Property Managment Fees for Vacation Rentals

[Clint Cook]

I'm a newbie, who is looking to start with a buy and hold of vacation rentals. Being my first time, I've got a ton of things to figure out. One of them is property management fees. Property management fees seems to be around 10% of the rent for traditional homes and condos, but I haven't found a good number for management fees of vacation properties.

I was looking at a property management company's website, who happens to manage several condos in a development I'm interested in. They had a spreadsheet for potential investors. One of the things that surprised me was their management fees was 25% - 40% of rent depending on the size of the unit.

I'm not surprised that vacation rental management is higher, but are those rates typical? If not what is the typical management cost of a vacation rental?

Thanks

[Monika Haebich]

Hi all,

It can be extremely difficult to compare property management costs, considering how widely management companies vary in their offerings and what is included in their commission rates.

The average vacation rental management fee is 23%, and vacation rental management fees vary widely (as you may be able to see here): 

Unfortunately, however, these rates are not all-inclusive, and the effective percentage that you are charged may be much higher than the commission you are quoted. See this example: 

Likewise, be wary of the costs of full-service management in comparison to companies that help only with marketing or booking (who will likely charge ~10%). 

My company, Rented.com, has been collecting data over the past four years on full-service management fees charged by U.S. vacation rental management companies (meaning they pay for cleaning, light maintenance, etc. and there are no additional fees), and we've seen the average effective vacation rental property management commission rate to be about 28%. 

Of course, the effective management rate will also vary by geography and the type of home. For example, beach and ski houses will likely be charged a higher commission rate should the management company be responsible for upkeep and maintenance. 

Rather than reach out to multiple vacation rental management companies to try to compare costs, rates, responsibilities, & fees, you can also have multiple companies make competitive offers on your home using the same contract. It's an easier way to get transparent pricing and see what companies would be a good fit. 

If anyone would like help generating offers or evaluating property management fees for a vacation home or short-term rental, I'd be happy to help.

Best of luck!