All Forum Posts by: Andrew McConnell

@Edouard Pierre Congrats on the purchase! Great part of town!

I know a few in the area who some other owner friends of mine have had success with.

They are pretty picky on what they are looking for so I would need more details to make sure it was a good introduction.

@Rob White  For the past four years, my colleagues and I have collected data on property management company fees across the United States. We looked at more than 1,000 managed properties across the country of various types, sizes, and values. The properties we looked at were managed by a range of companies too, from small Airbnb managers to nationwide management companies.

Through analyzing this data, we gained a comprehensive understanding of the industry overall, and hope that by sharing our data, you can have a better understanding of property management pricing. (I know this is more of a national.

Fee Models

Property managers usually work on one of two fee models:

Commission model. Most property management companies work on this model, taking a commission in exchange for their services. The property manager earns money when the homeowner does, and usually has a yearly contract. This model offers flexibility to homeowners who regularly use their vacation homes because they can open up their rental calendars only for days they won’t be using the property. On open dates, the homeowner becomes dependent on the manager to produce income, and the homeowner assumes the risk and cost of paying for a property even if it doesn’t get rented.

Guarantee model. In this model, which has been recently adapted by the vacation rental management industry, the homeowner receives guaranteed rental income for the weeks he or she wishes to rent out. The property manager and homeowner agree on a fixed amount of income that the homeowner will receive each month, and the manager pays the homeowner that number every month—regardless of occupancy. This model allows the homeowner to entirely pass off the risk to a property manager. This model is useful for owners who want a guaranteed income each month, but are willing to accept it might be less than you could make with the commission model. The commission model allows the potential for higher-paying months, but also the risk of months where the property isn’t booked at all. With a guarantee model, you get a steady income all year long.

Many property management companies, including those my colleagues and I work with, use both of these payment models, and the right one for a homeowner will depend on their goals for the property. For the highest possible return on investment, a homeowner may prefer to use a manager that can guarantee a certain amount. However, for those that are mainly planning on using the home for vacations with family and friends, a commission model may be right for you.

Full-Service Management Fees

Most management companies cover everything from booking to cleaning to answering guest questions and handling emergency maintenance. The fees they charge are a percentage of the income made by renting out the vacation property. These are the averages found for full-service management across the United States:

Typical range. The typical range of vacation rental property management fees falls between 15-40%. While it is a wide range, it provides the answer to a commonly asked question for those seeking property management for the first time: How much do property managers charge for vacation rentals?

Average range. The average property management fee across vacation rental markets in the United States is 28%.

Urban rentals. As management fees go, vacation rentals in large cities are on the lower end, at 20-25%. Because urban rentals tend to require less maintenance than a beach or mountain home, they also usually have the lowest property management fees.

Beach rentals. Owners in beach markets can likely expect a management fee in the 25-30% range. Beach rental properties typically have lower rates than other vacation rentals because they are often closer in proximity (often within less than a mile) and thus are less costly for the manager to take on. You’ll also find this rate in more well-established vacation rental markets, such as Gatlinburg, TN, because there is plenty of competition to keep prices low.

Mountain rentals. In mountain markets, such as the ski markets in Colorado and Lake Tahoe, fees range from 30-35%. The fees for mountain or ski markets tend to be higher than those for beach and urban markets because mountain homes tend to be more spread out and require more maintenance.

In-house management. In-house property managers (typically found in condos where the company that owns the building also provides property management) can charge fees as high as 40%, a percentage that is costly to the owner. Because homeowners will often choose in-house vacation rental managers out of convenience and without comparing their options, in-house managers are able to get away with these unreasonably high fees.

Booking-Only Fees

Even if you prefer to manage your home without the help of a property manager, you still might want to hand over part of the job. In that case, you might want to hire a booking-only management company to handle the marketing and booking.

Because these companies do not operate locally and do not provide full-service management, they can charge a lower rate. The typical fees for these services are in the 10-15% range. Keep in mind, however, this fee only includes the marketing and booking services—not the cleaning and on-the-ground operations.

Add-On Fees

To stay competitive, some property management companies advertise low commission rates only to later tack on additional fees. These fees vary across management companies but can include fees for credit card processing, cleaning supplies, handyman services, linens, deep cleaning, and more. This can make it difficult for homeowners to accurately compare effective property management costs and project future rental earnings.

Consider the chart below, for example. It highlights the vast differences in how management companies define full-service management and the differences in seemingly identical price structures. Below you can see that for a home earning $20,000 in gross rental income, the higher, all-inclusive rate (Company 1) effectively leads to a lower cost once the competitors’ add-on fees are taken into account.

Hope this is helpful

@Devin Lester Welcome! I happen to have some multi-family building owners in the LA area looking for leasing/booking help from property managers.

Reach out to me via direct message or give me a call.  I would love to connect.

@David Hodge I can get you a few different offers from a few different property managers in the area if you are indeed interested in moving forward with a manager when you own the place.

Reach out to me through direct message or give me a ring.  Once I get a few more details on the property, I can start lining these offers up.

