Property Management - what you need to know

In this episode we talk with Alex Dallman of Great Western Lodging about what property management entails, what the fees are, and how to interview PMs.  When you are buying a new investment property, have you thought about who is providing toilet paper for your guests? I haven't, but Alex has!!

Transcript

Welcome to Mountain Real Estate, where we bring you the latest insights on real estate from Denver to Summit County, Colorado. I'm your host, Candice De, a realtor, investor, engineer, mom, and Colorado native. All right. Welcome to Mountain Real Estate. Today we have Alex Dalman with Great Western Lodging. So welcome, Alex. Hi, Gabbyce. Appreciate you having me on here. Yeah, it's good to have you. We're going to talk about all things property management in Summit County today. And Alex has a great wealth of knowledge from a lot of different real estate perspectives, and we're going to focus on the property management side. But he brings a lot of knowledge just around the community. Alex, why don't you tell us about yourself? Yep, definitely. Alex Dalman, as Kandace mentioned, Director of Business Development with Great Western Lodging. Been in the county going on five years now, I guess, and in this role for three of them. Awesome. And then what do you tell us about Great Western and... Yeah, so high level Great Western Lodging. We only do short term rentals. We do not do long terms or seasonals because we just are busy enough with our short terms. We have about 250 properties right now, everything from Copper to Keystone to Breckenridge and everything in between. We are on all corners and we only do full service management. So our owners really enjoy being hands off. And that's kind of what you're looking for when you opt to go with a full service property management company versus someone who selects service like an iTrip or Evolve types in Ariadn. You might get a better management rate, but you're going to be a lot more hands on going that route. Whereas we're going to take care of everything full service. What that means is we're going to get your listing posted on Airbnb, BRBO, Booking.com, and our own website. We're going to take all the photography, the 3D tours, we'll manage the cleaning staff, we'll manage the maintenance, the check-in, check-out process, reservations, payments, taxes, everything. So owners that go with full service really enjoy. to be being in the background and trusting that we're taking care of everything. We're obviously here for any and everything that our owners want, but the best owners are the ones who are just, you know, trusting us to take care of everything and not giving us a call every minute. Yeah, trust you guys to do the job that we hired you to do. Yep, exactly. And real quick, I just want to touch on, I think we've seen in Summit County, some of our property management companies have shifted to those like... seasonal and long-term rental offerings because of all the regulations. But you guys decided like we're good at this, we're sticking with our niche. Yeah, pretty much. Seasonals, I'll talk to seasonals more than long-terms. Seasonals are tough because you can put together an idea of what someone can get in the month of January, but not everyone has 15 to 20 thousand dollars to shell out for a month. Not everyone has time because we all work and we have things going on in our lives. Not everyone's remote anymore. The numbers can look really good when you start talking about seasonals, but even if they rent for one month out of the year, that could be a good year for them. There's a lot of seasonals in the county and just not enough people looking for them. We see that pretty regularly, but it's every other season that's kind of tricky and trying to find that right tenant. There's a lot of inventory, especially in the May through November timeframe. There's a lot of rentals here and everyone's competing for the handful of folks who are looking for that opportunity. On the long term side, if you're open to renting to locals who live here in the county on a six to 12 month basis, It's actually incredibly easy to find folks. Just we all know the lack of housing up here, that if you're open to it and you are okay with about $1,500 per bedroom to a local, you can find folks very quickly in all parts of the county here. Yeah. That's a great point. Yeah. That $1,500 per bedroom, does that vary based on where you are? And that's just like an average? It does. I would say it's just an average. You know, you have a lot of new builds in Silverthorn that, you know, they might be looking for 2000. per bedroom because they're locked in at a 7.5%, 8% interest rate and their mortgage is a lot more expensive. There is a market for that. You're going to have some remote person who wants to come up here for six months and ski a bunch and they're going to be able to afford $2,000. But most of us here in Summit, $1,500 is about what you're looking at that you can afford and live comfortably in the county. Which is still per bedroom, that's pretty good rent when you compare it to urban areas. Yeah. Yeah, it's not bad. You know, you're going to have every room in a three to four bedroom home built to be able to pay the landlord. But it is what it is. You meet friends and I know I met you, my rental that I was in being my neighbor there. Yeah, exactly. You meet great people along the way. For sure. For