You have paid the final sum for your dream ski home, turned your key in the lock and are excited to open its doors to holidaymakers. But for your rental to run as smoothly as possible, you’ll need to do some financial planning and research into management companies first. In this article, we will cover what property management fees can entail and how to stay on top of them.
What Are Property Management Fees?
Firstly, property management fees involve keeping your home in shipshape year-round, which is especially important if you are renting out your home. So, from a leaky faucet to an unreliable oven, be quick to fix any issues in the home. Furthermore, during the winter, you’ll want to see to snow removal from the driveway while you might want to do some landscaping to make your garden prettier in summer.
Unless you live nearby and want to opt for a hands-on approach, you will want to hire a management company to assist with renting out your ski home to holidaymakers. A management company could take up to 50% (but 25-35% is more typical) of the rental income, but if they make the process hassle-free and keep your home booked with happy holidaymakers, you might feel that it is worth it.
They will handle check-ins, check outs, providing information about the resort and tend to guests’ needs. Additionally, they may factor in cleaning in between stays, as well as the washing of linen and towels.
Plus, your management company will be able to handle finances. This includes setting rental rates, collecting payments from guests, managing security deposits, and disbursing rental income back to you. Plus, they should have a plan in place for handling emergency fixes, like a burst pipe or power outage.
An additional (but effective) cost could be for the marketing and advertising of the property. This could be an online listing, such as Airbnb and posts to social media. But don’t underestimate the power of word of mouth and a few great reviews.
Fixed vs. Percentage-Based Fees
You can choose for your property management fees to either be fixed or percentage based. Fixed fees are predetermined charges that you will pay to the management company, regardless of the property's rental income. The advantage of fixed fees is predictability: you will know exactly how much you will be paying each month or year, regardless of fluctuations in rental income.
However, if you buy somewhere with a shorter ski season and limited dual season appeal or are planning to stay in the home yourself for some of the year, you might find it frustrating to pay a management company when no holidaymakers are in the property.
Alternatively, you might go for percentage-based fees. Instead of a fixed amount, you'll pay a percentage of your rental income to the management company. This can be more beneficial if your property's rental income fluctuates due to seasonal limitations or personal use.
With this model, the management company is motivated to maximise your rental income since their earnings increase with yours. So, during peak seasons or when your property is in high demand, you'll both benefit.
Factors Influencing Property Management Fees
The location of your property within the ski resort and the type of property you own (condo, chalet, apartment) can significantly impact management fees. For instance, a ski chalet located slope-side or in a prime location within the resort may command higher management fees due to increased demand and potential for higher rental income. Similarly, larger properties with more amenities may incur higher fees compared to smaller condos or apartments.
While buying in one of the most popular resorts will increase the likelihood of guests, it can also make competition fiercer, and the need for your property to stand-out even greater.
You could make your home special by ensuring that are great nearby transport connections or by installing smart features.
Evaluating Property Management Companies
When choosing a property management company, compare the different services offered and find the one that suits you best. It is crucial to do a little digging. If a management company say that they run successful online advertising, pretend you are a holidaymaker looking to book a ski home for a week in January and see how straightforward it is.
Plus, make sure that the management company has an abundance of local knowledge and experience. Our top tip is that if you know anyone that already rents out a ski home in the area, ask them what management company they use. Nothing beats a personal recommendation.
It’s advisable to connect with a couple of management companies before you choose one. So that you can compare not only fees but how communicative and transparent they are. Additionally, negotiate for flexibility in contract terms, including the ability to adjust fees based on rental performance or seasonal variations.
This can help mitigate risks during slower rental periods and maximise returns during peak seasons.
The Impact of Management Fees on ROI
At the end of the day, getting the best return on investment will be a case of tailoring an agreement with a management company that works best for you. Whether that’s opting for a fixed rate because you find the predictability easiest for managing your finances.
Or, going for a company with a proven track record of successfully advertising properties online, and finding that offers the greatest return on investment.
Now’s the time to make your dreams reality
At SnowOnly we can help you find your ideal ski property without fuss. Our property portal means you can look for ski properties without having to trawl dozens of agents' websites and our free property consultation service means we can give you the benefit of our many years experience and knowledge about buying ski property.
Get in touch and begin the next chapter of your adventures in the alps.
Apr 22, 2024
