Richard is the owner/broker of Coldwell Banker Tamarindo, and the founder of the vacation rental company www.viptamarindo.com. Please get in touch if we can help.
Here are the key points covered in the video.
1. Summary
After the buying decision, choosing your property manager is the single most important decision. Your property manager will be taking care of one of your bigger investments. Choose wisely.
1. Assess your needs
Are you going to be living full time, a few months a year, or a few weeks a year? Do you want to earn vacation rental income in your absence?
2. If you are living full time in CR
If you plan to live full time in Costa Rica, you probably don't need a property manager, most likely you will have a Costa Rica bank account so you can pay your utilities, hire a security company to keep an eye on it when you are not there, contact a local maintenance guy and maid
3. If you want vacation rental income
If you are not going to be in Costa Rica most of the year and want to earn vacation rental income you will definitely need a property manager. There are dozens to choose from in each beach town. How do you decide?
4. Do Due Diligence on the PM
There are many things to consider. How safe is your money, does your PM maintain separate trust accounting and banking? There are examples of PMs going out of business after spending owner funds on company expenses. What kind of software do they run? We use LMPM which is cutting edge, with real time owner portal. Don't go for the PM offering the cheapest rates. You get what you pay for! It needs to be a win win. You need to earn rental income, and keep your property well maintained. The PM needs to make money to pay a living wage to the staff, and go the extra mile to keep your property to the right standard. There are 2 cost structures a PM might offer you
5. Cost structure option 1- Low Commission Plus Fee, Fee and more Fees
The most common PM proposal you will come across will be say, 20% commission on rentals, plus maid service fee, monthly admin fee, supervising fee on top of maintenance costs, monthly cleaning supplies cost, etc etc. Some of these costs may be transparent, others not. Under this scenario the motivation of the PM is to add more costs, that is how he makes money, this is not in your best interest. You will never know when things are really necessary so a lot of discretion is in the hands of your PM
6. Cost structure option 2-Higher commission, fewer fees
The other option is a higher commission on rentals, say 35% and almost no additional costs. This is the model I prefer and the one my PM company uses. Sticker shock puts a lot of owners off, but I recommend you dig a little deeper. The commission only model gives you goal congruence with your property manager. He will be trying to maximize your rentals, and to do so needs to keep your property in good order, to get the best renter reviews. His goals are your goals
7. The Social Responsibility Aspect
Ask a PM how he treats and pays his staff. Minimum wage in Costa Rica really is a subsistence only level. Does he pay their insurance, vacation and pension? Cleaners and maintenance staff deserve a living wage, respect and job security. What about their policy on single use plastics, recycling etc. We live in a green country and everyone needs to do their part.
8. Find the Win - Win
For a long term healthy relationship between you and your PM, it needs to be a Win Win. You need to make a good ROI from your investment, and have your property maintained to a high standard. Your PM needs to make a living so he is focused on the business, so he can reinvest in his staff, and make the right decisions for your property, which are not based on cost cutting and lower preventive maintenance standards, which may not become apparent for years
Richard Lacey
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