Beware the hidden fees of your Property Manager

Being a property manager myself, it is embarrassing for me to have to point out some of the unscrupulous business practices of this sector.  Folks who don't have the time, interest, or energy to manage their property should be able to count on some straightforwardness from property managers.  

I hear folks all the time asking "If I am only paying them 20 percent, why is it that my checks are so small?"  The answer lies in hidden fees.  I call it rent-shifting.  Here is how the game works:  

1.  The Property Manager agrees to a very generous revenue split with the homeowner on rents.

2.  The Property Manager adds exorbitant fees onto the rents, and keeps 100% of those.

3.  Because the fees are so outrageous, the Property Manager has to keep actual rents low, so that the grand total is palatable for the guest.  That is rent-shifting, and is a very common practice.

Below is an example rental from a large, national vacation rental company that markets itself to homeowners as a "low cost" manager.  You will see in this sample reservation, actual rent is $758.  On an 80/20 split, the homeowner would receive $606.40.  But with the hot tub, damage waiver, and booking fees - all of which go to the Property Manager, the "real rent" balloons to $978.  With the homeowner only receiving $606.40 of that, the "real" management fee is 38%, not 20%.  ($606.40/$978).

Moral of the story is, find out about all of the "hidden" fees if you chose to utilize a Property Manager.  Your real commission will be found when you calculate those numbers.