A Lifetime of Income:
How to Turn Real Estate into a Money Machine

Generating rental income is an important part of my personal investment strategy… and it’s a key profit angle in many of the recommendations I make.

The best kind of real estate deal offers a double punch of profit potential.

The way it typically works is this:

1. We lock down prime real estate below true value and set ourselves up for future capital appreciation as values in the area rise.

2. In the meantime, we rent our piece of real estate out. We create a steady income (short-term or long-term) that helps our investment to pay for itself.

It all sounds pretty easy, right?

Well, it is easier today than at any other time in history for small investors, like us, to make strong gains from renting our real estate out, particularly short term.

Thirty years ago, renting was little more than a cottage industry. It took a lot of work to make an income from it—and even then, some luck was needed to really do well. People advertised their home or condo in the classified sections of newspapers, magazines, or via rental managers. If they were lucky or really diligent, they made some money. But it wasn’t easy.

It was complicated trying to make money back then from rentals in the U.S. or Canada. It was even more complicated when the rental was overseas…

Then, the internet happened. Now, it’s easier than ever to advertise your rental and find renters, even for homes in far-flung corners like Fiji and Patagonia. Players like VRBO and Airbnb jumped on the vacation rentals market, giving an easy-to-use platform to anyone who wanted to find a renter—and allowing renters to book homes at the click of a button.

Since then, the worldwide vacation rentals industry has exploded. In 2016, less than a decade after Airbnb was founded, the industry was worth over $100 billion. In 2019, it closed in on $170 billion. And those numbers are projected to continue growing in the years to come, as vacation rentals acquire a great market share.

Of course, right now, due to Covid, the industry is taking a hit. The drop in international tourism and travel has caused a dip in vacation rental bookings across the world. But I’m not worried…

In fact, I see this as an incredible opportunity. With the right real estate, in the right place, you can set yourself up with an income for years to come…bolstering your retirement saving and giving you a life of travel and ease.

For example, in Rome, Italy, one of the most popular tourist destinations in Europe, the drop in tourists has forced some overleveraged landlords to sell their properties at as much as 30% below their true value.

Buy now, while crisis deals are on the table and we can lock down premium real estate at a discount, setting ourselves up for exceptional yields once the world starts to recover.

And it will recover…

The fact is, for decades before this crisis, global tourism has been booming. In 1950 there were 25 million international tourist visits, rising to 166 million in 1970, and 435 million in 1990.

In 2019, there were a record 1.5 billion international tourist arrivals, a rise of 4% over 2018. According to the United Nations World Tourism Organization this represents 10 consecutive year of growth.

It’s easy to forget that less than two years ago, the number of tourists worldwide was at record highs. The world’s most popular sites and cities were swamped and struggling to cope with the hordes of vacationers.

It may take a while to rebound to those levels again, but people have always traveled and always will.

And when it does, it will be boosted by another accelerating trend.

In February, if you had suggested to every CEO, government department, school, and university they send everyone to work from home you would have been considered crazy.

Now, it seems the entire world is downloading online communications software like Zoom and managing their lives online.

Remote working was already a fast-growing phenomenon. According to a study by Global Workplace Analytics in one year (from 2016 to 2017), remote work grew 7.9% in the U.S. Over the last five years, it grew 44% and over the previous 10 years, it grew 91%.

But now, because of Covid, remote working has gone mainstream. And its effect will be profound.

Vast numbers of employees are now asking themselves why would they go back to the commute and the office…why not do their work from a Caribbean beach town or a hilltop town in Europe with lower costs of living and better weather…

For savvy real estate investors, who buy ahead of transformational events, this works out. They’ll be looking to Airbnb, VRBO, and other vacation rental platforms for options…and renting what we can offer them.

In the right places, renters are going to surge back after this crisis. And for those of us looking to generate rental income from our overseas real estate, there’s a lot to look forward to.

But, you need to know what you’re doing. First, you need to get the basics right—buying the right real estate in the right market at the right price. Then, you need to spend time growing your customer base and boosting your occupancy to bump up your returns.

Get it right, and your rental can be a license to print money.

This report will show you how to do just that.