sure. All right. Well, let's jump into like fees. I know you mentioned kind of what your company does and I've helped clients kind of interview property managers and make sure that they ask kind of like, okay, you're full service, but what does that include? Who gets the phone call when there's maintenance issues? And so can you talk through like good questions for clients to ask and then like how those fees vary even within that full service spectrum? Yeah, definitely. So our fees, I'll say in Breckenridge and Blue River are from 25 to 30 percent. It depends on what the property is. The bigger the property, the more revenue generation that's possible with it. Typically, the better rate that you're going to get. A lot of two-bedroom condos exist in Breckenridge. They're going to fall in the 27%, 28% area, but that's going to include a lot. So that's going to include all your paper products, toiletries, sheets, linens, towels. It's pretty stocked. We do everything down to sponges for sponges, dish soap, dishwashing soap, laundry detergent, if you have a washer dryer in your unit. And then all paper products, paper towels, toilet tissue, face tissue. It's all encompassed into our management rate. In addition to having our staff who's available to go and service the call, the fireplaces and work in, we're gonna go out there and check what's going on. If we can't figure it out, we're gonna outsource it to someone who can figure it out. So all these things are benefits of going with a full service management company is that we're here, we're here in the county, we're here to help your guests to have a great experience and give your property a five-star review to where you kind of keep moving up. the rankings on the Airbnbs and VRBOs of the world, more visibility, more bookings, more revenue. If you're not in Breckenridge and Blue River, Silverthorne, Frisco, Dillon, et cetera, we are 20 to 25%. And the reason that we're lower over there is because there's a lot more remote check-in possibilities than there are in Breckenridge. So we don't have to have those guests come by our office where we have a guest-facing front desk agent there to help them with physical keys, parking passports, what have you, that Breckenridge has made a little more challenging. Anything on the north side of the county is gonna be an electronic door lock. They can go straight to the unit. It's a little less us being hands-on with the check-in and check-out process. So with that, we can offer better management rates. Awesome. Yeah, that's good. Have you seen those rates change at all as like the COVID has simmered, the COVID-10? Yeah, for sure. So we are at least through various data tools, data metrics. We're back to pre-COVID. numbers. Whereas during COVID 2020 through 2023, essentially, you could charge a lot, especially in the peak COVID of 2020, 2021, because everyone wanted to get out of the city. Everyone wanted to vacation to the mountains, social distance, have a great time, what have you. So everything was booked up. Everyone, all the companies were running skeleton throughs at the same time. So it was kind of a crazy time. Everyone was getting their butt kicked, but everyone was just raking in revenue ownership. management companies, etc. We have simmered down from those rates and occupancy back to 2019 figures, which now we're flat, now we know what to expect, now owners know what to expect. A lot of people bought in that 2020 to 2022 area because of the boom that was happening and the revenue that these owners were making. And now they're having kind of a smack in the face of realizing, oh man, we're not making what we thought we would. But from here, if you get in right now, this is what you can expect. These 2024 numbers are back to 2019 numbers and they're going to be what you can expect going forward, unless there's another giant pandemic and everyone tries to get to the mountains again. Hopefully that doesn't happen, but you know, we like to be very realistic with our owners in what revenues to expect. I know I've provided you and some of your clients, some projections. We just want to be realistic. The worst thing I want to do is to give them some astronomical number and then us not be able to hit it. That doesn't look good for us in our company. That doesn't look for you for referring. Some people might think it's low, but it's what we're comfortable with people being able to make. Yeah. And I do appreciate that because we've had clients where we've offered multiple and they're like, why is this one so much higher than the other ones? And we're like, well, those are like 20, 22 numbers. And it's. It's not the same. And it's I think it's been good to just watch the trends and see that we have stabilized. We haven't gone way down. It's not like people aren't vacationing. It's just like if you look at that trajectory, like there was a big bump and we're back to like that same trajectory. Exactly. Yeah, 2020, 2021 were just insane times of people coming through. And then on the flip side, all the companies were just running skeleton crews. So kind of some reviews would take hits. But. revenue saw a great bump that year for sure. Yeah. So sticking with some of these trends, where do you see short-term rentals going in the future? Yeah, for sure. So exciting part about Summit County is there's a lot of new builds coming in. With new builds, the double-edged thing is that you're going to get more