Last winter Bruno and Carol Bard rented out their ski chalet at Sun Peaks Resort, B.C., for 65 nights. Rather than pay a management company 40 percent of their gross revenues to handle bookings, check-ins and maintenance, they took care of much of it themselves. The cost: 22 percent of their gross.
The Bards, who live 40 minutes from Sun Peaks in Kamloops, B.C., are taking an increasingly popular path among property owners: Cut out the middleman and deal directly with customers. "We do a lot of booking and advertising ourselves, and the Internet is helping a lot there," says Bruno Bard. "We didn't want to give a 40 percent cut to a management company."
The Bards have an arrangement with a local management firm to work on their behalf on an as-needed basis. The couple pays $100 each time their unit is cleaned, $10 a week for hot tub maintenance, $10 an hour for snow shoveling and so on. A booking through the management company costs an 11 percent commission; one way they've improved their take is by booking repeat customers directly. "The more we do ourselves, the bigger our take," says Bard.
Marketing has always been the biggest hurdle for property owners who don't want to work with a management company but do want to rent their units out. This is where the Internet is helping the most. "We're like a newspaper's classifieds," says Kara Rozendaal, director of sales for 1st Choice Vacation Properties, one of a myriad of websites catering to do-it-yourself owners. Of the 3,000 properties currently listed on 1st Choice's site ( www.choice1.com ), 2,700 are managed by individual owners, she says. The site charges owners $150-$250 a year and is averaging three million hits per month. Another new site, Coloradoskiing.com, not only lists properties but also does the booking. It operates like an on-line travel agent, selling airfare, lift tickets and other vacation amenities. Property owners pay $120 a year, a $25 setup fee and a 5 percent commission. Or, if they have multiple properties, they can put zero down and pay a flat 10 percent commission.
Many property owners are driving business with their own sites. "The first thing I did was build a web page," says Denver Fox, a semi-retired educational consultant who lives in Englewood, Colo., and owns a condo in Silverthorne, not far from Keystone and Arapahoe Basin. "It's worked great." In the first 17 months he has owned his condo, Fox booked it for 145 nights. And he got 99 percent of that business through his web page.
"The thing I really like is my flexibility of personal use," he says. "Sometimes with management companies you have to fit into their schedules. I have control over that. As far as the finances, I think I'm a little ahead of the management companies, but I'm not sure of that."
Like the Bards, Fox contracted with a management company for some services-in his case, snow shoveling for $100 a month. He pays $50 per quarter to put his web page on www.summit.net, and has invested in a lock box so clients can check themselves in.
Both owners say they're able to cut deals with clients more easily than a management company could, such as throwing in a seventh night if someone pays for six. Moreover, they believe they give their units more care and attention than paid staff would.
One downside to being your own property manager is handling payment; few individual owners accept credit cards. But Fox says he has had no bounced checks, no damage, no problems with late payment: "The thing is, people who have computers and search the net are different from people who don't. I get a really good clientele."
A good clientele isn't guaranteed, however, and owners absolutely cannot discriminate-that's a violation of federal law, notes Shelly McKarnen, a rental agent with Mountain Management, a property management firm in Telluride, Colo. You can't prohibit families, college kids or snowboarders from renting your home, for instanc But you can communicate information to attract the kind of client you want. For example, if you have expensive furnishings, a higher rental rate will discourage the spring break crowd.
To keep everybody happy, remember that you are in business and act accordingly. "One key is getting it in writing," says Rich Aubin, a Dallas attorney familiar with property management. "The house rules, departure dates, holdovers, other guests, parties, pets. People who try to avoid these details because they want to be nice or don't want to seem negative learn their lesson rather quickly." Aubin advises against using form rental contracts for vacation rentals because they aren't designed for that purpose. "Ultimately, although signed in times when everyone is getting along, a contract's purpose is to spell out your expectations and to plan in the event of a future time when the relationship is not so rosy."
Telluride's McKarnen agrees. "Always get a security deposit above and beyond rental to cover damages and phone calls," she says. "Be specific. Don't leave anything open to interpretation in the contract. Document, document, document. You can't document too much."
McKarnen uses a checklist that renters initial when they arrive, laying out the house rules and other legalities. This is one part of the paper package that an owner must develop. Other elements include a standardized list of policies (deposits, refunds, etc.) and clear instructions on how to use the home-a "user's manual"-left at the property. If you do contract with a management company to do some of your work, document that carefully, too. "You don't want them spending a thousand dollars on a new refrigerator for your unit when it just needs a repair," she cautions.
To understand the market, call around to local property management firms and discuss listing your property. This will give you a sense of what to expect for rental rates and occupancy. "But remember," McKarnen says, "they're going to inflate the numbers because they think they're going to get your business."
Also, understand zoning and cove-nants that may limit your ability to rent your property. And check with the fire marshal to determine the maximum number of people who may legally occupy your unit. Buy plenty of liability insurance and determine whether renters' possessions are insured against damage-then advise them accordingly.
Regardless of whether you advertise on the web, in the local visitor's guide or through the classifieds in the newspaper, "you must have a toll-free phone number," McKarnen says. "People are cheap." If they're going to get a recording, use the machine to make a sales pitch: Bedroom, bathrooms, amenities, price, availability. Call potential clients back right away, and know your product inside out-from the number of steps to the front door to the distance from the home to the slopes and grocery store.
Financial success in property management depends on repeat customers, so take care of the ones you get. Before check-in, do a walk-through and make sure the oven is clean, the lights work, the heat is on. Leave a welcome basket. Lastly, be nice to your clients and recognize that they have a right to complain. "You are in the customer-service industry, and service cannot be overemphasized," McKarnen says. "You have to be able to handle complaints and not take them personally. The best marketing is repeat guests and word of mouth. And they're the cheapest marketing tools you can have."
By The Numbers
Property managers generally charge owners between 25 percent and 50 percent of gross revenue. The more you pay, the more services are included. If a firm charges 25 percent, this is considered bare-bones; services such as snow-plowing, hot-tub maintenance and cleaning are add-ons, charged on top of the commission. Of that 25 percent, the in-house booking agent gets about 7 percent. If a real estate agent refers a client, he gets 5 percent; a travel agent takes 10 percent. The remainder goes to paying an accountant, advertising and office overhead, with, perhaps, a little profit left at the end.rcent. The remainder goes to paying an accountant, advertising and office overhead, with, perhaps, a little profit left at the end.