Ronan McMahon
Real Estate Trend Alert

Contents:

• Buy the Right Real Estate
• Buy in the Right Market…at the Right Price
• Determine How Involved You Want to Be
• Get the Basics Right
• Give Your Guests the “Wow” Factor
• Choose the Right Platform
• Don’t Skimp on Your Photographs
• Write a Clear and Upfront Description
• Cultivate 5-Star Reviews
• Adapting to the Post-Covid Rental Market
• Choose the Right Rental Manager

Buy the Right Real Estate

With my real estate investments, I leave nothing to chance. Before I put a cent in, I do a lot of work and due diligence to decide whether a buy is right for me and my portfolio.

One essential part of this is choosing the right location to buy in. You need to identify a market that’s on the up. It could be following a "Path of Progress" event. The Path of Progress is the term I give to a market that’s set to rise, thanks to new infrastructure like a highway that makes getting to a destination quicker and easier, increased investment – perhaps new resorts to attract well-heeled visitors, new businesses opening up that will bring in workers, or any other factor that will put real estate in that destination in stronger demand, to buy or rent.

Or, it might be a crisis market where pricing is temporarily depressed…but where there’s potential for pricing to rally once the crisis passes.

Whatever the case, I make sure I have a strong picture of where the market is now—and where it’s heading.

This is important, whether you’re buying with rental income in mind or just for capital appreciation.

Once I have identified a market that is on the up, I investigate the type of real estate that’s in demand in that market. You will not do well on your rental real estate investment if you buy the wrong type of home.

Sure, there will always be some outliers to any rule in life. Maybe you know someone who’s making a fortune renting out their fancy penthouse in the middle of nowhere short-term, even though there’s no real tourist market. Perhaps you know someone who is making buckets of cash renting out a five-bedroom home in a market where most renters want smaller condos.

Those kinds of cases certainly exist. I guess the owners got lucky…

But rather than rely on Lady Luck you should buy the type of home that’s in demand in a location where there’s already a strong or growing market.

What you should buy varies from place to place.

As a general rule, I like small, one-bedroom condos (or studios) and spacious two-bedroom two-bathroom condos as rental buys. Why a small one-bedroom condo rather than a much larger, roomier one-bedroom pad? The answer is that the larger condo will still only have one bedroom and command one-bedroom rates. You might (if you’re lucky) get a tiny premium on top for all that extra floor space. And, all other things being equal (location, finishes, etc.) you’ll pay much more for that larger one-bedroom condo.

Your carrying costs will be higher, too…all of which depresses your rental yield. For short-term rental potential, I particularly like condos or homes with a “lock-off” layout—a layout that ensures you can lock off one part of the condo, even just a single bedroom, from the rest. These are a great buy if you’re thinking of renting to vacationers.

They give you maximum flexibility (and that is key to making the most money from a rental). With a two-bed lock-off layout you can rent the condo as a two-bed, or as two one-beds…or rent one side of the condo out and still keep part of it private for your own personal use.

As I said, the “right” real estate varies. To figure out what is in the most demand in the specific area you’re planning to buy in, talk to as many local rental managers as you can. Also, check out listings websites. Vacation rentals sites like VRBO and Airbnb are great for giving you a snapshot of what’s on the market, typical rates, and average occupancy levels.

And on local listings sites for long-term rentals look beyond the asking rental rates. They can help you determine ballpark rental rates. But you need to also look at when the listing was posted to see if there’s a quick turnaround for that type of home—or longer gaps between tenants.

Buy in the Right Market…at the Right Price

The most important thing, buy the right property in the right location, and do it at the lowest possible price.

If you don’t choose the right place to buy from the very beginning, creating profit can be an uphill struggle.

The key is to find an attractive destination that vacationers can easily get to from as many locations as possible.

Recently, perhaps more than anywhere else in the world, I've been putting boots on the ground in Portugal's Algarve. It’s a region that's nearly unparalleled in Europe in terms of the returns it can offer savvy real estate buyers...

The Algarve has perfect weather, with 300 days of sunshine a year, amazing beaches, and world-class golf. It's easy to get there, the cost of living is low, the food is great, and it's safe...peaceful.