saturation, more short-term rentals coming onto the market, more people competing, but then you're also going to kind of phase out these older complexes that were built in the 70s and the 80s. into maybe they're going to push more toward bringing in the long-term renters, bringing in the locals, being more affordable housing, just because they're competing with a lot of new progress going on in the county here. So hopefully, we see these new guys kind of start to dominate the short-term rental markets. They're beautiful units. They're going to produce great revenue. And the older places from the 70s and 80s, which are a lot of the county, gear more toward affordable housing, gear more toward the locals that live here. That's what we'd like to see ultimately with short-terms, with the caps that different townships have put on. Also, that's going to drop supply as they continue to lower the numbers, lower Blue River Basin and Silverthorn and Wilderness, Upper Blue Basin up on, you know, Boreas and Baldy. They continue to lose short-term rental licenses, less short-term rentals here in the county, the ones that exist, the better revenue and occupancy that they can get. So I see it both ways. Yeah, it's getting saturated by new builds, but with the caps that they're implementing and less licenses every year, it's kind of evening out what's out there. I think a lot of the people that are losing their licenses are those older folks who are gearing toward long term rentals. With the program Breck created, lease to locals and whatnot, a lot of people have shifted that way. Little less short term rentals, better occupancy, better revenue. And that's what we'd like to continue to see. Yeah. Yeah, it's definitely that that's the ideal housing for our workforce. But I think you're right. The more we see and really, I think the biggest that I've seen is in Silverthorn. There's so much new development and it might slow down as the economy kind of takes hold. But they're allowing short term rentals and they're allowing development and everything is brand new. So there is opportunity. And I think Silverthorn is also. trying to make a little bit more of a community and a destination rather than like a pass through town. So. Yeah, Silverthorn is exciting. It's probably my most exciting township in the area just because of their growth. We've always known Silverthorn as being a kind of industrial area with a lot of mechanic offices and whatnot. And now they're kind of getting rid of that and bringing in these new builds, which are just doing incredibly well. We have a lot of them on our program and they're producing because people like the proximity to I-70. getting back to the tunnel, if they're going to go catch a flight, not having to come all the way from Breckenridge, 25 minutes just to get to 70, you can hop on, you can be a male in 25 to 30 minutes, you can be a keystone in 10 to 15. Personally, yeah, really love Silverthorne and the opportunity that exists there. Now, if only they would stop building all two bedroom condos. Yeah. That's a good point. All right, let's shift gears a little bit. So being on the property management side. How do you guys interact with HOAs? And I wanna talk a little bit about HOAs and feel free to tell me where you know or don't know and I can give my two cents. I don't wanna see like how property managers interact with HOAs and then also just kind of like what you're seeing with how HOAs are run and what that means for your maintenance schedule and your contributions for the client. Yeah, so we manage three HOAs. is in Breckenridge right now. The Corral, Sawmill Creek and Park Avenue Lofts, so we're very familiar with the HOA world. We've been in it for a long time and we're actually continuing to grow and expand our footprint. We're always in talks with new HOAs, especially in Dillon and Silverthorne, new parts of the county to help grow our presence. Maintenance-wise, we always have a dedicated maintenance staff member for each of our HOAs. That's there on site every day. They might have other additional tasks that they're doing at a neighboring short-term rental unit next door. But those are our onsite guides to make sure all of our H2As are up and running, staying smooth. The challenge with the H2As right now is just, as we all know, the insurance assessments coming down. Because, like I mentioned, there's a ton of builds that happened in the late 70s and 80s trying to get the Olympics to come here that are just not to code today. So a lot of our H2As have gone through insurance heights. You could have gone from $600 to $800. You could see a 40% increase. It's not small money because the fire concern is kind of on everyone's mind. There's always wildfires it seems every year. I know we have one in Frisco just a few weeks ago across I-70, which was a bit of a scare and insurers are dropping a lot of complexes because of the fire concern. They don't have sprinkler systems installed into these late 70s, early 80s complexes. So if a fire hits, you know, the whole building is going to go up in flame. So what we're seeing is a large assessment to go and put fire suppression systems into these HOAs. Could be in the tune of $10,000 to $30,000 per unit, depending on how big the complex is. It's not small money by any means to get them up to code until that time that an assessment can be done and that fire suppression system put into place. The insurance is going