Let’s say you’ve finally decided on which Airbnb management company you’d like to sign up with. The next step is officially signing up for their service which means going through a short-term rental property management contract, also called property management agreement or real estate management agreement.
While most contracts are 15 to 30 pages long, a portion of it will be defined by state-level government and will be standard to property management contracts across the board. The most important parts to go through are typically the first five to eight pages of your contract, which most likely contains the things that your property management company has edited and will be the points of discussion before finalizing the agreement.
It is essential for anyone registering for any service to get a clear breakdown on what they will be paying for. If you have been drawn to them due to a deal that seems too good to be true, it is wise to clarify the specific inclusions of the agreement. Some companies charge additional fees for services like renewal, property inspection, admin related work and so forth on top of their management fees. This isn’t necessarily a bad thing, but it should be clear from the get-go so you don’t get any surprises down the line.
Examining the fee structure of your contract also gives you a clearer picture on which extra costs you will be responsible for and which ones are for the guests. If you’ve seen anything handwritten added, ask about it straight away. If it’s not applicable to the charges you should be paying for, ask for a redrafted contract without those extraneous edits. If any changes are made to the contract by hand on the spot, however, it’s important that you and the representative both sign next to the changes to ensure both parties are in agreement.
Another important part of the contract you should be looking at is the termination clause. If you decide to discontinue the service and switch to another Airbnb property manageent company in the future, how intricate will this process be?
Check if there are any financial implications or if there is a lock in period and if so, for how long. Do they need a reason for you to discontinue or is it an at-will basis? Well-drafted contracts will state the details and good property management companies will always make this transparent and won’t hold you to the contract for an unreasonable extended amount of time. While this is different for every company, you generally want to sign a contract that will allow more flexibility and will not give you unduly heavy penalties if you decide to terminate the agreement.
Authority to Spend
Airbnb management companies usually require their clients to maintain a fund that they can utilise for managing their short-term rentals. This is a usual practice since it makes sense from a day-to-day operation perspective. This may include Airbnb maintenance like changing light bulbs, fixing plug points, repairing a scratched surface, and so on.
In this section of the contract, what you want to check is how much they can spend without your explicit approval. Ideally, hosts shouldn’t be bothered by minor fixes and small ticket item purchases but it’s better if you define from the start what they consider small repairs and purchases. You might want to ask specifically how much their spending ceiling is for these slight tweaks as you don’t want to be caught off guard. As a rule of thumb, you should be informed about big spending necessities. Good property managers will give you a specific amount and will make you feel confident that your resources will be spent efficiently.
When you sign up for Airbnb management services, you may want to check on how they’re planning to set your listings up for success. Will they get you in touch with trained professional photographers who specialise in real estate photography? How will your listing look and how will they describe your property? Which parts will they highlight, and will they feature your property on their social media pages when requested? Try to imagine this from a guest’s perspective and decide if their marketing strategy makes sense and is beneficial to you.
Once you’ve looked into all the pertinent details and have made your decision, keeping a physical copy of the contract would be helpful so you can review the agreement in case you notice any irregularities. Lastly, don’t be afraid to ask your hosting partner in case you need clarification on some things as more often than not, they are more than happy to help. If you have any concerns before signing a contract, communicate it and be transparent. After all, the property management company you’re joining must also reflect a transparent and communicative environment if you are to have a relationship that yields many benefits in the coming years.
Contact us at Hometime for a free consultation session and see how your investment property may benefit from our services.