When I bought my first rental property in Canada, I was still living in the UK, but didn’t even think of asking a third party to manage the rentals. I wanted to do it myself, and I am glad I did because what I learnt from buying that cottage, and the five that followed it, became the foundation of my book, Renting Your Recreational Property for Profit.
It was a very steep learning curve, not only from the perspective of managing a property from a distance, but also in the sheer amount of things I hadn’t considered at the beginning that created a lot of challenges along the way.
If I had known back then what I know now, I could have saved a lot of money, time and worry. Having said that, I’m still happy I went the RBO route rather than use an agency because it was right for me. I had time and enthusiasm; I was a management and marketing consultant at the time so knew what I had to do to make it work, and my entrepreneurial streak drove the whole process.
Of course, I ended up making a business out of managing the rental of other people’s properties because I saw the opportunity to share what I’d learnt with those who just don’t want to do it themselves.
So, here it is. You have a property you want to rent out. Perhaps you are one of the 350K owners that Phocus Wright suggests might be moving towards ‘active’ rather than ‘casual’ rental. And you don’t know where to start.
You could buy a book (and that could be a good decision!); you could attend a seminar….if you can find one in your area; you might find a forum where other owners hang out, like Lay My Hat, and see what you can find there. There are some listing sites that have owner areas that give advice and suggestions, and you could probably find all you need to know on this blog. However, all this takes time and if you want to get in there and begin marketing your place for the summer, you need to move fast.
The alternative is to register with a rental management agency and let them handle all the marketing, enquiries, screening, financial stuff, feedback collection, and administrative work, while you sit back and wait for the cheques to come in.
Note that I am not talking about ‘property management’ here. There are some agencies that manage both the rental aspect, and the changeovers and maintenance, as a package and I’ll be discussing those later in the week.
There are costs in both routes in terms of time and money so its important to weigh these all up and balance the benefits against the drawbacks of each. An agency will charge commission on a percentage of your rental, while renting by owner will incur marketing and advertising costs as well as web site creation and maintenance. Here's a few guidelines to help in your decision making:
Rent By Owner if:
- You have plenty of time for the work involved in setting up, marketing, administrating and managing your rental business.
- You enjoy responding to emails and receiving telephone calls and can spend at least an hour a day working on them.
- You are comfortable with handling renters money; taking deposits, final payments and dealing with the aftermath of any damage.
- You can create a system for managing enquiries, rental contracts, reservations, availability calendars, invoicing, balance statements, and follow-up correspondence.
- You have the skills to set up a website or blog, optimize it for search engines to drive the traffic to it, or are willing to hire an expert to create this for you.
- You are familiar with the concepts of marketing and can apply effective strategies for getting enquiries and converting them to actual bookings.
Use an Agency if:
OK – so that’s a little simplistic but I will be covering rental agencies and what they do in greater detail in this upcoming week. The bottom line is that if you want to get a rental up and running, and need it done quickly, then you might find that hiring an agency to do it for you is the best way, at least in the first year.
Photo by Bill Barber