to go up because they're terrified of a fire coming through and having to ensure that building. So a lot of people, a lot of places are selling, a lot of people are offloading their condos that are seeing these big assessments, seeing the big insurance hikes, trying to get out before a big assessment baby comes down. And it's unfortunate, you know, we've been living in these things. A lot of folks have lived in these complexes for the last 50 years and we didn't have this problem. And here we are all of a sudden having to deal with it with a lot of HOAs that don't have good, good reserves. Thankfully ours do, but a lot of them don't to kind of cover. these increases. Yeah. And speaking of that, do you want to talk through like what the requirements are for reserves and like how does an HOA determine that? Because we've seen it on all ends of the spectrum. Yeah, unfortunately, that one will be over my head. That's definitely more on the HOA side. Our HOA manager is Laura. She's fantastic. She's worked with us. She's worked with Keystone and HOA is all across the Summit County, but definitely not something I'm familiar enough with there. OK. Yeah. Just from what I've seen, like I think there's a requirement to do a reserve study like every three years maybe, don't quote me on that, but it's good to look at those reserve studies because we've had some that like the one that I worked on with you where the reserves look great, they knew what their capital improvements were and they had it budgeted. And then we've worked with some where we looked at their reserve study from two years ago, we looked at their capital improvements and there's an assessment or a pending assessment. And so we start like adding everything up. And we're like, oh. dues are going up, and there's this assessment. Oh, and there's an insurance claim. And what we've seen is we've had two different clients in the last couple months where the HOA, they were very big issues. One was a flood and one was boilers. And the HOA decided not to submit an insurance claim, even though that's the whole point of insurance. And both of these were over six figures that they were like trying to figure out what to do. And they ended up not submitting insurance claims because one, they're afraid their premiums were going to double or two, they were afraid they were going to get canceled by insurance. And so it's like when something scary happens, it's hard. But I think on the flip side, there's one redeeming silver lining and we have one client that had assessment, HOA assessment insurance through his personal insurance. So while their portion of the assessment was, let's say 15 grand, these are rough numbers, Insurance covered 10 grand and they paid like a $2,000 deductible or something. They covered whatever that remainder was. So I think it's a wild card. Like you said, insurance is going up and some of these reserves aren't great. And different HOAs are managed. I love Laura and she's great and she manages things very well. Not everybody does that. And so it's definitely something important to look at when you are buying a house and just look at your management and your monthly costs. How much does HOA cover? Yeah, yeah. A friend of mine is out in Warriors, Mark, and they have to redo all their stairs because they're all wood stairs instead of up to code with the new metal stairs with little spikes on them. And there's 36 units in their complex, 35,000 assessment per unit to redo the stairs. And it's not small change. And she just bought her place like less than a year ago. It was kind of promised something from some housing helps programs here in the county with 0% loans for this big assessment they knew was coming and it's not working out. in that way. So it's a scary thing that it's unfortunate. It's going on across the county. And if you bought pretty recently and you have a big assessment coming in, you don't have capital really built up to afford it. Yeah. Yeah, exactly. You go into the purchase, like, here's everything. And yeah, I think the thing that H-ways are very necessary evil, and we've seen some properties that don't have them where I'm like, oof. This would be a lot better if there were an HOA kind of helping manage and keep the exterior and do those maintenance improvements. But the HOA is it's just all out of your control. I think that's what's hard is you're dependent on sharing with your neighbors and most people are good. But it's hard to get everybody to agree when it comes to these big, big improvements and big dollars. Yeah, for sure. Yeah. So I guess. To wrap things up, Alex, what would you say or what kind of conversations do you have with clients that are getting ready to interview property managers? Like what should they be looking for when they look at property managers and what questions should they ask? Yeah, you know, I always like to be upfront, transparent. There's a lot of different management companies here in the county and not every management company is going to fit. You have to like doing your due diligence, go out, you know, interview four or five, six of us, because there's different things that owners value for different companies. For us, we are very, very owner-geared in that, hey, you want to limit the amount of bookings because you're trying to get top dollar, you want to put minimums on your rates. That's fine. We're going to sit back, we're going to wait for these really good