My business partner and I bought a property in April 2021 that has 6 duplex's / 12 units. We have converted 4 units to ABB this far with the first unit online in October 2021 and the 5th to be online by September 1. The remaining 7 units are LTR with potential to be STR if tenants move out.

Since this was my first real estate venture and they had a couple years experience with a few of their LTR properties, we agreed that him and his wife would handle management and payments for such. At the time we had no STR’s but planned to do so. Management fees were to be around 7-8% for LTR’s. Too be fair, since we have been bleeding cash to convert LTR’s to STR’s they have taken little to no payment for management fees. In the past few months we have started paying a 3rd party individual with no experience a flat fee for LTR management.

Since I have almost no experience with property management, my contribution in addition to approximately $2500/month cash deposits has mostly been in unit finish out and labor. One unit was completely down to studs and has require significant resources and cash infusion. Other contribution includes time and labor for minor/moderate electrical, minor plumbing, shelving/fixtures/lighting/fans, and kitchen and bath cabinet installation for the upcoming September 1 unit. In addition, my fiancé and I contributed time and labor for complete design, delivery, furnishing, and set up of 2 units and complete set up of 1. The other 2 ABB’s had contributions from all parties but 75% efforts for furnishing and set up came from my business partners wife.

Recently my partner has decided it is time to begin collecting management fees for all 5 Airbnb run STR's. There has been no prior discussion as to how much these fees would be. He has suggested 25% management fees and claims that this is the "going rate." It seems like 10 - 30% is a more realistic range and the upper end is clearly the 5 star service. I should also add this is their first STR management venture with initiation in October 2021.

I have zero issue paying them for management fees. However, there doesn't seem to be a model for how much a 50% owner should collect for STR management. I certainly have my opinion on what it should be but I'm more interested to see if it's in-line with what the community thinks. I would also like to know what level of "service" I should expect from a manager who is also a 50% owner.

Disclosure: This topic is not a conflict between the two of us but just in the discussion phase. He and I both take the Bigger Pockets community and their advice seriously and will use it to come to conclusions. He wants the best deal and I want the best deal. It is most certain he will see this. Other owner has also been very clear that he does not want to do handyman or skilled labor activities unless absolutely necessary and mostly sticks to that. I do not want to either but we do not have the cash flow to outsource and automate all aspects. However, in an effort to slow the cash bleeding and get the all ABB’s up and running I have injected myself into projects that I could handle to save money. Once this 5th ABB is up and running next month we hope to be sitting back to fill the reserves again.

Houston, Texas

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