Should You Hire A Property Management Company? Here’s the Real Truth

If you have ALL the time in the world, and you don’t want to share any of your rental income, self-managing your vacation rental is the way to go.

However, hiring a property management company can be a lifesaver, especially as you expand your portfolio.

In this article, we’ll break down:

• what holiday home companies in Dubai do
• if they’re worth it
• the pros and cons of hiring one
• how to decide if it’s the right move for you

Let’s go!

What’s the Role of A Property Management Company?

A property management company handles the everyday responsibilities of running a rental unit or Airbnb, which often includes rent collection, maintenance, marketing, and guest management.

Think of property managers as the middleman between you and your tenants (or guests), handling all the stuff  that makes your rental property profitable. This includes;

• Marketing & advertising your property on listing platforms.
• Screening potential tenants/guests and managing the leasing process.
• Overseeing move-in and move-out procedures.
• Adjusting rent/night rates based on market conditions.
• Collecting payments and managing finances.
• Handling maintenance requests and repairs.
• Addressing tenant complaints and evictions if necessary.

…and many more.

Who Needs a Property Management Company?

Now that you have an idea of what property management companies do, the question is – do you need one? Maybe not. Here’s a quick list of people who need property management;

1. Busy 9-5 workers who don’t have time
2. Investors with multiple properties
3. Landlords who live far away and can’t handle issues in person

…and YOU if you want some passive income without the “management headaches” that come with it.

Managing Short-Term Rentals vs Long-Term Rentals: What You Need to Know

If you’re considering a property management company in the UAE, there are two primary options for renting out your property: short-term and long-term rentals. 

Short term rentals, also known as holiday homes, vacation rentals, and Airbnbs, involves renting out your property on a “short-term” basis like a night, week, or even a month. On the flip side, long term rentals means renting out your property for a long period, about 6-12 months.

1. Long-Term Rentals: Pros and Cons

2. Short-Term Rentals: Pros and Cons 

Yet, is it better to go for a long-term  or short-term rental management? 

3. Vacation Rental vs Long-Term Rental Management: Which Is Best for You?

Long-term rentals are best for property owners who want stability. In contrast, short-term rentals are better for  flexibility and higher income. The biggest difference between both rental types is the earning power and the risk involved. According to Forbes, short-term rentals can make up to 30% higher profits than long-term rentals.

Take Anthony, who got a +15%  ROI increase  in only 6 months – when he switched to short term rentals with Homevy. He was formerly using his property as a long-term rental, and he struggled to get a tangible ROI for years.

Homevy Tip: If you’re on the fence about using your property as a short term rental, use our free str vs ltr tool. It shows you if your property is better as a short or long term rental.

Pros of Hiring a Property Management Company

Here are the benefits of letting a property management company do all the work for you;

1. Setting the Right Rental Price

A vacation rental management company doesn’t just pick a nightly rate out of thin air. They analyze local market trends, competitor rates, and factor in seasonal demand to determine the best price for your property.

Photo by Yan Krukau

2. Consistent Rent Collection & Financial Management

A property manager ensures your rent is collected on time, late fees are enforced, and you get your money without awkward conversations.  They also handle accounting and provide clear financial reports on your property’s performance.

3. Handling Maintenance & Repairs

A property management company would save you from maintenance issues, bad tenants and last-minute guest complaints. Also, property managers have a network of trusted contractors who solve issues quickly, often at better rates than you’d get on your own. 

4. Top Tier Tenant Screening

A bad tenant can cost you money in unpaid rent, property damage, and legal fees. Property management companies have screening systems to find reliable, responsible, and financially stable tenants/guests. This means fewer evictions, late payments, and fewer horror stories.

5. Legal Protection & Eviction Handling

Rental laws can be tricky, and one mistake can lead to costly legal trouble. A property manager knows the laws, ensures lease agreements are solid, and handles evictions – legally, if necessary. This protects you from lawsuits and unnecessary stress.

6. Lower Vacancy Rates & Better Marketing

Vacation rental marketing  is demanding. Property managers can help you market your rentals effectively, get them in front of the right audience via various property listing sites, and set competitive rental prices.

Cons of Hiring a Property Management Company

Trusting a property management company can save you time and stress, but it’s not always the perfect solution. Here are some downsides to consider before making your decision.

1. It’s an Added Expense

Property managers don’t work for free. Most charge 10-30% of your monthly rental income. There may also be additional charges. And if your rental income is low or insufficient to cover expenses, you’ll have less profit.