@Ray Li In my day job, I mainly interact with individuals who own vacation rental (or Airbnb) properties looking for vacation rental property managers.  Here are a few of the questions I have found that have been very helpful to those owners as they evaluate property managers.

1. What is the Airbnb manager's reputation?

How reputable is this Airbnb manager? Is she a college student who has heard about Airbnb and how quickly it is growing, and wants to ride the wave? Or is she a professional who is licensed to rent out other people’s vacation homes in the relevant jurisdiction?

How many years has the manager been doing this? How many other vacation rentals does she or he manage? How are the guest reviews? Are there owner reviews for your to review?

If your prospective property manager cannot provide a number of references for you, consider it a red flag.

At my company, for example, we certify our network of over 600 managers based on financial, legal, and operational excellence to make sure you’re matched with only the best.

2. Is the vacation rental management contract homeowner-friendly?

When considering a vacation rental manager, take a close look at the Airbnb management contract. Who does the contract really serve—you or the manager? Who is liable for damage caused by guests? Who is taking the financial and operational risk?

Also make sure you know what you are responsible for.

Will you be paying the property manager a commission as most people do?

If so, review the contract, and compare it to other home owner friendly contracts (I have an example of a good one if you are interested). Known for having some of the most homeowner-friendly contracts in the industry, we have our managers assume operational risk while the financial risk and upside is shared between both owner and manager.

Looking for guaranteed rental income instead?

I also have an example of a guranteed rental contract for a better understanding of how to structure a deal where you get a fixed rental income every month and the financial and operational risk falls on the manager.

3. How much can I expect to make with an Airbnb manager?

How much rental income will Airbnb managers make you?

This is not just a product of how frequently the manager can find guests for your Airbnb, but also what price she is able to charge for the nights rented, and perhaps even more importantly, how much of that rental income ultimately flows to you as the owner.

If you sign a guaranteed rental contract with the manager, this amount is set.

If you use a shared success (or commission) arrangement, the calculations can be trickier.

What is the vacation rental manager’s commission rate? Are there any additional fees?

Horror stories abound of owners being tempted to sign with a manager based on a low quoted commission rate, only to be blindsided when the effective commission rate was more than double the amount quoted due to “additional fees and management services.”

Always do your homework upfront, and know how much you can expect to make before agreeing to any arrangement.

Our site has a personalized tool to help you figure out how much your property should be making in annual rental income

4. Is the management company financially secure?

Ultimately this comes down to one question: How deep are the manager’s pockets?

Has the manager ever filed for bankruptcy? Ever been late on payments to owners?

What sort of insurance does the manager carry to make sure she can make you whole should things go wrong, and what type of insurance should you have?

5. How does the Airbnb management company vet guests?

Maybe the manager is great at booking and cleaning your property, but how good is she at ensuring your home is taken care of?

Ask your manager what type of systems he or she has for vetting guests.

Does the Airbnb manager participate in a “bad guest” scheme?

Does the manager do background checks? How does the company check on the property during rentals?

Cleaning up after a mess is made is helpful, but making sure no mess is made in the first place is even better.

6. Will there be an impact on long-term home value?

Is the property manager an “asset manager” or simply someone looking to “churn-and-burn”?

One is not necessarily better than the other, and your preference will likely depend on your objectives for the home.

For example, if this is a short-term investment property on which you are looking to maximize the annual income and depreciate the value for tax purposes, you may prefer a manager who will keep your home filled to maximum occupancy.

On the other hand, if this is a long term investment or even where you plan to retire, you will likely want to find someone very different.

7. Is this manager someone I can trust?

Finally, it is important to remember that this is still a relationship business, and none of the above six factors really matter if you do not like or trust the manager.

Get to know your potential Airbnb manager. Skype if you’re home is far away, or try to even meet in person.

Ideally, your relationship with your property manager will be one you retain for years to come.

We also have a free tool on our site for owners to find local vacation rental and Airbnb property managers in the area if you want to try it by clicking the link in my signature.  You can also direct message or call me as well. Cheers.

@Angelo Goodwin I would be happy to help.  I know a few in the Philadelphia area but they are very specific about the types of properties they are looking for.

Feel free to direct message me or give me a call with some more information about your property, and I would be happy to connect you with the right one based on the fit.

@Kyle Bentz I have some in the TB area that I believe might make sense to connect you with.

Feel free to send me a direct message or give me a call and I would be happy to see if I can help.

@Adriana Fernandez If you are open to investing in multi-family properties, I may have some folks who can help you out in the area.

Feel free to reach out to me via direct message or give me a call.

@Eric Johnson Try Airbnb and VRBO/HomeAway (who now has a model for pay-per-booking).

I also have some other individuals in the Louisville area who would help you do this on a weekly basis.  They have helped a number of owners be successful that I have worked with in the past.  Feel free to direct message or call me if you are interested in more information. 

@Efosa A. Welcome! Poconos is a great area.

I have worked with a number of vacation rental/Airbnb rental experts there who can help you rent a palce there out while you are in NYC.  I have worked with some other owners who have been successful there through similar arrangements.

If you get closer to purchasing the property, direct message or call me, and I would be happy to connect you to these local individuals.