Sunday, April 19, 2009

Guest Posters Can Make The Best Points, Sometimes!


You can see the original post and it's replies, by clicking here.

The Author of the post has given his permission for it to be re-posted on this site, and you'll need a little context for the best reading enjoyment.  Part of what you need to know is that this poster, Tom Stone, is from the stunning hills of North Georgia.  (This awesome close up of a dollar bill is compliments of SqueakyMarmot at Flickr.)

Something else:  Georgia does not have any rules about keeping an escrow for the monies that belong to guests, owners, and the tax people.  Is it possible that common sense wafts on prevailing winds in the Blue Ridge Mountain area?  Mr. Stone, Mr. Stone (yelling loudly to get his attention) ~ blow some of that stuff over this-a-way!

Enjoy:

Are you keeping two sets of books?  Maybe you should...
by Tom Stone
Originally posted at VacationRentalsCommunity.com on 4/17/09

I read a comment from a cabin owner on a local website, where she said they are 4-5 months in the rear from their rental management company for the rents collected.  Why would anyone tolerate this!  Would you let a guest rent your vacation rental and pay you for their rental six months after their stay? 

My guess that this situation is the result of the management company dipping into money which wasn't theirs, meaning the owner's portion of the rental receipts.  They were probably in a tight place, and used the funds to cover operating expenses, figuring they could make it up when cash was flowing in the right direction again.  I recently heard about another management company which wanted to sell, but they had dipped so deeply into the advance deposits, that they could not sell for the price they wanted and needed.

Maybe you shouldn't keep two sets of books, but you should have two checking accounts. #1 is your Operating Account which is your money to play with.  #2 could be called an Escrow or Trust Account, where you hold deposits, taxes collected, housekeeping fees and cabin rental receipts.  The second account is where you hold money "In Trust" to distribute it as required.  All money you receive from guests goes into your Trust Account.

It is very important that you wrap your head around this: It is not your money! This money is actually someone else's not yours.  This money belongs to the guest, until they check in; the owner of the property you are managing; the housekeeper who cleans the property; and the taxing authorities, not you.  When a guest checks in, you can remove your portion of the rental as commission and deposit it into your Operating Account.  I do this once a week, usually on Thursday, when I cut checks for the week.  Some states require you have a separate Escrow or Trust Account, but many, including where I live, do not.

When it is time for you to cut Owner's checks, pay sales tax receipts, pay your housekeepers, or maintenance items, it all comes out of your Trust Account.  The money will always be there, in sufficient amounts to pay whatever funds are due.  When the money is due to be paid out, its there because you have not become confused about whose money is whose.

When a property owner places trust in you to manage, market and oversee their property, do you give them reason to trust you with their money too?  It's something you should think about.


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