Its sunny shores offer perfect escapes for all types, from those seeking an energetic nightlife, to families looking for secluded stays next to vast golden-sand beaches. It has historical attractions in former Moorish towns, thermal springs, and miles of limestone caves and grottoes, cliffs, and bays along its rugged coastline.

Importantly, the Algarve attracts a huge mix of markets. It's what I call an "internationalized destination" that draws Northern Europeans, North Americans, and even folks from as far away as Asia...

This is crucial...

As a conservative investor, I buy in internationalized destinations because they are far more resilient to crisis. It's a place where, no matter what happens, people always come.

For instance, a contact on the Algarve tells me that in the beach town of Lagos in 2020 the average occupancy for well set up, well located, and well-managed properties was around 35 weeks. My contact manages a lot of rentals in Lagos and elsewhere on the Algarve. So he should know.

Last year, despite the lockdown, I hear some property owners were still pulling in gross yields of 7%.

Given what was going on in the world, that's impressive.

My contact rents his own villa on the Algarve each summer. As lockdowns spread rapidly around the world in 2020, he had most of his reservations cancel.

It took him less than a week to replace every single one with new bookings.

This summer, he is expecting to pull in $44,000 in just two months renting out his home...

And when travel bounces back in full force, a rental in an internationalized destination like this will be the first to see a fresh surge in demand.

The short-term rental market in the Algarve is anchored by a red-hot, 10-week peak season. You can add the two weeks at Easter and schools'(in northern Europe) spring and fall breaks as high season. (The Algarve is very popular as a family destination.) March and September-October are good months to rent to golfers, young couples, and retirees. In recent years, even the previously dead winter months are attracting more visitors.

Buy well in the Algarve, and you can lock in both high yields, and strong appreciation—a two-punch play that I love.

And if you use bank financing, you can be into killer opportunities here for very little. In fact, right now, foreigners can borrow as much as 80% in Portugal, at rates of as low as 0.9% or even less.

If you can get the bank to finance your play on an undervalued property you could do very well.

It’s important to remember that your yield depends not only on how much you make, but how much it costs you. As we say, “you make your money when you buy.” If you pay too much for the home to begin with, you’ll always struggle to hit those big yields.

This is where being a Real Estate Trend Alert member really comes into its own. Thanks to RETA's group buying power, you get access to pricing that buyers on the street can only dream of. Getting in first on top-notch homes in premium locations means you can cherry-pick the best homes…and buy at prices significantly lower than anyone else pays, putting you on track to make the strongest rental yields.

The crisis strengthens our hand even further…

Right now, developers around the world are hurting…and as they become increasingly pinched, we will be there to offer them a way out.

The first wave of the crisis has already handed us some exceptional deals…

For instance, we’ve had some incredible deals in Tulum on the Riviera Maya.

In February of last year, I was able to re-negotiate an already killer RETA-only deal on luxury condos in Edena, Tulum. Members could lock down spacious homes for just $149,000—including a free pool from the developer (a $7,000 bonus!). I figure these homes will be worth $225,000 shortly after delivery. A year later, they're already well on their way, listing at $199,000. A $50,000 paper gain in 12 months.

I reckon you can easily bank 13% gross yields or more. And because construction slows in crisis moments like this, we’ll see a fall off of supply to compete with.

Owning in Tulum primes us to profit enormously from the new normal that will emerge from this crisis. We're going to see a rapid acceleration of the mega trends driving our profits on the Riviera Maya, such as the surge in remote workers looking for their dream base.

Before this crisis, the Riviera Maya was already drawing mobile professionals in big numbers. After all, it's easy to travel back home to the U.S., Canada, Latin America or Europe from the Riviera Maya. There are hundreds of direct flights and Cancun's airport is modern and efficient.

Edena is ideal for these longer-term renters. One of the sweet things about the longer-term rental market is that with just a couple of renters a year you can make your money.

I figure you could charge $2,500 a month in high season and $1,500 in low season.

By the time these spacious homes are delivered in this best-in-class community, the juggernaut of tourism and development on the Riviera Maya should be full tilt again.

