Host, Christine Karpinski: Today's guest is Steve Trover. He is the CEO of All Star Vacation Homes in Florida. Steve is actually a property manager. I know people are going, "What? Christine is interviewing a property manager?" Yes, I am. I know that renting by owner isn't for everybody, and if you do decide you want to use a property manager, I have got Steve on the line and he is what I would consider one of the really good property managers. So we're going to ask him a whole bunch of questions about what we can do if we are looking for a property manager.

Steven had started in this property management online in 1997. Remember, folks, in 1997 the Internet was not widely used, so this has pushed his web site, All Star Vacation Homes, to be one of the top traffic web sites for vacation rentals through property managers. So it is one of the better web sites, he is very well known and very well respected. He is a member of VRMA, which is the Vacation Rental Managers' Association, and has a whole bunch of other accreditations as a property manager. As I said, he is definitely one of the better, cream‑of‑the‑crop property managers.

Steve, thanks so much for joining.

Guest, Steve Trover: Thanks for having me.

Christine: OK, we are going to get right into this. I know a little bit about you. I want to talk about, if I needed to find a property manager, what would I need to look for in a good property manager?

Steve: I think the primary thing is someone that you feel you could trust, and I think that that is going to take a little bit of time. It's going to happen over time, but obviously, in your initial discussions, somebody that you just work well with.

You are looking for a partner, and I think a lot of owners go in looking to be a customer, and I think that in most cases we need to look at the rental client as the customer, and the property manager should be your partner, someone that is there to take care of your property at the level that you would want it to be taken care of, yourself. Kind of somebody that's there when you can't be, and you really have to feel comfortable with that person.

So I think relationship, and just really feeling good about that person or that group of people, if you will, to begin with; but there are a lot of other things, such as, how long has the company been in business, what accreditation does it have, what kind of reputation does it have within the industry, and obviously, what type of marketing and operations do they offer, as well.

Christine: OK, so I guess you need to feel comfortable with the person; but how do I know, I mean, let's face it, when you feel comfortable with somebody, they're not always going to be the most efficient. What I think I would want is somebody that I could communicate with well. Is it unreasonable to ask your property manager to have communications with me on a regular basis?

Steve: Not at all, and I think that you might do that right in the beginning, by asking some questions both by telephone and by email, and see how they respond and how they communicate even before the contract is signed. Then also, obviously you could ask for them to give you some other owners, to give you an idea of how they work with those other owners, so maybe you can ask some questions from some references for them.

Christine: Yeah, references, I guess. That would be a really big thing.

Steve: Absolutely and I think most good property management companies are going to easily be able to offer some of those references to you. Make a call to those owners just ask those things that you're concerned about such as communication.

Christine: Mm‑hmm. Now, what about, one of the big things that is a motivator for owners, of course, is control, but it is also the money. What do you feel is a reasonable commission to charge? Steve: Well I think it does depend on the market, and obviously, the typical average daily rate in that market. I think that makes a difference. Also, what types of services are included in that fee structure, if there is a management fee that is separate from the commission. If you're just strictly talking about commission structure, I think you want it to be somewhere in the realm of 25‑30 percent.

Why I say in that area, I think when you start getting into these 40s and 50s, I think that there better be some other things that they are doing for that, such as paying the electricity and the utility bills themselves instead of charging you.

But you don't want somebody necessarily‑‑and some owners may disagree‑‑that is only charging 10 or 15 percent, and here's why: if you are expecting them to market your property, typically they are not going to have enough funds to be able to properly market your property and get you a number of reservations that way. They need to have a margin there so that they can pay the people that operate your property and take care of it, but also the marketing side of it. I think they have to spend a reasonable amount of money on marketing as well.

Christine: Oh yeah. Even on the Internet, people might look and say, "Oh well, they have a web site. What does a web site cost? They build it, it's done." No, that's not exactly how it works. It is an ongoing process. You have got to make sure that you are optimized well in the search engines; and let's face it, we all have to pay Google and Yahoo! for paid, sponsored advertisements, and some deep pockets sometimes have to go into that.

Steve: Absolutely. I mean, for our 150 properties we spend over $1 million a year on marketing, so you have got to have a decent margin there, and you want to be with a company that can show you, that can outline their marketing program and kind of tell you a little bit about how they spend that money, and where it goes, and show you the results of those efforts.

Christine: Mm‑hmm. That is astonishing to me, that you spend $1 million with 150 properties or so. That seems like a lot. Is that over the top, or is that something I should expect if I am looking for a property manager?

