(Watch) Self-Manage or Hire a Property Manager? A Real Estate Investor’s Guide
Buying a rental is the easy part. Running it well, year after year, is where most new investors either build real wealth or burn out. One of the biggest decisions you will make is whether to manage the property yourself or hire a property manager.
On this episode of the Real Estate Returns podcast, I sat down with Parker Touchton, owner of Pinewood Management in Northwest Arkansas. Parker manages close to 70 doors, roughly half short-term and mid-term rentals and half long-term rentals. He also owns both types himself, so he sees the business from the investor's side and the manager's side.
We covered what property managers really charge, the hidden costs of running an Airbnb, how to spot a bad property manager before you sign, and how your manager's hours can make or break the short-term rental tax loophole. Here are the highlights.
Listen to the full episode: YouTube | Apple Podcasts | Spotify
How Much Does a Property Manager Charge?
In Northwest Arkansas, expect to pay 8% to 10% of rent for a long-term rental and 20% to 25% for a short-term rental. The gap makes sense. A long-term rental is one tenant and one lease. A short-term rental is, in Parker's words, "a mini hotel" with constant turnover, guest messaging, cleaning and pricing changes.
Long-term rental: 8% to 10% of rent, often tiered by inspection frequency (quarterly vs. every six months).
Short-term rental (Airbnb, VRBO): 20% to 25% of booking revenue, the market standard for most NWA properties.
Remote or unique short-term rental: up to 30%, and only in high-demand spots with strong nightly rates.
Anything above 30% is a warning sign. When Parker bought his first Airbnb in Bella Vista in 2021, managers quoted him 30% to 35% because the property would not produce enough volume for them. That is what pushed him to self-manage and eventually start his own company.
Gross vs. net: the fee detail most owners miss
Ask whether the fee is calculated on gross revenue or on revenue after the cleaning fee. Many managers take their percentage off the gross, which means they also take 20% to 25% of the cleaning fee your guest pays. On a $200 cleaning fee, that is $40 to $50 per stay that never goes toward cleaning. Pinewood backs the cleaning fee out before calculating its cut. Over a year of turnovers, that difference adds up fast.
The Hidden Costs of Self-Managing an Airbnb
New short-term rental owners tend to budget for the mortgage and the cleaner, then get surprised by everything else. Parker flagged three costs owners consistently underestimate:
Software. Pinewood spends about $150 per month, per property, on tools: dynamic pricing software to maximize nightly rates, a channel manager that syncs Airbnb and VRBO calendars, and a virtual assistant for guest messaging. A self-managing owner either pays for these tools or leaves money on the table.
Utilities. Parker's own cabin in Jasper runs about 25% over his original utility budget, driven largely by water and the hot tub. Unlike a long-term rental, you pay every utility on a short-term rental.
Linens and upkeep. Plan on replacing sheets roughly every six months. Worn linens lead to bad reviews, and on Airbnb, bad reviews push your listing down the search results.
The point is not that short-term rentals are a bad investment. Parker's cabin performs well enough that the overage does not matter. The point is to underwrite the deal with real numbers before you buy.
What Makes a Good Short-Term Rental (and What Doesn't)
Bigger is not better. Parker's answer to "what should never be a short-term rental?" was simple: a massive house. If a large home only books once a month, it will not cash flow.
His better bet is a smaller property in a unique, easy-to-reach location. His two-bedroom, two-bath cabin in Jasper sleeps six and outperforms some of Pinewood's properties that sleep sixteen when measured against purchase price. Why it works:
Drive-to location. Jasper pulls guests from Little Rock, Springfield, Branson, Northwest Arkansas, Tulsa, Dallas and even Houston as more travelers choose regional trips.
Amenities nearby. Outdoor recreation and good food are close by.
Easy access. It sits just outside town. A cabin 10 miles down a dirt road is a much harder sell.
When you run the numbers on a potential short-term rental, compare revenue to what you paid, not just total revenue. A smaller property with steady bookings often beats a showpiece that sits empty.
When to Convert an Airbnb to a Mid-Term or Long-Term Rental
Not every short-term rental should stay one. Pinewood has advised several owners to convert underperforming Airbnbs, and the conversation starts with one question: how much do you need to make each month?
If the property cannot reliably hit that number as a short-term rental, a long-term lease may come out ahead. On a few Bentonville properties outside the downtown core, owners were spending $300 to $400 a month on utilities alone. Moving to a long-term tenant shifted those costs off the owner and produced steadier cash flow. The process is straightforward: sell off the furnishings and find a tenant.
