If you are thinking of purchasing a vacation rental one of the big decisions you will need to make fairly early on in the process is how you are going to manage it. I have some clients who want to play a very active part in managing the property whereas others are happy not to have anything to do with the property and just want a check to be delivered at the end of the month.
As well as making a big difference to how much of your time a vacation rental will take up, it will make a big difference to the bottom line because for a full service from a large company like Vacasa you can expect to pay nearly 30 per cent. Fortunately there are number of alternative options.
In addition to large companies such as Vacasa, which acquired Turnkey, the second largest in the Sonoma County market, there are companies such as My VR Host, which started in San Francisco and has slowly expanded into other geographic areas such as Sonoma County, to smaller companies set up by local entrepreneurs in Sonoma County. In addition, there are independent property managers who are hyperlocal and who can offer a very personalized service. There are other services such as Evolve but companies like this just provide a booking engine. They do not take on the responsibility for managing the property, providing cleaning crews and ensuring the property is properly maintained.
One of the reasons most people need to use a property manager, even if they want to do a lot of work themselves, is because one of the conditions of a permit is to have a property manager within 30 miles of the vacation rental property.
As part of working with any clients, I like to be able to offer a team of people who can provide a solution best suited to the client. To further my understanding of the different approaches to vacation management I sat down with Jason Bandarra, founder of My VR Host; Cherie Sexton, Founder of Russian River Nested; and Nicole Singley, owner of Song Bird Hospitality.
My VR Host, founded by Jason Bandarra, was started in San Francisco nine years ago, a few years after AirBnb was founded, to take advantage of the growth in Vacation rentals in San Francisco. It’s expansion outside of the San Francisco area was driven by San Francisco hosts purchasing properties outside of the area. It now has 30 people working at the company and has a presence in numerous markets including Lake Tahoe, Napa, Sonoma and further afield in Seattle and LA.
Jason still plays a very active role in working with all potential new clients to make sure there is a fit on both sides before the onboarding team takes over. As with many of the providers, My VR host will provide a full service doing everything from getting a property ready all the way to optimizing the listing to maximize gross income.
“A lot of our clients are people who have a second home but also want to rent it out to offset a lot of their costs. When we first start talking to a client, their property is generally furnished and ready to go but we like to work with clients to add all the finishing touches. We have have designers who can work with homeowners to fluff the property up,” commented Jason.
As with any company offering services in Sonoma County, My VR Host, has a person on the ground in Sonoma County who is the designated property manager. The property manager is then supplemented by a 24/7 services team who is able to provide guests with support around the clock. According to Jason, “We play an important role in helping to vet potential guests and making sure that there are no party houses that might give the property a bad name in the neighborhood.”
One the questions I always get asked by potential clients is the degree to which they can do some of the work but then outsource the remainder to a vacation rental management company. According to Jason, they can be flexible to a certain extent. “There are some owners who want to play with revenue management. For them, it feels like they are playing at a casino trying to figure out how to maximize income.” It should be no surprise that there are a lot of Bay Area owners who want to nerd out AB testing various scenarios!
“We also feel pretty strongly that we assign a cleaner to a property so that they know the nuances of each property but more importantly, we commit to always cleaning the property on the same day so that we are never in a position where we need to turn down a booking because the property isn’t clean,” added Jason. “It is also important that the cleaners to an audit every time they visit the property to make sure supplies are replenished and any maintenance needs are taken care of.”
My VR Host does offer a 30+ day rental service but only for select properties. In looking at its website, I noticed that it has started another brand, West Coast Corporate, which is targeting the mid term rental market for employees being relocated or providing housing for people who are building a house or doing a major remodel.
The Fees: My VR Host charges 18% of the rental income for rentals of 29 days or less and 14% for stays of more than 30 days.
Russian River Nested was set up by Cherie and her contractor husband to initially serve properties in the Russian River but have expanded to other areas of Sonoma County and more recently into Lake County. They own four vacation rentals themselves and two small hotels and manage a total of 42 homes.
Given they are real estate investors themselves, in addition to offering the full managed service, they will help clients navigate the permit process and pride themselves on being able to give access to a crew of service professionals and contractors as required.
According to Cherie, “Our ideal clients are investors like ourselves. We will help clients get the maximum amount of revenue for any given property. We aren’t interested in working with clients who want to use the property themselves for more than 12 weeks a year.”
“We really understand the market we are going after in the Russian River. We know how to stage homes correctly to give guests a unique ‘Cabin in the Woods’ experience. It may surprise some people to find out that an old cabin in the woods will almost certainly do better than a new build,” added Sherie. “A lot of the guests are from San Francisco where they have modern chic homes. They aren’t coming to Russian River to get more of the same!”
Russian River Nested also puts a lot of focus on the listing and making sure the listing is optimized by constantly changing the photos. As someone who understands the importance of an online presence, I was impressed with their focus on optimizing for the AirBnb algorithm. The constant refreshing of content is an important part of that.
According to Cherie, it clearly gets results, “All of our properties are on the first three pages of Airbnb and have an occupancy of well above 80%. We like to control the process to get the best results although we are open to some client involvement in the management of the property but there is no discount on the fee.”
Fees: Russian River Nested charges 20% of the rental income. It does not take on rentals where the owner wants to use the property for more than 12 weeks per year.
Song Bird Hospitality is at the other end of the scale compared to a company such as Vacasa. Nicole is an independent contractor who has a team of cleaners and service professionals she relies on to deliver an end to end service. Nicole works with a number of my clients on various different properties and I know from first hand experience that clients love working with her. While she is based in Guerneville, she manages properties across the county. More recently she has taken on an 8 bed, 8. Bath property in Calistoga that a client of mine purchased.
According to Nicole, “I have a relatively small number of clients compared to some of the big providers, but I can offer a truly white glove service, while being flexible about how I work. Some clients want to do a lot of the communication and background work themselves and then rely on my for being a presence on the ground.”
Song Bird Hospitality will provide a full service for those clients that want it including help with setting up the home, presenting it online through to full guest management and managing the ongoing cleaning and maintenance of the home. Unlike many of the different providers, Nicole is happy to be flexible in the way she works although one constant is the flat rate she charges for her role as the local property manager which is a requirement of the County
“I have just started working on a new property, The Black Sheep Cabin, where the owners handle the communication with the client prior to the booking being completed and then I largely take over from there to make sure the check-in experience and stay is flawless and then making sure the property is turned over for the next guests once a stay is complete,” added Nicole.
Fees: Songbird Hospitality charges a flat fee of 3% for acting as the local property manager and designated emergency contact, while all other services charge on a per use, on-demand basis at a rate of $45 per hour with no minimum required.
How To Choose The Right Service For You?
A lot of it depends on your level of involvement and whether you want to have a personal relationship with your property manager or if you are more comfortable having a bigger company with potentially more resources at your disposal. A lot of the services are the same but they are just delivered in a slightly different way. I am always a big fan of making sure incentives are always aligned so it would be interesting to explore performance related bonuses for hitting certain gross income goals. I am not sure if there are any providers that offer that as an incentive on both sides but I would be happy to pay a higher percentage of a larger pie if that was an option.
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