2. Less Control Over Your Property

When you hire a rental manager, you trust someone else to make decisions about your property.  You won’t be in charge of  decisions like tenant/guest selection, maintenance choices, or pricing. If you prefer to be involved in every aspect of managing your property, then outsourcing property management isn’t the best choice.

3. Potential for Mismanagement

A bad property management company can leave your property empty for long periods, get you the worst tenants/guests, or spend too much on repairs. This is why it’s important to carefully select a reliable holiday home company to avoid such issues. 

4. Some Tasks Still Need Your Approval

Handing over your property doesn’t mean you won’t be accountable for anything. You’ll still have minor responsibilities like repair permissions, legal matters, and tax-related issues.

What’s the Cost of Hiring a Property Management Company in Dubai?

Property management services prices range from 5% to 20% of the annual or monthly rental income, depending on factors like the property’s value, location, the range of services offered, the type of property, and the specific terms of the contract. These factors can significantly influence the management fees and the overall value you receive.  

Let’s explore this in more detail below;

Property Management Fee Structures: 

• Percentage-Based Fees: Many property management companies charge a percentage of the annual rent. For example, if your property’s annual rent is AED 200,000, and the management fee is 5%, you’d pay AED 10,000 annually. 
• Flat Fees: Some property management companies may offer a fixed fee for properties under a certain amount of rent. Say… if your property’s rent is below AED 200,000, you may pay a flat fee of AED 10,000 per year, regardless of the rent amount.

Additional Costs:

• Marketing Fees: Some property management companies in the UAE may charge additional fees for marketing or furnishing your property.
• Maintenance Charges: You might also be charged for repairs that exceed a certain amount, depending on the terms of your agreement.

TLDR: Percentage-based fees are based on how much rent you charge, while flat fees are fixed amounts that don’t depend on the rent value. For example, Homevy’s short-term rental management fees are performance-based with no additional costs; you only pay 14% of your earnings. 

Should You Hire a Property Manager or Do It Yourself?

Now for the big decision: should you manage your property yourself, or is it time to hand over the reins? 

Photo by Tima Miroshnichen

Let’s see…

Self-Management vs Property Management Companies: Which Costs More?

How to Choose the Right Property Management Company

If you’re here at this point, you’re probably considering if a property management company is right for you. Here’s how to make sure you pick the best company for your needs.

1. Look for Experience and Reputation

Experience matters. Always. A company with a good track record will know the ins and outs of managing rental properties, handling difficult tenants, and navigating legal stuff. Also check customer reviews and testimonials online to get a sense of reputation. Sites like Trustpilot and specialized real estate forums can help. Better still, ask the company to provide references from their past/existing property owners.

2. Understand the Fee Structure

Every property management company has different pricing. Make sure you fully understand what you’re paying for. Ensure the company clearly outlines its fee structure, including management fees and additional charges. Beware of companies that don’t publicly list fees on their website as well. It’s a red flag.

However, don’t just settle for the first company you find. Compare rates and services to ensure you’re getting the best value for your money.

3. Check their Services

Management services differ, so ensure the company has everything you need;

• Do they handle advertising, showings, and tenant/guest screening?
• Do they have a network of trusted contractors for repairs, or will you be responsible?
• Will they handle evictions and ensure compliance with local laws?

4. Check Knowledge of Local Laws

Dubai has laws governing rental properties. Your property manager should be well-versed in these laws – to ensure your lease agreements are legally sound. They should strongly understand RERA  guidelines, legal process for evicting tenants, settling tenant disputes etc.

5. Evaluate Communication and Responsiveness

Communication is important when working with a property manager. The company should be easy to contact, and responsive to you and tenants/guests. Call or email them to test their level of communication and see how long it takes to get a response. Also ensure they’re available to handle emergencies  or have someone on call during off-hours.

6. Trust Your Gut

After you’ve done your research and met with a few companies, trust your instincts. You’ll be working closely with this company, and it’s important to feel comfortable with them.

Outro: The Real Truth About Hiring a Property Management Company

Managing one or two properties by yourself might work. But when you expand your portfolio, you need a team on your side. Sure, it comes at a cost, but the right service is worth every cent. 

Now here’s another truth. Outsourcing property management won’t “miraculously” fix things immediately. The initial syncing, onboarding, and setting up your property may take some time. But once that’s done, life becomes easier and you can truly make passive income. 

Question is…would you rather enjoy passive income or manage tenants & guests?

If you choose the former, Homevy is the best company to help you manage short-term rentals in Dubai. Get in touch today.

Xoxo :))