Pros and Cons of Adding Short Term Rentals to a Long Term Rental Management Business with Heather Nicely – Part 1

Heather Nicely is a Realtor, broker, and loan officer, and also the president of the Arizona chapter of NARPM. She’s been on all sides of property management and today, she’s joining us to talk about short term rentals and how managing those properties are different from managing long term rentals.

Heather’s Journey to the Short Term Rental (STR) Space

While other little girls were fantasizing about growing up into princesses, Heather was fascinated with real estate. By the time she was 12 years old, she knew she wanted to purchase a home in the mountains or near the beach so she could vacation there. Ultimately, she wanted to buy 52 properties so she could live in a different home every week of the year.

She also wanted to make money off the properties while she wasn’t living in them.

As she grew up, the idea seemed silly.

But now, it feels like maybe she was onto something.

Short term rentals were part of a platform within a software company she and her husband owned. She took the time to dig into it and learn about that space. Then, she became Vice President for an after-hours emergency call center and serviced some short term rentals while there. Heather learned that short term guests have more persistent needs than long term tenants. It seemed like a difficult market.

As her career evolved and she became a Realtor and opened a brokerage, she began to gather clients who were purchasing investment properties to be used as short term rentals. It made sense to her as she began to manage properties that she would include short term rentals in her property management portfolio.

Are Short Term Rentals the Future?

When COVID happened, short term rentals were the worst place to be.

But, since the pandemic has dissipated, there’s been a surge of binge travel. Now, short term rentals are more popular than ever. As a property manager, you might have heard about other long term property management companies dipping into short term rental management.

We asked Heather about the pros and cons of adding these properties to a long term management business.

* Short term rentals can be lucrative. Anyone renting out a short term home can tell you that there’s money to be made. Everyone wants a piece of the Airbnb market.

* But, if you’re generally doing long term rentals, you have to wrap your mind around the different business model that’s in place for short term rental homes.

Your 15 or 20 years of experience managing long term properties won’t help you.

This is a different beast, and trying to offer short term management services through an existing management company can be trouble.

Here’s the main difference: In the long term rental space, you’re developing a relationship with tenants over time. Your property owner is your main client. In the short term space, you’re renting out more than a roof. Vacation properties especially require you to rent out an experience. You have to cater to those guests. They’ll want coffee filters in the kitchen when they wake up on their first morning. If they’re checking in at 2:00 a.m. and the lockbox doesn’t work, you can expect a frustrated phone call.

Short term guests will want refunds if everything is not perfect. And, everything is an emergency.

So, it’s different.

But, Heather says that when you can hone in on those differences and create a good experience, you’ll do very well in that space. Educate yourself and understand the industry.

Most importantly, separate yourself from what you already know about property management.

Short Term vs. Long Term Property Management Mindset

Heather worked on the vendor side in a call center, and that demonstrated the difference between long term tenants and short term guests.

If someone is in a home for only two days, they’ll expect everything to be perfect for those entire two days,