Determine How Involved You Want to Be

Before you ever lay down a red cent for a piece of real estate with a view to generating rental income, you need to ask yourself one important question: How hands on do I want to be?

From the beginning, you need to decide how much work you’re willing to put in.

If you’re looking to buy in a place where there’s no established rental management companies or tourist market, you need to be a lot more hands on to make a success of it.

You’ll need the time, motivation, resources and skills to draw in vacationers and manage the whole rental process.

If you don’t want to be hands on, you need to find a place with an established and hopping rental market (long- or short-term) with excellent rental managers so you can stay hands off.

In places where there’s a lot of tourist footfall, like Tulum or the Algarve, it’s easier to find renters for your place…and to find a good-quality rental manager who will do most of the work for you. They’ll help you find renters, pay the bills, organize repair work, and take care of cleaning and checking guests in and out in short-term rentals.

One guy I heard of who’s doing particularly well with his rental manager has grossed $88,000 in a year on his three-bedroom in Costa Rica’s Southern Zone. Things have gone so well that he’s building another home to have somewhere to stay himself when he visits—the initial home is almost always full.

If you decide you need a rental manager, I outline the process in the Hiring a Rental Manager section at the end of this report. But even if you plan to be hands off, it’s worth getting familiar with the rest of the process. There are still many ways you can grow your rental profits while remaining in a passive role.

A lot of people sit back and congratulate themselves on a job well done at this stage…and then never chat with the manager until a problem arises. That’s not savvy business.

You need to work your relationship with your manager. Get to know the manager so they know who you are. Push (nicely) to maximize occupancy in your home. Ask what will help bump your home up for them; it could be as simple as adding some little extras that make it stand out. Always stay on top of them so you’re their top priority. And don’t stop watching your competition—your neighbors that also rent their homes. If they’re hooking up Netflix or throwing in cooler boxes and snorkel gear, see how it affects their occupancy rate. If it works, match them…or go one better.

In some markets, you may also find extra profit by leaving the rental manager to do their thing, while you chase potential renters who are perhaps on your doorstep. Even if you want to be largely hands off, you’ll still benefit from putting in some effort to attract more renters to your place.

Get the Basics Right

It’s a competitive world these days in rental property. Winner takes all. And you, of course, want to be a winner.

Doing well with a rental property is not as easy as buying a nice place and hoping renters will show up. If you’re asking renters to part with their hard-earned cash for your property over a competitor’s, you need to be sure that what you’re offering beats the competition. Your rental property is a product. And you need to treat it like one.

A good short-term rental is something between a home and a hotel. It needs to have the comfort and functionality of the former and the attention to detail of the latter. But you’d be surprised how many people neglect even the simplest, most affordable opportunities to improve their rental offering.

While on scouting trips, I’ve stayed in rentals with cheap sheets…dirty kitchens…scratchy comforters…and dodgy plumbing. And I’ve often paid good money for the privilege. As a guest, this can be annoying, but as a real estate buyer, the lesson I take from it is very encouraging: Get the basics right and you’ll be head and shoulders above the competition.

By the basics, I mean things like making sure the furniture is clean; the utilities are in good condition; there’s potable water available; the beds have comfortable sheets, pillows, and blankets; you have clean towels available; and more than enough pots, pans, utensils, and dishes.

Give Your Guests the “Wow” Factor

Once you have basic comfort taken care of, think about adding some extra touches. These are the details that make your rental stand out, and they can be very useful if you want to get the edge on similar rentals in your locale.

For instance, you could create a “welcome book” for your guests that shares information like WiFi password, contact information, transport services, recommended sights and eateries to visit, or even instructions for using house appliances. Not only is it a nice touch, if your welcome book is helpful, it will mean less time spent answering guests queries during their stay.

Some places I’ve stayed in have left a basket of goodies for me: maybe a bag of coffee, local chocolates, wine or beer, passes or discounts to local attractions, or a sun hat. Even if your guest doesn’t use the goodies, they’ll feel welcomed by the gesture.

Other things you can offer are bicycles, a selection of books or DVDs, or even just a full ice tray when they arrive. If your rental is next to a beach, there’s a good chance your guests want to enjoy water activities, so providing boogie boards or snorkels will win you points.

