Whether you are on the management side of a short term rental or you have your own short term rental and hope to hire a manager someday, understanding rental management agreement contracts is essential.
We’re going to discuss the top 5 things that you may not think about in your contract:
In the contract, there will be an agreement that maintenance under a certain price point will be under the manager’s discretion to get it done without having to bother the owner. You want to have this fleshed out beforehand so it doesn’t become an issue or point of contention down the line.
In the contract between the manager and the owner, the manager is going to require the owner to carry at all times (and at the owner’s expense) public liability insurance. The owner needs to be covered and the manager or their business also needs to be listed as insured. Any insurance agent will be able to walk you through this easily.
In a contract, there should be a manager promotional usage and an owner promotional usage policy laid out. You want this to be called out and agreed upon before you start working together. The owner will want a certain number of days a year where they can use the property at no additional cost, as long as it does not displace a guest. The contract will also outline which days are available (i.e. not during peak seasons).
This is something sure to happen at some point, and if you are able to get into an agreement on what makes sense for everyone involved beforehand the whole process can go much smoother. Things like when the property can be shown versus when guests are allowed to stay need to be resolved ahead of time.
If you are a property owner that is hiring a manager, you need to understand every single fee involved in the management process. And if you are a manager and you know what your business structure is and what you’re going to charge for, you need to mark down all of these fees very clearly (including onboarding fees, trip fees, commission rate, linen fees, etc).
While no two businesses are the same in this industry, it’s important to pause and take the time to set yourself up for success. The more you can have figured out ahead of time, the less you will encounter problems down the road.