Demand for guest rentals has increased dramatically over the past several years. The rise of platforms like Booking.com, Airbnb, and Vrbo has made it easier than ever for property owners to make money through vacation and guest rentals. Most owners with multiple rentals or those who rented the property for Airbnb arbitrage still rely on property management firms to handle daily operations.
While property management firms offer benefits and conveniences, they often charge fees and monthly payments that eat into your profit. Switching from using property management firms to self-management can increase your revenue.
Here are reasons why self-managing your guest or vacation rental can significantly boost your profits.
Eliminate Management Fees
Most property management firms will charge you a base annual fee and extra monthly charges based on the services offered. In most cases, the annual charge can be between 20-40% of your yearly income from guest bookings. Say you make $50,000—you might end up losing $10-20k on management fees alone.
Switching to self-management can help you recoup more money from your business. You can use the money to upgrade your property or acquire more units to boost returns. You will grow your business and enjoy better ROIs over time.
Gain Valuable Insights and Improve Your Business
Relying on property management firms means you may not get direct access to the underlying numbers from your guest rentals. Data is crucial in running a business in the current market. The data can help you make the right changes to enhance revenue and scale up or down depending on the demand.
Insights from your rental business will help you learn more about your booking patterns, guest preferences, and financial performance. Based on the information, you can adjust pricing or run marketing campaigns, marketing your vacation property.
Case Study (based on Capterra reviews): How Rental Analytics and Market Data Helped Scale Our Business
When first starting out, Pat L. hired a property management firm to help manage her vacation rentals in downtown Detroit. However, when running through the numbers, she found that she was not making much despite her properties having 90% booking.
With recommendations from a friend, Pat decided to invest in the vacation rental app from iGMS. The rental analytics and market data features were a game-changer. Using the actionable insights and market research data from the app, Pat can now track the expenses and manage his rentals.
In her own words: “I had completely outsourced the management of by vacation rental to a national firm, but the results were horrible. iGMS helped me grow by over 50% AND add 3 new units with LESS effort than I had put in before I went with the national firm.”
Take Control of Pricing
Part of the services offered by most property management firms is price control. However, the standardized rates set by most management firms may not match current market trends. This can result in a loss of revenue during peak seasons.
Self-management allows you to regulate prices to maximize profit when demand for guest rentals is high. You can adjust prices using automation tools like dynamic pricing software. These applications regulate your booking fees, ensuring you’re always charging the optimal rate.
Summing Up
Switching from property management firms to self-management can make a massive difference in your vacation rental firm. Ensure you look for the best property management software, and you will start reaping the rewards from your business.
