Managing a holiday let: Use an agency or DIY?
You’ve bought a holiday let property, kitted it out and now it’s ready for the first guests. The next step is to decide whether it’s best to look after everything yourself, or to hand over the management tasks to a rental agency?
Your final choice will depend on many factors and personal circumstances. To help you decide, we’ve listed the pros and cons of running a DIY holiday let, versus contracting a professional property management agency:
Going it alone
For someone who is just starting out and wants to maintain a close reign on their holiday rental business to begin with, the DIY option has several advantages:
Potential for higher earnings: If you’re not paying agency fees and commission, you get to keep 100% of rental income you make after tax and expenses. This can significantly boost your bottom line if you manage to secure a good number of bookings by yourself.
Entry to market: The internet and holiday rental portals have empowered holiday let owners to easily create an advertisement and handle vacation rentals by themselves. In a matter of days you could be receiving enquiries.
Screen guests: You can personally screen your guests and have the final say in who stays in your property.
Flexibility in use: You can decide when you want to stay in the house yourself with no agency restrictions. You can also visit the property to check on maintenance and any problems whenever convenient to you.
Better satisfaction: If you’re good with people and like the idea of a hands-on approach to holiday lets (e.g. greeting guests in person when they arrive), managing the property yourself will give you lots of opportunities to ensure good guest satisfaction.
Flexibility in rental rates: You can offer guests special deals or discounts easily and quickly if you’re in charge, allowing you to secure extra last minute bookings more quickly and efficiently than going through an agent who would first need to check discounts with you.
Better control of property: Handling your own management gives you the opportunity to keep a close eye on your holiday let. You’ll see if items need replacing or fixing and have a much better idea of the state of your property at all times.
But do-it-yourself holiday let management isn’t all about benefits – there are several downsides too. And some of them are biggies.
No Guarantee: There is no guarantee of income.
Time-consuming: The biggest negative – looking after your own holiday let takes a lot of time, it’s a second job. A recent Homeaway survey found that holiday rental owners spend an average of nine hours per week marketing and managing their rental properties. This is often in addition to having a full time job and being a busy parent. You’ll need to put in evenings and weekends too.
The paperwork involved in holiday lets is surprisingly time-consuming when you don’t have the benefit of an agency booking engine to handle reservations for you. And then there’s the greeting of guests, dealing with their requests, cleaning in between rentals, continual maintenance that will need to be carried out and handling any other issues that may arise at any time of day.
Impractical: Unless you’re based near your holiday cottage, managing it yourself isn’t as practical as it is for owners/agents who are close by and have day to day contact with the operation. You just won’t be able to get there quickly if things go wrong.
Lack of expertise: If you’re a newbie to the holiday letting game, it’s a steep learning curve and you’ll probably make mistakes (perhaps costly ones) while you find your feet. Often it’s easier to start off with an agency and learn from how they do things, than going completely alone from the outset, unless of course you already have a solid background in hospitality!
Potential for expense: You’ll need to fork out for your own marketing which is a significant outgoing whilst you’re getting established. This may include a website, advertising on several big listing sites, and perhaps some pay-per-click or social media advertising campaigns – and there’s no guarantee it will work.
However you can expect your marketing expenses to reduce considerably due to repeat bookings and recommendations. You can also ‘cherry-pick’ the listing sites based on how they perform.
Extra responsibility: If you hire people to help out (e.g. cleaners and gardeners), you’re responsible for their contract, working conditions and pay. This also means you must have a good level of insurance for staff employed under your watch.
Competition: It’s becoming increasingly difficult to stand out on holiday rental portals – Homeaway now lists more than 1 million rentals. In addition to other rental owners, you also face competition from professional rental agencies that have better online distribution for their rentals as well as lower cost and expertise.
Using a holiday letting agency
Handing over the management of your holiday let to an agency also comes with advantages and disadvantages. On the plus side:
Time: Using an agency will free up your time to do other things in life, whether that’s work or pleasure –you never get time back when its gone.
Knowledge of local area and rental trends: Good agencies have their finger on the rental pulse and know which market sectors to target. This expertise should translate into higher occupancy rates and better guest satisfaction as they will find the right clients for the right properties.
Responsibility for marketing: A good agency will have a tried and tested marketing plan ready and waiting for your property, and know who, where and when to target.
Responsibility for enquiries: An agency will take care of all guest queries and be in charge chasing payments, as well as dealing with arrivals, departures and cleaning the property. A good agent should also be on hand for guest emergencies at any time so you don’t have to answer the phone in the small hours.
Experience with guests: A well-established agency will have experience in dealing with problematic guests and a good idea of which bookings to accept into your property.
Control over paperwork: If you contract an agency, they take care of all the paperwork from dealing with booking requests, taking deposits and balance payments, issuing the booking contract and sending out the final arrival details to your guests.
Legislation: A good holiday cottage letting agent should ensure you are kept updated with regards to current legislation relating to holiday rentals.
But, like doing it yourself, handing your holiday let over to a management agency isn’t all about benefits.
No Guarantee: Just like DIY management, there is no guarantee of income.
Less rental income: You’ll have to pay for the agency’s services – between 15 and 40 per cent of letting income is the norm – so this will take a big chunk out of your rental earnings.
In addition, some agencies work on a model of obtaining maximum lettings at minimum rates. This fills your booking calendar but not your pocket as more guests doesn’t necessarily mean more profit.
If the agency was letting at a higher (realistic rate) you could achieve the same revenue from letting fewer weeks plus save on cleaning, energy, commission and wear and tear costs.
No booking control: You may have little or no control over which bookings are taken. Managers only earn income if properties rent, so they may be less discerning with guests than an owner would be. Are you responsible for the cost of any damages caused by poorly screened guests?
Also, depending on your contract you may not be able to market or use the property yourself whenever you like.
The choice is obviously a difficult one, so it can also be worth visiting some holiday rental forums to get further advise from owners who have tried both approaches before you make a final decision on how best to manage your holiday let.
Often it’s easier to start off with an agency and learn from how they do things, than going completely alone from the outset. Once established you could go alone.
For many it is a choice of:
Agency – less hastle, less profit vs DIY – more hassle, more profit
However, an agency may create more bookings/profit than your efforts.
Do you have any advice for holiday rental owners? Please add them in the comments…