Mid-term rentals are the middle ground. These are furnished stays of a month or more. In Northwest Arkansas, demand comes mostly from people relocating for work, plus some traveling nurses. A typical guest might say, "My job starts in February, but my family can't come until school ends." Demand peaked while Walmart's new Home Office was under construction and work crews needed housing. Parker expects a smaller bump as new hospital construction ramps up.
A tax note: the tax code has no "mid-term rental" category. A rental with an average guest stay over seven days is generally treated as a regular rental activity under the passive loss rules. That matters if you were counting on short-term rental tax benefits, which we cover below.
Short-Term Rental Regulations in Northwest Arkansas
Local rules can decide whether a property can operate as an Airbnb at all, so check them before you buy. Here is what Parker is seeing on the ground:
Bella Vista has the strictest rules in the area, including a cap on short-term rental permits. Buying a home that was not already permitted can put you on a waitlist with no guarantee. The city's rules have been challenged in court.
Fayetteville is close behind. Our understanding is that a buyer continuing an existing short-term rental may be able to move to the front of the permit line, but confirm the current process with the city.
Jasper is the toughest Parker has seen. Inside city limits, a short-term rental must be rezoned commercial, and the city has been denying those requests.
At the state level, a bill to limit how much cities can cap short-term rentals has been proposed twice but has not passed.
Rules change often. Verify the current ordinance with the city, and talk to a local manager or agent who works in that market, before you close.
How to Hire a Property Manager: Questions to Ask and Red Flags
Parker's first rule: always interview more than one manager. Then use these questions to separate the pros from the pretenders.
Questions to ask before you sign
Are you licensed, and do you operate under a brokerage? In Arkansas, property managers are supposed to hold a real estate license and work under a brokerage. Parker noted the state has also added a property management certification on top of the license. Some short-term rental managers skip all of this, and the Arkansas Real Estate Commission's complaint backlog means it can take years to catch up with them.
How many rentals do you own yourself? A manager with their own short-term and long-term rentals understands the investor side and is more likely to treat your property like their own.
Is your fee based on gross revenue or net of cleaning fees? See the fee section above.
What fees are not on the first page of the agreement? Ask about startup fees, tenant placement fees and setup charges like smart lock installation. If you pay for equipment such as a smart lock, confirm it stays with you if you leave.
What is your repair approval limit? Most agreements let the manager spend up to a set amount without asking. Pinewood's is $250 to $500, and they text the owner as soon as an issue comes up.
How do repairs get paid? Many managers deduct repairs from your monthly payout. Ask how they handle a negative month and large items like a new HVAC system.
Who owns the Airbnb and VRBO listing? Some managers, Pinewood included, run listings under their own account. The owner gets calendar access through a tool like Guesty but does not control the listing directly. Know this before you sign.
Red flags
Projections that are too good to be true. A friend of Parker's received one revenue projection 40% higher than every other manager's. That is not a better manager; it is a sales pitch. Parker would rather give a conservative number and beat it.
Buying before you talk to a manager. Parker has seen investors buy on a realtor friend's rent estimate, only to learn the property will realistically bring in about $300 less per month. That gap can wipe out your cash flow.
Fees above 30% for a short-term rental. Unless the property is remote and in very high demand, keep shopping.
What makes a great owner
Hiring goes both ways. Parker's best owners trust the manager to do the job. His worst included an owner who kept checking security cameras to see how long guests stayed. Guests notice, and it damages both privacy and trust. Owners who refuse to spend on upkeep, like fresh linens, also end up parting ways. Because many managers run listings under their own account, bad reviews hurt the manager's reputation as much as yours.
CPA Corner: The Short-Term Rental Loophole and Your Property Manager
Here is where property management and taxes collide. The short-term rental loophole can let you use rental losses, often boosted by a cost segregation study and bonus depreciation, to offset W-2 or business income. It rests on two requirements:
The average guest stay is seven days or less. That takes the property out of the "rental activity" category under the passive loss rules.
You materially participate. The most common way to qualify is spending at least 100 hours on the property during the year and more time than any other individual.
That second test is the catch. Your property manager, cleaners and handymen all log hours too. If any one of them spends more time on the property than you do, you can fail the test and lose the deduction. (If you put in 500 hours or more, other people's time no longer matters, but most investors with day jobs aim for the 100-hour test.)
Parker's team has helped several owners work through this on purpose:
Shift tasks to the owner. Instead of Pinewood coordinating the handyman, the owner makes the calls and schedules the work, so those hours count for the owner.