Studies show that millennials are by far the biggest age group using vacation rentals, so, unless you have a good reason to target a different market, it can be smart to tailor your rental accordingly. This means having a rental with a strong “wow” factor, or adding a feature that will make it stand out among other rentals in your locale. Perhaps it’s a historic home with a pool, it has a hot tub, a Zen garden, an ocean view, or a hammock in the garden.

“Different” sells. So having that edge on your competition is a recipe for strong yields. One strategy I use is to opt for the best available condo, even if that means spending a little more.

Opting for a two-bedroom condo rather than a one-bedroom, will also increase your reach. It’ll cost a little more from the outset, but being able to tap into different markets will pay dividends on your rental returns. Your condo will be popular with singles, couples, families, business people, and more.

Choose the Right Platform

When you’re creating an online short-term rental listing, one of the first things you need to do is decide which rental-platform (or platforms) you’re going to use.

While it might seem obvious to use the platform with the most users (i.e. Airbnb), it’s worth experimenting with other options too.

Consider who your renters are, and what platform they would be most likely to use. For instance, VRBO tends to attract families, while Homestay.com specializes in private rooms and solo traveler accommodation. If your renters tend to be Scandinavian, Mexican, American, British, Irish, etc., seek out the websites they’ll be using and post your home there.

You should also consider the fee structure of each platform. With Airbnb, owners will pay a percentage of every booking in return for hosting their rental on the site. But with platforms like VRBO you have the options of paying an annual subscription fee instead. The subscription structure might work in your favor if you have good occupancy rates.

Of course, you can increase your visibility by listing on multiple platforms at once. However, before you sign up to every platform out there, consider the extra management this involves, such as updating availability to avoid double bookings. You might have more success focusing your attention on just a few key platforms.

Don’t Skimp on Your Photographs

When creating an online rental listing, your photographs are your shop window: you want them to display the best of what you have to offer, to be bright and colorful, and upfront about what your prospective renter can expect to find inside.

The importance of your photographs can’t be understated. Airbnb found that listings with professional quality photographs performed twice as well as other listings. That can be a difference of tens thousands of dollars a year, so getting your photographs right from day one is hugely important.

When taking your pictures, use a good quality camera, preferably one with a fish-eye lens, which will help maximize the sense of space in your rental.

Make sure each room is tidy, without clutter, and staged correctly. Remove any personal items you’ve scattered around. Make it look warm and inviting.

Lighting is fundamental to good photography, so take your pictures when natural light is at its best. If you need to, use lamps to brighten up dark corners. And don’t use any unusual camera angles.

Airbnb will let you upload as many photographs as you like, but quality is more important than quantity. Your first five photos are the most important, and they should give visitors to your listing a good overview of what they can expect. They should include one photograph of your surrounding neighborhood, one of any outdoor space or patio, one of the master bedroom, one of a living room, and one of a kitchen or bathroom.

But you should generally include more pictures to elaborate further on everything your rental offers—including a picture of any unique features or landmarks within walking distance. If you have a beach steps from your door, be sure to include a picture of it. This is a huge selling point, but you’d be surprised how many renters don’t think to do it.

If you’re taking the photos yourself and not achieving the results you want, consider hiring a professional photographer. It could be a smart investment.

In certain cities, Airbnb offers a free photography service. This gives your rental a “verified photo” status, which one study found can generate additional revenue of $2,521 per year on average. However, the downside is that Airbnb will own the pictures and you’ll have little control over them.

Write a Clear and Upfront Description

Your photos draw in your potential guests, but a good description in your listing can seal the deal. This is your chance to share a lot of detail about what makes your rental unique.

There’s an art to crafting a description of why a guest should rent your home, without writing 50 pages or getting lost in tiny details. You may need some help on this front, too, from a friend or family member who’s good at this type of thing.

List what rooms you have and what furniture and appliances you’ve got, including the type of bed and how many place settings you’re offering. Describe the area around your home—the amenities and attractions nearby. State how close they are to your home.