Steve: I am sure, per property, we are at the higher end of the spectrum in most cases. We really don't have very many homeowners within our group that do any marketing at all. In fact, over 90 percent of the bookings that go in the properties that we manage are generated by us. So that's pretty unique, I'd say. Many property managers have owners where they are doing a number of the bookings themselves. We don't discourage it in any way, it's just that most of our owners tend to have us do most of the marketing.

Christine: Well if you do such a great job, then there's no need for them to do it on their own. I know a lot of owners who are renting by owner along with their property manager renting their homes, do it to get those extra bookings.

Steve: Exactly. They are doing it out of necessity a lot of the time. Some people do like to do it themselves‑‑have a web site and get to know the people that are going in the homes, as outlined in your book‑‑but I think in most cases, a lot of the owners would just as soon somebody do it well [for them], but they are doing it out of necessity because they have not found that.

But I will tell you there are property managers in most markets. If you seek them out they can really generate those reservations for you. I know that it is sometimes hard to believe, and many owners and I have heard the stories‑‑not quite as many as you have, I'm sure‑‑where they have gone to more than a few managers and finally decided just to do it themselves. But I think if you really work hard in the beginning in finding a good partner, then you won't have to do as much work and you can kind of subsidize it.

Christine: Right, right. That absolutely makes sense. So then, how would I go and find a good property manager. For instance, you are in Orlando‑‑a very, very big, competitive market. There are hundreds, if not maybe thousands, of property managers in that market.

Steve: Yup.

Christine: And if I go to a web site like VRMA, which is the Vacation Rentals Managers' Association, there are only a few property managers in the Orlando area. Should I always just look for a property manager that is a member of VRMA?

Steve: I don't think so. I think that there are a number of different ways. In our market, for instance, there is VRMA. Then there is the FVRMA‑‑Florida Vacation Rental Managers' Association. Then there is the Central Florida Property Managers' Association, which is another organization. So you can kind of cross‑check those three. You can also look at the Chamber of Commerce, the CVB. Most of the time, if you call one of them, they'll kind of give you a list. They won't necessarily tell you to go to one particular one, but then you can call around, you can look at the Better Business Bureau, at reports of companies that you're looking at.

And for me, I think if I was going into the market, one of the things that was of most concern to me was how many reservations is a company going to generate, I'm going to look at their web site, where it's placed, their organic rankings in the search engines, see if they are spending a decent amount on cost‑per‑click advertising.

I don't know if you are familiar with Alexa, but you can look at Alexa.com, at their ranking there, as well as Ranking.com. It's not an exact science, but it gives you an idea of the type of traffic that they are getting compared to other sites in the marketplace. Obviously the Internet is a critical piece from a marketing perspective.

Then just go in and meet the people‑‑not just the owners of the company or the managers, but the staff. Kind of get a feel for how they operate their company. Ask to maybe see a couple of the properties that they manage and inspect them.

And take it with a grain of salt. They are rental properties, they are going to have some wear, but just look at things that you would be concerned about if it were your property.

Christine: Great suggestion: walk in and say, "Hey, can I have a look.” And talking to the actual employees. Steve, I bet you're not taking reservations very often, now, are you?

Steve: Not at all. I will say, occasionally I do jump on the phone just so that I'm connected with the guests, on occasion, but for the most part, no. And it is very important that they have good, solid reservations agents that are trained well, that know the product.

A lot of times you'll call a company and try to make a reservation, and that agent has never even been out to most of the properties, and they really can't tell you strong information. So you want an agent there that is going to kind of talk to the client just like you would, really tell them about the property and tell them about the great features of it, and actually know it and have been to it.

Christine: So the reservation agents should have visited the property. Is that correct?

Steve: I think in most cases that's true. With some companies, very large property management companies, where they might have a thousand homes, it is obviously sometimes difficult; but when we take on a new property‑‑and most managers do this‑‑they will take the reservations agents out there and tour the property, so they really get to know the product that they're selling.

Christine: Yeah, because I guess that would be really difficult, to sell a product that you have little or no knowledge of.

Now, we talked about the [online] advertising aspect of it, which is obviously extremely important. What about print? Is that important? Because it seems like when I have looked at some property managers' portfolios, they have said, "Well look at all this print advertising we do." And from my perspective, I have never done a piece of print advertising whatsoever, and I know the Internet is 100 percent effective for me, but how effective is that? Does print come into play at all?

Steve: We do print specifically through the destination marketing organization such as the CVBs, and we find that relatively effective. It is not as effective as most of the other channels that we provide. I will say, in certain markets where the demographic is a little older in age, that print still seems to be effective in some cases; but I would rather see a company that has a stronger Internet presence. The best print, though, is not print that they pay for, that's print that they've gotten through media exposure.

Christine: Right, positive PR.