Let the owner handle calendar management, such as blocking dates.
Consider timing the purchase. Parker suggests buying around mid-September. A shorter first year gives the manager and vendors less time to pile up hours. Keep in mind the 100-hour minimum is not prorated, so you still need 100 hours in that first year.
With 100% bonus depreciation back for qualifying property acquired after January 19, 2025, a property placed in service late in the year can still produce a large first-year deduction.
Two takeaways. First, keep a detailed, contemporaneous log of your hours: date, task and time spent. Second, if you plan to use this strategy, tell your property manager up front. A manager who understands material participation can structure the work so it helps you instead of hurting you.
What Records Your Property Manager Should Give You at Tax Time
A good manager makes year-end easier. Pinewood provides:
A monthly owner statement showing revenue collected, stay details for short-term rentals, and any work paid on your behalf.
A year-end summary combining every monthly statement into one spreadsheet.
A Form 1099 reporting the gross rents collected for you.
Here is why the year-end summary matters. Your 1099 shows gross rents, not your profit. If your property grossed $100,000 and the manager spent $40,000 on cleaning, repairs and fees, the 1099 still says $100,000. You need the statements to deduct that $40,000.
At tax time, your CPA is really working with three numbers:
Gross rents: from your 1099 from the manager.
Net payouts to you: from your monthly owner statements, after management fees, cleaning and repairs.
Expenses you paid directly: from your own records, such as mortgage interest, property taxes, insurance and anything else not run through the manager.
Lodging and tourism taxes. On short-term rentals, these are handled either by the booking platform or by the manager, depending on the platform and the location. A full-service manager should handle them for you either way. Confirm in writing who is responsible.
Self-Manage or Hire a Property Manager? How to Decide
It comes down to what your time is worth. If you are a senior leader at Walmart, J.B. Hunt or Tyson earning a strong six-figure salary, spending your evenings calling plumbers and answering guest messages is an expensive use of your time. A manager likely pays for itself.
There is also a case for self-managing first. Running your first property for a year or two teaches you what the job really involves. When you do hire a manager, you will know exactly what questions to ask and whether they can do it better than you.
And if you are buying your first rental this year, Parker's advice is to build your team before you buy:
Talk to your CPA about the tax strategy before you choose the property.
Find an agent who specializes in the type of rental you want, short-term or long-term.
Talk to a property manager to get realistic rent and revenue projections before you make an offer.
Frequently Asked Questions
How much does an Airbnb property manager charge?
Most short-term rental managers charge 20% to 25% of booking revenue. Remote or unique properties may run up to 30%. Ask whether the fee is calculated before or after the cleaning fee.
How much does a long-term rental property manager charge?
Typically 8% to 10% of monthly rent, depending on services such as how often the manager inspects the property.
What are red flags when hiring a property manager?
No real estate license, no brokerage, revenue projections far above other managers' estimates, hidden startup or placement fees, and short-term rental fees above 30%.
Do my property manager's hours affect the short-term rental loophole?
Yes. To meet the 100-hour material participation test, you must spend at least 100 hours on the property and more time than any other individual, including your property manager, cleaners and handymen.
Is a mid-term rental a short-term rental for tax purposes?
Generally no. If the average guest stay is more than seven days, the property is usually treated as a regular rental activity under the passive loss rules.
Should I self-manage my rental or hire a property manager?
It depends on what your time is worth. If you earn a high income or own several properties, a manager usually pays for itself. If you are new, self-managing your first property for a year or two teaches you the business and helps you vet a manager later.
About Our Guest
Parker Touchton runs Pinewood Management, a licensed property management company serving short-term, mid-term and long-term rental owners from Fayetteville to Bella Vista, Siloam Springs and Jasper. Pinewood also helps investors buy and sell rental properties. Learn more at pinewoodmanagement.com or find Pinewood Management on Facebook.
Build Your Real Estate Tax Strategy
The right property manager protects your cash flow. The right CPA protects what you keep. Cornerstone CPA works exclusively with real estate investors on tax planning, short-term rental strategy and tax preparation. If you are buying a rental, or want to know whether the short-term rental loophole fits your situation, schedule a consultation with our team.
And subscribe to Real Estate Returns on YouTube, Apple Podcasts or Spotify for new episodes.
This article is for general educational purposes and is not tax, legal or investment advice. Tax outcomes depend on your specific facts. Consult a qualified tax professional before acting on any strategy discussed here.