It’s important to be upfront about your property. Remember, you might find short-term success by promising more than you can deliver, but this will attract negative reviews and ultimately damage your income. If there is an issue with the rental, such as nearby construction causing noise, address it in the description so that your guest won’t be disappointed when they discover it for themselves.

Similarly, you can keep you description up to date with any positive news: completed renovations, festivals or concerts happening in the area, or newly opened restaurants or bars.

It’s also useful to add some information about yourself. People still trust a face over an anonymous listing. So, if you have the option to add a picture of you and a short, friendly blurb, do so. If you’re using a rental manager, make sure he/she does it instead.

Include as many keywords in your description as possible. Keywords help your listing rank higher in Google and increase the likelihood that people will see it. If you don’t know what keywords you should use, think about the words and phrases folks would type into a search engine to find a rental like yours. For a home in Playa del Carmen, for example, you might include phrases like “central Playa del Carmen condo,” “close to the beach,” “close to Fifth Avenue,” “comfortable and furnished” and “includes pool access.”

Cultivate 5-Star Reviews

Like your photographs, your reviews and ratings are a “make or break” element of your rental listing. Even an admirable four-star review can damage your occupancy rate if there are five-star rentals available in the same area.

From my own experience, if I see multiple negative reviews, I’m immediately out—especially if they’re all highlighting the same problem. It means that the owner hasn’t made the effort to address the issue with the rental, either by fixing the problem or making it clear in the description.

Stellar reviews are a must, and there are a few steps you can take to make sure your reviews are consistently first-class.

The first thing to know is that having an extravagant and luxurious rental doesn’t automatically mean you’ll get good reviews. In fact, a very basic rental is just as likely to get you coveted five-star reviews provided you know how to manage your guests’ expectations.

As I explained in the previous section, communication is key. That’s why being clear and upfront in your description is imperative. Once your guest is satisfied with what you offer, even if it’s just something simple, they’ll generally be happy to give you a good review.

Stay in frequent communication with your guest throughout. Personally, I’m far more inclined to leave a review when I’ve interacted with the owner or rental manager and the experience was good. If you can’t interact with your guest face to face, send them a check-in message within 24-hours of their arrival, and let them know that if they have any questions, you are only too happy to help. It makes a good first impression, which is crucial.

You can also send a follow-up message once they’ve settled in and after they’ve checked out. By communicating directly, you can solve any issues they might have so that they don’t write a negative review later.

Be sure to leave your guest a review once they’ve checked out. This will encourage them to return the favor.

Choosing a Rental Manager

Not sure if you’ll have the time or the expertise to properly manage your rental property? Then you should consider a rental manager.

A good rental manager can mean the difference between mediocre occupancy rates with measly rental income and a stellar performance. If a rental manager can get you a $40,000 return a year (minus his, say, 20% to 25% cut) and you can only get a zero-dollar return with your own skills, it’s bad business not to run with the rental manager.

Whether you use a rental manager or not is completely up to you. You should weigh up how much time you feasibly have to devote to managing, promoting, and maintaining your property. Dealing with tenants can be a time-consuming process.

On the other hand, if you have the time to spare, it may be worth managing the rental yourself to save the money you would pay a manager.

Here are a few things to keep in mind if you decide to use a rental manager.

1. Get some recommendations.

When you’re looking for a rental manager, ask friends, neighbors, and locals who they use and what their experience has been with them. Then, go online to do an internet search. Search for similar homes to yours in the same area and see if a certain name comes up again and again. You might find a rental management company with a website that’s in the top three that shows up…or a manager who’s working all the vacation rental sites, like Airbnb and VRBO.

As you know, that web presence is crucial. It’s the way to get your home out there, in the face of potential renters, and keep a steady stream of visitors coming through your door. Look at how appealing they make the real estate on their books seem. Are there nice photos? Good descriptions? Would they make you want to stay there? If so, you may have found your rental manager.

2. Ask them questions.

When you’ve found a possible rental manager, it’s time to start asking questions. When you describe your home, they should immediately tell you the ballpark rental rates you can charge and the type of occupancy you can expect. They should also give you a clear breakdown of what they will charge you and what it covers.

