Advise needed for 1st Investment Property

[Joanna Mendoza]

This is my first time browsing this forum. Please be patient with me. I am sure some of my questions have probably been answered before. 

My aunt purchased a property in Tucson Arizona with a single family house. The house will be vacant starting September 2024. She is based in the Philippines and plans to stay in the property every 2-3 years for only a couple of weeks. So technically the property will be empty most of the time. She wants me to help maintain the property. 

Since I will be maintaining her property, I am planning to offer her to convert it to an Airbnb rental and I will run it for her since I am based in Tucson, Arizona. Considering I will be maintaining the property (overseeing the construction so I can convert it to a multiplex, all the Airbnb needs including advertising and looking for customers), what would be a fair split? Or is there an acceptable or usual profit sharing for this kind of arrangement? I was thinking 65 (Mine)- 35 (Aunt). I am thinking this would be fair since she had no intentions to earn from it to start with.

Thank you

[Jeremy Holden]

Most property manager cover all the services you offer charge a flat fee of 20% gross revenue. 65% is exorbitant - its 3.5X the market rate. Im a realtor and investor in Phoenix, feel free to ping me 

[Michael Smythe]

@Joanna Mendoza 50/50 split would be the highest you might request from your aunt.

Of course, the split would be AFTER all STR expenses are covered.

[Mya Toohey]

I see your thought process on the split. She wasn't planning on making any money. You need to check out the local rules and regulations before you get too ahead of yourself. Make sure that the property is allowable and that the returns are good. You could end up investing money for it not to even be a good fit for STR. I am in the Tampa Florida area and we have very stringent rules and regulations all around where I am.

[Braedon Page]

Quote from @Mya Toohey:

I see your thought process on the split. She wasn't planning on making any money. You need to check out the local rules and regulations before you get too ahead of yourself. Make sure that the property is allowable and that the returns are good. You could end up investing money for it not to even be a good fit for STR. I am in the Tampa Florida area and we have very stringent rules and regulations all around where I am.

Definitely second this - if you were thinking of taking 65% for yourself I would imagine you're pretty new to the STR management space (not a criticism, just an observation). STR regulations are a big consideration before you make any big capital improvements specifically for short term stays, also running your numbers and making sure that your area offers consistent returns above what you'd get renting it long-term. Generally STR's make more, but if you run your numbers and it comes back similar to your LTR numbers, I'd go with a long-term tenant for stability and less work.

[Michael Haynes]

Mya Toohey in Tampa. Your a Real Estate Agent? The property is in the Philippine's? You want to STR it? Do you know the Laws out there? Do you know that Tuscon is the Marijuana Capital of the US? What a mess.

[Nathan Gesner]

The harsh truth is that you aren't looking out for your aunt. You're basically wanting to use her property to make money for yourself.

A professional property manager would charge around 20-25%. I don't think it's appropriate to charge as much as a professional would, and I certainly don't agree with you keeping 2/3 of the money.

[Joanna Mendoza]

Quote from @Nathan Gesner:

The harsh truth is that you aren't looking out for your aunt. You're basically wanting to use her property to make money for yourself.

A professional property manager would charge around 20-25%. I don't think it's appropriate to charge as much as a professional would, and I certainly don't agree with you keeping 2/3 of the money.

It did say in the post that she didn't need nor want to make money off of it. She's actually only buying the property to help the seller. These facts were all settled with her.

[Jakob Mikhitarian]

For most property management services, especially for airbnbs, the average fee is about 20%, with wiggle room up to 30% depending on how well you manage the place. Of course with this being in the family, negotiation is whatever the two of you feel comfortable about with.