solid bookings to come in. Other owners maybe want to make sure they have 100% occupancy across the board. In order to do that, you're going to have to adjust rates. So when you're interviewing management companies, definitely start with what all is encompassed into their management rate. Are they going to be a full service or are they select service? Are you going to be the one getting the call in the middle of the night when the boiler explodes or is your management company going to? Are you going to deal with the lockouts or is the 24 hour on-call person with the management company going to? What all's included in terms of bedding, you know, for us, it's linens, towels, sheets, pillowcases, washcloths, face cloths, et cetera. Or is, or are you going to have to provide your own? Are you going to have to provide toiletries, soak shampoo conditioner all the time? Does your management company do something like a welcome basket with coffees? It's not something that we do because frankly it's tough to manage. Every owner is kind of different, so we just don't offer it. If you want to leave a boatload of coffee for the guests, we're not going to touch it. Everyone's a little bit different, but I always recommend interview a bunch of folks and see what's going to work best for you. Our owner relations team, which is Carrie and Carrie, and a third coming on shortly, which is awesome because we continue to grow. They're here for our owners. And that's the thing that we pride ourselves in is that you can give us a call seven days a week. Five of those, you're going to talk to your owner relations manager, one of the caries or someone new starting up here. If they're not here, it's our front desk. If our front desk doesn't say call, give me a call because the odds are good. If you've signed on with me, we've had a lot of conversations and I continue to make myself available. Being a local shop is just an incredible benefit. No matter who you go with, making sure that you can keep it local. If you give someone a call, they're here in the County, they're not up in Portland. It's a wild benefit to have, you know, everyone that's working for your management company to be here in Summit because putting a face to someone, being able to walk into an office and shake someone's hand, say hi, have packages delivered. Hey, help me with this or that. Good job for these reasons. It's a great benefit. It's just working with someone who's local to the County because we have the best knowledge of. how to drive the best revenue, best occupancy, get the best renters for your property. Yeah, that's awesome. And I think there's obviously the financial component, but the financials are so tricky, like you were saying, like, what is your goal? Is it the most dollars? Okay, but then like, for some people, it's the most reviews, right? Like, how do I get my brand out there so that I can make this a long-term thing? And... I think there's a lot of different ways to play the game, and this is why we hire experts like you to help us figure out which pieces to put where. Yeah, a lot of folks, you know, they'll purchase a lot of our properties or multimillion dollar real estate, and they don't want 75% occupancy of people coming and going. Is this going to come with the wear and tear? We've got some folks who want us to crank out as much occupancy, just get them as much money into their pocket as they can. And that's fine. But it's typically going to come with the wear and tear component. You know, some owners don't value the revenue like others do. And maybe they want, maybe their unit's going to sit vacant for a whole month, just waiting on that real quality top dollar booking for their multimillion dollar home, because the odds are good and clientele who can afford a thousand dollars a night, it's going to take better care of a property. Yes. That's a really good point from long-term tenants to short-term tenants. It's all, all the same who you want in your house. All right. Any other parting thoughts for our listeners on what you do or? Not really. You know, we're I always like to think I've worked and talked with a lot of different management companies and there's a lot of really good ones out there. Do your due diligence and shop around. If you value the rates, you know, go find a select service that you're going to get that call in the middle of the night. If you want someone who's going to take care of everything, start to finish, go with the full service management company like Great Western Lodging. Awesome. Yeah, that's a good way to summarize. There's a lot of different options and you gotta find what fits for you. 100%. Everyone's got their own little thing going on and just find what works best for you. Yeah. Awesome. Well, thanks so much, Alex. And if people have questions for you, where can they find you? Sure. You can either go to our website, gwlogging.com and it's pretty user-friendly. Go find, submit an inquiry about property management. You can shoot me an email directly, alexatgwlodging.com, or give our office a phone call at 970-453-1009. They can transfer you over to my phone. Always happy to pick up a phone call on the weekend or early morning, late evenings, whatever you'd like to talk, I can be available. Awesome. Thanks so much, Alex. Appreciate it. Thanks for joining us today on Mountain Real Estate. I'm Candice Day. If the mountains are calling you, reach out to me. See you next time.