Airbnb Owners but non-operators- What do you pay your management?

Question

I'm in the process of building out a management company in Cleveland, Ohio but have no idea where to start with pay structure. My wife and I are among the best operators on our 2 units and we are completely confident in our abilities (setting up, hospitality, management) but the $ aspect is difficult to pin down. I have seen figures ranging from 9%-30%. Please help!

Mark Miles · Answer

I offshore my property mgmt for around $4/hr. I’m honestly not sure why anyone would pay someone stateside to handle property management when it is so cheap to hire someone offshore to do a high-quality job.

My offshore PM can set door codes, message (or call) guests, schedule cleaners, adjust the thermostat, monitor my cameras, & call a plumber just as easily as a local PM can, for 1% of the cost.

(more on that here: https://www.biggerpockets.com/... )

Nathan Gesner · Answer

Find companies that have been managing for more than ten years and you won't see any charging 9% unless they have a ton of add-on fees. You can model yourself after successful companies to get started but that's a lazy method that is unlikely to ensure your success. What you really need to do is understand what it takes to manage a property and the value of that time/effort. You define your costs, build in some overhead, and that's your fee.

That's a very simplified explanation.

Kyle Parks · Answer

@Paul Sandhu

I agree! But many people like the extra money a str brings but not the work. Also - I love reading your stories.

Collin Hays · Answer

The biggest thing you get for your 25% is time.  Time often translates into dollars gained, or dollars lost.

We just added a former self manager to our program.  He has a property in pigeon forge TN and lives in Indiana.  He’s actually done a good job with his property.  But time is money:

His hot tub quit working the first week of October.  So call the hot tub repair people, right?  Well, those guys are completely overwhelmed.  In December, he finally told them “Look, I’m losing my shirt in lost rents...I’ll just buy a new hot tub if you guys will just bring it out.”  They said “sure thing...you’re on our list and you’ll have your tub in May.”

Well he joined our program, and within 48 hours, our repairman had his hot tub going.

So...how much did the self manager save in the two months that he couldn’t get his hot tub fixed?  And how many hours did he spend trying to find someone to fix it, explain the problem to guests, issues refunds, etc.?

Chris Gottshall · Answer

I was quoted 15% by someone in my market recently (someone that is managing a few other units in my complex and comes recommended), but at the end of the day, I decided to keep up DIY management for another year because that 15% would be 100% of the margin I get on operating costs. If I had a bunch more money into the deal and had lower costs, I’d probably do it just to get my time back; but not when it’s potentially going to make it a negative cash flow situation. If he was willing to do 7-10% instead of 15%, I would have looked at it more seriously. But he acknowledged that I was already more savvy with using Airbnb’s basic technology than he was; so the upside was only going to be maybe some extra low season bookings via referral from his other properties.

Andrew Haney · Answer

Collins points are one major reason we opted to hire a management company.  We pay a 25% fee.

Chris O. · Answer

I sent you a PM with some more detail - but there's really two schools of thought

1) - Low initial price (10-15%) and owner pays for everything.

2) Higher all in price - (25-35%) - but you cover payment processing, consumables, photo/listing setup, pass through maintenance work, remote lock service, welcome books, etc etc etc.

You can combine the two to meet in the middle etc - but you really need to think about what kind of service you want to provide owners - nuts and bolts admin or white glove

Paul Sandhu · Answer

The general rule of thumb is the management fees for a property manager are going to eat up your profits and you'll end with the same profits you would as a LTR.  So just go with the LTR option with the property.

Paul Sandhu · Answer

If I had to pay someone to manage my STRs, I would not be doing STRs.  But my STRs are full of refinery ruffians.

Wendy Schultz · Answer

Hi Kyle. I can teach you everything you need to know and be quite profitable. Reach out to me if you'd like help. On here you're not going to find a lot of support for property managers because there are a lot of DIYers but out in the world, there are a lot of people willing to pay for your services.

Airbnb Owners but non-operators- What do you pay your management?

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