolios. But as I like to tell many of our soon-to-be clients, "anyone can be a brain surgeon for a year". Maybe it's an exaggeration (I sure HOPE it is!) but managing a property for the first year is EASY.
In the first year, there are of course things that can go wrong, but the likelihood of a fresh property needing the kind of maintenance and attention of a property that's had a successful 5+ year track record as an STR is extremely low.
Additionally, the STR market has, and will continue to shift with every global event: pandemics, weather patterns, election cycles, economic conditions and more, and having a PMC partner who is not only prepared for that, but accustomed to it, is of the utmost importance.
STRs are fueling hospitality industry growth.
STRs are a growing market and have become an important part of the travel industry, especially since they're not just for business travelers anymore: many people are now using STRs as their primary source of international travel. In fact, STRs have grown so much that they've become a major influence on tourism in many countries around the world; we estimate that about 10% of all tourism happens through STRs, which isn't bad considering how young this industry is!
In addition to their impact on the tourism industry, STRs have also begun to affect real estate markets—and this trend is expected to continue into the future. As more investors purchase properties with STR potential in mind (for example), it becomes easier for homeowners and landlords alike to transition from traditional long-term rentals into short-term ones over time.
Growing competition across the STR space.
In the STR space, competition is rapidly growing. Ten years ago, you wouldn't have been able to rent out your home for more than a few nights per year if you wanted to earn extra cash. Nowadays, it's common for homeowners to rent their homes hundreds of nights per year—in some cases even thousands of nights.
The STR industry has grown from zero competition into a booming marketplace in just under two decades; and with more properties being added into this new market every day and more people wanting to get involved than ever before, there are real opportunities available for those who want them.
The problem with self-managing.
When you look at a home owner and ask, "Can you be a property manager?", the answer is almost always yes. But when you look at the actual work of managing a property, it's clear that this isn't something that all home owners are prepared to do—and there are good reasons for that.
Your STR is already a complex and risky business, so you may be wondering why you should care about the length of service of your PMC. After all, it only affects the price they charge. But there are several reasons why this information can be important to you.
First, it’s a measure of how long a PMC has been in the industry and whether they have experience navigating its changing landscape. As we’ve seen above, PMCs have to continually adapt their business models as jurisdictions change laws or new technologies emerge. The longer they’ve been around and able to do this successfully, the better chance they will have continued success moving forward.
Additionally, more established firms tend to have bigger teams with more diverse skillsets than newer companies who don’t yet need such breadth because their focus is narrower. This means that if one person drops out for some reason—whether due to illness or family leave—there would be others on hand who could step up instead of leaving everything unfinished until someone returned from vacation.
Investing in a PMC with a long track record of success can help you achieve your goals.
The truth is, not all PMCs are created equal. Some have more experience in the STR space than others; some may have more expertise in certain types of properties than others; and some might even be committed to the STR space longer than others. These differences can really matter when it comes to your goals and objectives as an investor who wants to maximize returns on investment (ROI).
The STR space is rapidly evolving and changing. The best PMC is one who is constantly looking forward and finding ways to redefine and refine the industry, but who has the experience to back up their vision with SOPs, policies and track records.