Steve: Exactly. So that's much stronger. So if they can show you those kinds of things, where they were maybe written up in a magazine, a guidebook or a newspaper, those are typically more effective than print advertising.

Christine: Yeah, that's true. It gives a lot more credibility when you've got a reporter writing about it; and I suppose you could always go onto Google News or Yahoo! News, and search that property manager to see if maybe there were any adverse things against them as well.

Steve: Absolutely. As well as things like I Go You Go and TripAdvisor, their online reputation is critical. Somebody saying, from a guest's perspective, that they didn't take care of them, well certainly you probably don't want them to manage your property if you see that as a recurring thing.

Christine: Now, what about other sorts of costs that are associated? I have heard from thousands of owners, and I have heard all kinds of fees that property managers charge. Certainly, I acknowledge that not all of them charge all the fees. When you and I had talked, previous to this recording, I was astonished to find out that you don't actually have a linen pool fee, nor did anybody else that you had spoken to.

It happens to be one of the big complaints that I get from a lot of owners, that they get a $700 or $1,200 a year linen pool fee. What is your take on fees such as linen pools, or them charging the owners the cleaning fee as opposed to the renters, or sometimes we have heard where they charge the owner and the renter. What is your take, and what is your recommendation?

Steve: Well I think you have got to look at it and see what makes sense for you. It is different in each market and across different property managers. For us, the linens are included in the cleaning fee. We do charge the owner a cleaning fee, but only on a six night or longer stay. In Orlando you have a lot of shorter stays, only four or five night, or even three night on a last minute, we'll charge the guest to clean and not the owner.

But on the longer stays we typically do charge the owner, but it is offset by the income that we do produce for them. So you need to know all those things and put that into your calculations as you consider the property manager that you're going to use.

Christine: That's really interesting. You are definitely the cream of the crop. You are not the complaint property manager that I have heard about. That was interesting, what you just said, that you charge the renter for the shorter term, and the owner for the longer term; and it totally makes sense, because that's another complaint that I get from owners, is, "The property manager is renting my property for one, two, three nights at a time, and they are charging me a cleaning fee, and then the bottom line means nothing to me, " because once you've paid the cleaning fees...

Steve: Exactly.

Christine: So I guess that's something else that you can look for when you are looking for a good property manager.

Steve: Yeah, you want to look at all the different fees that they charge. Some charge a lot, some don't charge very many but they have a higher commission, so you have to calculate all of that when you're considering it. With us, we do have a monthly management fee, it covers a lot of different things; we don't have call‑out fee, we don't charge when we go out to change a light bulb, and some managers do that. So I'm not saying that it is wrong to charge for that, but sometimes it can get very exorbitant.

So I think that you have just got to have a balance there of things. You know they have to make money. They are in business to make money, and you want them to do a good job, and in order to do that you have got to pay for it, or somebody does, whether it is the guest or the owner; but a lot of times you'll find managers that charge you for every single thing that they do, and mark up all the different things that they do, and you have just got to be careful when you're looking. It should all be in the contract when you go forward with them.

Christine: That led me perfectly into my next question. Is all of this stuff typically in writing, and should you expect it in writing? Is there some sort of standard contract that property managers use between owners, like there is a standard real estate contract? Does there tend to be a standard property managers' contract?

Steve: There is not, so it is fairly different throughout. A lot of us, especially with VRMA and FRMA, we actually have meetings regarding property management contracts. So when we're at conventions and whatnot we'll talk about that, and we'll discuss‑‑it doesn't necessarily mean that we're all in the same boat, but we talk about best practice.

So I think it is critical to look at that and compare that to the different managers you're looking at, and make sure you feel like you got the best one. But I think it should be in writing, personally. I think that you want as much in writing as possible. You are not going to be able to cover every single thing that could potentially happen, but most of it should be there, and all the fees, obviously, that they charge should be there.

Christine: Steve, that sounds really interesting, about the whole contract, and putting it all in writing, and having a good contract, and the fact that there are no standards or practices if you go to one or the other. Do you by any chance have an example of a contract that we could put on the Owners' Community web site for homeowners, so that property owners, when they are looking to rent, could see what maybe the ‑‑ obviously it won't be the standard, but it could be something that they could look at and use as a guideline?

Steve: Sure, I could do one that is kind of a generic contract that could be used as a guideline. Obviously it is not going to be the absolute perfect, and in fact, I would say that, in certain areas even, there are certain laws that management companies have to abide by, like in North Carolina, so it will be a little different. It doesn't mean that this is exactly how this should be, but it will cover a lot of the ground.

Christine: I think that that would be amazingly helpful. See? There are ways that owners and property managers can work together.

Steve: Absolutely.

Christine: This is really exciting.

