By: Ed Ulmer
If you call yourself a property manager, shame on you. Property management means you focus primarily on cleaning of and managing the day to day operations of the unit. You are labeling yourself as caretaker for the property.
Asset management companies manage people’s wealth. For most homeowners, their home is their biggest asset. Companies in rentals can learn significantly from Wall Street and those that manage stock portfolios. Asset managers look at their client’s needs and desires, apply data, and set expectations. Those needs include how to make the vacation rental property more valuable, bring in more revenue, save them money (both on the short term and the long term) based on their goals of the unit.
Recently I was talking with someone who owns a multi-million dollar house in Hawaii, 30 feet from the ocean. He shared a story about his property manager. They did a great job of keeping the house clean and booking the unit. However, the house had aluminum window sills and, over time, they became pitted from the salt air. Eventually the owner had to replace them, costing him $250,000. While they were structurally sound, the windows looked terrible and in renting a high end home, the windows were an eye sore. If the property manager had thought more about the value of the home and management of the asset and the clientele it attracted as well as exit strategy, he would probably have suggested that it was worth a few dollars more a week to wipe down the sills, but he was so focused on savings he did not look at the big picture and the owner suffered.
Here are a number of quick suggestions to get started.
- Expectation is key- In a previous blog we suggest that every home owner has a golden number to understanding expectations of the homeowner. Track that and communicate back to the owner where they stand adjusting as the season goes on and change strategies should things be weaker than expected
- Managing exit strategy- Second home owners often invest to not only generate revenue, but as a wealth building strategy. Although they may not be ready to sell, providing an on going CMA in your bi-yearly or yearly meetings is a great way to motive owners to update, think about selling and using your company or your sales partner.
- Incorporate insurance and deeper property management-Not travel insurance, but bring property insurance into your business model. As a rental, there are crucial items your insurance policy must have based on your location, the features and the niche you focus on. If it is just outside of your comfort zone, then work with an agency to better educate your owners.
- Concierge is not just guests focused- Owners vacation too and you should promote those services with them. It reminds the owner that you are not just a cleaning company, you are the local expert and it is another touch point for the owner.
The next time an owner comes in to your office, put yourself in their shoes and talk to them as if you where the co-owner of the property. Ask them what their expectations and exit strategies are with the property. I would also listen to their pain points and ask leading questions, like how can we better assist you in the management of your asset, most of these owners have enough wealth where they probably have an advisor and when you explain to them you are part of asset management team, they will get it, appreciate it and all will benefit from it?