Rental management rates vary hugely. In Latin America, on short-term rentals, they typically average 25% to 30% of the annual rental income you make through them. But some managers will charge you 25% to 30% of all rental income…even when you find renters yourself. In some parts of Europe, you pay a regular monthly fee, regardless of whether the manager finds you renters or not. It pays to check your contract to see exactly what you’ll pay.

Make sure you ask what they will do for their management fee. Will they find you renters…do check in and check out…pay the bills…take care of the cleaning…handle repairs and maintenance? It’s worth paying a little bit more to a manager who does all of this for you. The last thing you want is to receive phone calls in the middle of the night, or during an important work meeting, asking you to fix the hot water or get the internet sorted in your overseas home.

And don’t nickel and dime a rental manager who you think knows their stuff. It could be to your detriment. A friend bought a condo in a historic district as a rental vehicle.

The market was an emerging tourist hotspot, with a shortage of hotels and vacation rentals. My friend went with a manager that charged 25%; his neighbor went with one who charged 40% but offered a lot more. The company charging 40% focused on properties in the historic district and advertised aggressively online, targeting high-end tourists. They blogged, produced videos, and appeared in newspapers and media reports on a regular basis.

Twelve months later, my friend had made $9,000 in net rental income. His neighbor had made more than $22,000. Choosing the cheaper manager was the wrong choice. All that extra work they did paid off for their owners.

3. Check the paperwork.

Have a local attorney review your agreement with the rental manager before you sign.

And, try to find a rental manager with a good reporting system. It’s ideal if it’s online, so you can see at the touch of a button where you’re at—how many nights booked, how much income you’ve got, and the bills that were paid.

If you do decide a property manager is the right course of action for you, it can be a lucrative move. A good property manager can make all the difference between an average rental yield and a great rental yield. And if you’re looking for a hands-off rental property, you’ll need a property manager that covers all the bases. They should find tenants, check them in and out, pay utilities, and deal with plumbing emergencies at 3 a.m.

There are a few pointers to follow if you do take this route that will protect you and your investment.

4. Get their rates in writing.

For short-term, you’ll pay anything from 15% to 40% of the rental income in fees. Some companies charge a fixed rate per month (which you’ll pay even if you don’t have renters). That may be worth it if they have a good track record. If they don’t, you’ll be throwing money away.

For long-term management, you’ll pay 50% to 100% of the first month’s rent if they find you a tenant and then a monthly charge of 5% to 15% if you want them to take care of maintenance, repairs, bills, and any issues the renter has. Make sure that you’re clear on what the management fee covers.

5. Ask how many units your manager currently handles.

Most managers are juggling the number of units they manage and the number of staff they employ to handle rentals. You won’t get good service if they have a handful of staff and a large number of units. Find out what systems they have for handling reservations, queries, and reporting problems. Check if they are an established company with a large client base or a start-up with no track record.

An established company should give you a clear idea of how much rent you’re likely to get and how much profit that translates to. Check the data they provide with other sources. Ask them for referrals from clients, too.

A start-up manager might come along with some innovative ideas to draw in renters and an attractively low fee. But you’re their guinea pig as they learn the ropes. An established group will have experience…connections…and (hopefully) a good name for delivering excellent service. They’ll have staff in place and plumbers and cleaners on speed dial. And a huge plus is they will have an existing list of clients who rented through them in the past. Repeat renters and referrals by renters is key to getting high occupancy rates. You’ve got a head start if your manager has a long list of satisfied clients.

With that in mind, see what reviews the rental manager has online from renters. Five stars is fantastic.

Get some written referrals too, from owners who already use them, to see if they’re happy with the type of income and level of service they’re getting.

6. Get your attorney to draw up a standard rental contract

Make sure that your property manager uses it with every tenant. The contract should come with a detailed inventory list if you’re renting a furnished home—and make sure the rental manager carries out an inventory check before tenants or renters leave.

One tip: don’t hire a rental manager and then completely ignore their advice. If they tell you that you’ll get a better rate if you buy a king-sized bed rather than a queen and can show you evidence to back that up…don’t ignore it and buy a queen-sized bed.

If they recommend new linens and little pieces of art to brighten up your home, don’t dismiss their advice.