OK, so what about major repairs? I have an agreement with my property manager, so to say‑‑I don't use a property manager to do the bookings and all that, but I do use this person that does a la carte services, he does all the housekeeping and maintenance and everything for me; but we have an agreement that if there is anything under $200, he can go ahead and do it, but if it is over $200 he has to get a hold of me. Is that standard within contracts, or is it acceptable to ask that sort of thing?

Steve: Absolutely. That is fairly typical and we do have that in our contract, that we have to call‑‑I think it's $250 on ours. We do have one situation that we just kind of verbalize to let them know, if they have a renter that's in and the air conditioner goes out in July, for instance, and there is no warranty on the air conditioner, let's say, and we've tried numerous times to get in contact with them.

Just to save us from moving that renter out, we are going to send our technician out to fix that AC. And it may, if it exceeds $250 we'll have to discuss it, but in most cases owners would want that, as opposed to moving the renter because you're going to lose more revenue that way.

So we abide by that contract, but we certainly don't want to hurt the owner by abiding by that contract; but I think it is important to have that stipulation. We don't just go in and replace things for hundreds of dollars and then you see it on your statement. That's not a good way to do business.

Christine: I guess that just goes in the line of communication ‑‑ that you absolutely really have to have good communication with the property managers, or your maintenance people, your housekeeping people. Heck, you have got to have good communication with your husbands and your children, why wouldn't you extend that into your businesses as well?

So we talked about all of the stuff regarding the money, and the maintenance, and everything else. Now, there is one other thing that tends to be, sometimes, a little bit of a sticky subject, and this is in the area of personal use. I have heard that there are some property managers out there that dictate to the owners when they can and cannot use their own properties. For instance, they can't use it for Spring Break, or maybe Christmas week, or Fourth of July week. Is that reasonable? Is it something standard in the business? What is your response to that?

Steve: Here is my take on it, and it is probably coming from an Orlando take. We don't restrict owners using their property, ever. I will say that I can kind of understand that in certain markets where they have a very short season, they spend a lot of money on marketing the properties, and the owner uses up all the high season or peak season, and then they just have no availability to generate revenue from.

I think that that's what that stems out of in most cases. I will say it can be frustrating at Christmastime, when we're always sold out, 30 percent of the owners show up. We don't really have that problem within our own inventory, but I could understand that as well. But I think it's your house. It is the owner's house, they should be able to use it when they want to use it.

I think the more frustrating thing than the owner usage is if the owner is doing bookings, but they are only booking those peak periods, and then they are upset with the manager because they are not getting the September months, when they are booking all the peak periods in whatever market it is at. So you have to look at it from both perspectives, but I think that at the end of the day it is the owner's house. We do respect that, know that, and I think that we should allow them to use their own house when they want to, especially for their own use or friends or family members.

I think it comes down to, when you are expecting that manager to do most of the marketing, and then you use those peak weeks by renting them out; and especially if it is for less than what the manager would rent it out for.

Christine: You know that is something I absolutely cannot understand whatsoever. Why would you rent it for less than the property manager? I went on and on about this on my blog, and I have got articles on the owner community web site about that. I don't understand why, if I were renting through a property manager, and the property manager was getting $2,000 a week for my home, why would I rent it for less? I mean, that's devaluing your home, and if the renters are paying $2,000, it's worth $2,000. So I guess I don't understand that mentality. Nor do you, but I always have to kind of give it a jab a little when I get the opportunity.

Well, Steve, I really appreciate you taking the time to talk to us. I know, everybody, this was kind of a longer podcast than usual, but certainly there is some really good information here with Steve, and if you do ever need a property manager in the Central Florida area, Steve Trover is his name, and the name of his company is All Star Vacation Homes. He can be reached at AllStarVacationHomes.com, and Steve, what is your phone number, in case people want to call you?

Steve: Our toll‑free number is 888‑249‑1779, and our normal number is 407‑997‑0733. I will tell you that we don't take on many outside properties, outside of our real estate company, but if you are looking for a manager in this area, I would be more than happy to try and point you in the right direction, to the right manager. We do that on a regular basis here. We have some great managers that we work with, locally, that I meet with on a monthly basis, and I can turn you on to them.

Christine: Excellent. That, to me, even tells me that you are a better property manager, because you turn people away.

Steve: I think you have to if you grow too fast. Nobody's perfect. If you have too many properties it is very difficult to do this, so I think you have to have a balance there.

Christine: Well thank you so much for all of your information. Again, we'll have Steve's information on our web site, and he is actually going to contribute a contract that we can use; and perhaps we can even get you to write a couple of articles. I think that might be fun.

Steve: Yeah, that's fun.

Christine: OK, thanks again. Everybody, have a great day. Thanks for joining us.