Should You Self-Manage or Hire a Property Manager? A Comprehensive Guide

When it comes to managing airBNBs, property owners often face a critical decision: should they self-manage their properties or hire a property management company, or hire a cohost? This decision may be one of the most important ones you make as a new property owner. Each option has its pros and cons, and the right choice can vary based on personal circumstances, property types, and investment goals. If you are considering property management / co-hosting, or self management, here’s a breakdown to help you make an informed decision.

The Difference: Co-Hosting Vs. Property Management

First, understanding the distinction between co-hosting and property management is crucial for property owners. Co-hosting typically involves partnering with someone who assists in managing the property, usually on a part-time basis, to help with tasks like guest communication, check-ins, and cleaning coordination, while the owner retains significant control over the listing and at least some portion of the operation. In contrast, property management involves hiring a dedicated management company that takes full responsibility for all aspects of the rental, including marketing, tenant screening, maintenance, and compliance with local regulations, some accounting and more. While co-hosting can be a cost-effective way to ease the burden of management without giving up complete control, property management offers a hands-off approach, allowing owners to maximize their investment with professional expertise and efficiency.

Ironically, while cohosting came about as a result of airBNB and requires significantly more work than traditional property management, cohosting does not typically require a real estate license, while long term property management does. Additionally, many traditional property managers are not experts at short term rentals, and so many owners opt for co-hosting as a better solution for their needs.

Watch out, however! If you go with a cohost, make sure to understand what services they do and don’t provide, so you know what you are paying for. Many cohosts will not take care of things like maintenance, billing, or other items, and mainly focus on guest communications. 

At Oikos, we provide nearly all the services of a full-time property manager, but we technically fall under the cohosting category, to the great benefit of our property owners.

Self-Managing Your Property: Pros and Cons

Pros:

1. Cost Savings:
   One of the most significant advantages of self-management is the potential cost savings. Property management companies typically charge a percentage of your rental income (as high as 30% for companies like Vacasa) and cohosts usually charge a bit less, but still a significant portion of your revenue (usually between 10% and 20%) plus additional fees for services. By self-managing, you can keep that money in your pocket.
2. Direct Control:
   Managing your property gives you full control over the decision-making process. You can choose how to handle maintenance, set rental rates, and manage tenant relationships according to your preferences.
3. Personal Touch:
   Building relationships with tenants can enhance their rental experience. Self-managing allows you to establish rapport, which may lead to longer tenancy and more responsible tenants.
4. Learning Experience:
   Self-management can be an excellent learning opportunity, especially for first-time landlords. You gain insights into the rental market, property maintenance, and tenant management, which can be valuable for future investments.

Cons:

1. Time-Consuming:
   Managing a property can be a full-time job, especially if you have multiple rentals. Tasks such as tenant screening, maintenance, and legal compliance can take significant time and effort, and despite automations and technology assistance, for some, the time it takes to manage the property is well worth the management cost of hiring someone else. 
2. Stress and Responsibility:
   As a self-manager, you’re responsible for all aspects of the rental, from late-night emergency calls to dealing with difficult tenants. This can be stressful and overwhelming, particularly if you have other commitments.
3. Lack of Expertise:
   Property management requires a diverse skill set, including knowledge of local laws, maintenance, revenue management and marketing. If you’re not familiar with these areas, you may struggle to manage effectively.
4. Potential for Higher Vacancy Rates:
   Without professional marketing, airBNB know-how, and tenant screening, you may face longer vacancy periods or attract less desirable tenants, which can negatively impact your income and ranking of your property. 

Hiring a Property Manager or Cohost: Pros and Cons

Pros:

1. Expertise and Experience:
   Property management companies have industry knowledge and experience that can streamline operations. They understand local laws, market trends, and tenant management strategies.
2. Time Savings:
   Hiring a property manager frees up your time, allowing you to focus on other investments or personal interests. They handle tenant inquiries, maintenance issues, lease agreements, airbnb listings, pricing, marketing, and provide peace of mind.
3. Effective Marketing and Tenant Screening:
   Cohosts have access to resources and tools to effectively market your rental and screen tenants. This can lead to quicker tenant placements and higher-quality renters.
4. Legal Compliance:
   Keeping up with changing laws and regulations can be challenging. Property managers ensure that your rental complies with local, state, and federal laws, reducing the risk of legal issues.

Cons:

1. Cost:
   The most significant drawback of hiring a cohost or property manager is the cost. The management fees can eat into your profits, making it essential to factor this into your overall rental strategy.
2. Less Control:
   When you hire a property manager, you relinquish some control over your property. This may include decisions about maintenance, tenant selection, and property marketing.
3. Potential for Poor Management:
   Not all property management companies are created equal. If you choose a company that doesn’t align with your values or fails to perform, it can lead to frustration and lost income.
4. Communication Gaps:
   Miscommunication between you and the property manager can result in misunderstandings, particularly regarding tenant issues or property maintenance. Establishing clear communication from the outset is crucial.

Making the Decision

Ultimately, the choice between self-managing and hiring a property manager depends on several factors:

• Your Time Commitment: If you have the time to dedicate to managing your property and enjoy the process, self-management may be the best option. An easy way to assess this is find out the income potential of your property, and project what a cohost “would” make by helping you. Divide this amount by the total number of hours you imagine your property may take to manage-this is the cost of your time per hour. Does that hourly rate seem worth it to you? 
• Your Experience: If you’re new to short term rentals or lack the necessary skills, hiring a property manager could save you time and frustration.
• Your Investment Goals: Consider your long-term goals for your property. If you’re looking to scale your investment portfolio, hiring a property manager may allow you to focus on acquiring more properties and leave the day to day to someone who loves it.
• Market Conditions: In a competitive rental market, professional management may provide an edge as they are usually staying up to date on all the latest trends.

Conclusion

Deciding whether to self-manage or hire a property manager involves weighing the benefits and drawbacks of each option. Carefully consider your circumstances, resources, and goals to determine which path aligns best with your investment strategy. Regardless of your choice, the key to success in rental property management is staying informed, organized, and proactive in addressing the needs of your property and tenants.