It’s been over a year since I swapped property management companies for my Lake Tahoe vacation rental (it’s snowing buckets btw), but it was only recently that I marketed the property here to help boost its income for the second year. The property used to be managed directly by the hotel, which would obviously garner the most amount of incoming calls and online inquiries compared to an outside property manager. When reservations were booked through the hotel, they randomly assigned which units those reservations went to. So when I was in their rental program, the only way I used to benefit was when the overall volume of guests increased.
That all changed when I moved to an outside property management company who charges a lower commission. They market my specific units on their website. Therefore, the challenge is for them (Vacasa Rentals) to get well known enough to be a favorable company for vacationers to book living arrangements vs. the hotel’s challenge of simply marketing The Resort At Squaw Creek as the premier Lake Tahoe vacation destination.
I used to try and help my cause by advertising my property on Craigslist while it was still managed by the hotel as well, but I stopped because it takes a lot of time dealing with inquiries and bookings. You would think I’d be worried about seeing a drop in income by switching management companies, especially if I didn’t market my unit on the side. But I wasn’t because I wanted to let them earn my business for the first year, so they wouldn’t take me for granted. They gave me a guarantee that I would earn at least as much as I did from the hotel, or else they’d refund the difference.
CHANGING PROPERTY MANAGEMENT FOR A GUARANTEE
The old property management company started taking owners for granted by charging ridiculous extra fees to upkeep our property. For example, they wanted owners to spend $25,000 on new furniture and art, even though everything was fine. I wasn’t down to spend $500 for one king size pillow. It felt like the government charging big bucks for a stapler.
With no ridiculous $25,000 on furniture to spend, no more huge commission to pay, and a guaranteed minimum income, there wasn’t anything to lose my first year with the new management company. But the important focus was on the future beyond year one.
Based on previous efforts to market my property online to the public and to friends, I know that I can boost rental income by 20%-25% a year. But it was important to let the new property management company work things out on their own so they could focus on at least replicating what I earned with the old property company.
Imagine if I worked hard marketing my property and grew revenue by 25% higher than the guarantee level. I’d be screwed in the second year and beyond because the property management company wouldn’t hustle any harder since they surpassed the minimum by so much. They might have confused my efforts with theirs.
By letting the new property management company try and grow the business on their own the first year, they had to give my property more exposure on their home page, promote The Resort At Squaw Creek and Lake Tahoe more, experiment more with rental rates, and pay more attention to my unit. I’ve personally been able to e-mail or talk to eight of the property management employees on the West Coast to help focus their attention on marketing my property due to the guarantee over the past 12 months.
Now that there is no more guarantee, I can rest assured knowing they did everything possible to make the unit as much money as possible. I won’t tell them that I’m helping them help me in the second year or beyond because I want to keep their hunger alive for as long as possible. But it’s inevitable they will no longer feel the same sense of urgency marketing my unit, even if they do make more in commissions if I make more money.
HELP OTHERS MORE BY DOING LESS
Preventing Children From Spoiling
No parent wants to raise their child to become a spoiled brat who believes the world owes them something. But if you buy your child everything without her having to work for it, that’s exactly what she’ll become. She’ll have no appreciation of how hard it is to make money. As a result, there’s a good chance she won’t work her ass off in school. And when she’s flunking out of school and can’t find a job to support herself, she’ll be knocking on your door for financial support in no time.
There are so many people I know who went to expensive private schools and don’t give a damn about creating their own wealth because their parents are just going to hook them up with everything anyway. It’s hard to appreciate money when you don’t have to work hard for it. It’s easy to say you are slumming it with a roommate and spending frugally when you’ve got a huge parental safety net below.
If you do everything and buy everything for your child, it’s going to be so difficult for the average child to get motivated enough to maximize their potential. There is no way I’m telling my children they will be financially OK if they do nothing. They must do some struggling on their own.
Helping A Partner
Let’s say you are relatively well off, but your partner is not. You know you can take care of the both of you without her ever having to work again. Should you? Probably not because then your partner might not try as hard in her career. She might not take as many risks because she’s already so comfortable. She might also start taking you and your money for granted as people tend to do after a while.
It goes back to allowing people to reach their potential as much as possible on their own. People won’t respect themselves if they know they didn’t get to where they are due to their own merit. It’s the same thing with people not respecting others who inherited their wealth instead of creating their own wealth. There’s a careful balance between helping them succeed and buying their success.
Confident, successful, and independent people are much more attractive partners wouldn’t you agree? There’s less insecurity by them, less resentment by you when the passion fades, and much more compatibility.
There are those of you who are objecting because marriage is all about being a team. I agree. However, it’s best if both spouses are financially independent because marriages are no guarantee. I have a friend who recently got a divorce after 13 years. Her spouse was wealthy, and because she felt comfortable in the relationship and had to take care of their child, she did not keep her skills up to date. She’s now having a very difficult time finding a job after being out of the workforce for 13 years. The alimony will eventually run out, and I wish her the best of luck.
If her husband had encouraged her to be more financially independent during their marriage and if she never got comfortable living a wealthy lifestyle, I’m sure she would have maintained her skills and found it easier to find work after the divorce. The divorce settlement wasn’t great for my friend because she was the one who wanted to break up.
Thriving At Work
Work is an interesting animal because you need to perform to get paid and promoted. However, there can be situations where doing nothing and saying nothing can drastically help your cause. You just need to demonstrate patience. One person I know was able to get promoted because he didn’t say anything about a horrific new hire his CEO made. The new hire looked the part and had the right pedigree, but when it came down to actually doing the work, the new hire was clueless.
Instead of speaking up about the bad hire, the person simply stayed silent, did his work, and let the new hire drown in his incompetence. After 11 months, the CEO finally realized his mistake and let the new hire go. Apologetic that he passed over my friend for the role, the CEO made it up to him by giving him a 40% raise, two extra weeks of vacation, and the new title he should have gotten 11 months ago.
Bad apples always slip through the cracks. The main reason is because not enough people from different levels interviewed the person. People who are looking for jobs are like actors during an audition. It’s very hard to trick 25 people vs. one or two. Always make sure as many people interview a person as possible. Once you’ve hired someone, it’s extremely difficult to let the person go without at least six months to a year of documentation.
MAKE MORE MONEY BY DOING NOTHING
Sometimes you’ve got to let people figure things out on their own, no matter how much you want to help them. I used to have a huge problem with always trying to help someone whenever I felt I knew best. My actions often came across as didactic, overbearing, and sometimes presumptuous. Nowadays, I’m much more laissez faire in my approach, partly because some people have shown displeasure when I reach out.
People want to listen to what they want to hear. It often takes utter failure for some to shake off their stubbornness and start to listen. We’ve got to be the better person by being supportive when they finally come around. Saying, “I told you so” isn’t going to do anything but make you feel better for a couple seconds.
I’m hopeful my new Lake Tahoe property management company will do their best to generate as much rental income as possible. If not, I’ll just have to ride them until I realize they just can’t do any better.
START A BUSINESS ALREADY
It’s been over six years since I started Financial Samurai and I’m actually earning a good passive and active income stream online now. The top 1% of all posts on Financial Samurai generates 31% of all traffic. In other words, after putting in the hours to write some very meaty content over the years, 10 posts consistently generate a monthly recurring income stream that’s completely passive.
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