How much a vacation rental manager will charge is one of the key concerns when deciding between hiring or manager or self-managing your vacation rental. Owning a vacation rental home can be much easier with the right property manager, but many owners are hesitant to give up too much of their income. The question is: how much do vacation rental managers actually charge?
What Type of Vacation Rental Manager do you Need?
The commission of a vacation rental manager can vary wildly, from as little as 8% to as much as 50%. How much vacation rental managers charge is based largely on the type of service they provide. Lets look a little deeper at what I consider the different types of vacation rental management.
Managing longer stays – 30 days and up
This is a property manager that typically handles long-term rentals. A tenant signs a lease for 6 months or a year or longer. The property manager will market the property and manage it while the tenant is in place. This is much less labor intensive because your manager is not cleaning the property and getting it ready for a new guest every few days or weeks.
A property manager such as this will typically charge a fee of 8 – 12% of your monthly rent.
This type of manager doesn’t quite qualify as a vacation rental manager, but I wanted to include it in this topic for context.
Vacation rental manager for self-catering properties (most common)
In this instance your vacation rental manager will market your property, handle maintenance issues, tend to your guests and clean your property after guests check out. This type of manager usually has a central office offsite and can manage a variety of properties in a variety of locations in your area.
Most vacation rentals are self-catering, meaning the property is handed to the guest clean and with a set amount of linens and amenities (i.e. soap, paper products). Your vacation rental manager is not providing maid service or towel service to the guests. The property simply has an exit cleaning after the guest leaves.
This means less work for your vacation rental manager and lower costs for both you and your guest. This is actually one of the main reasons that vacation rentals are generally more affordable than hotels. The guest is giving up some hotel-style amenities in exchange for a bigger place at a better price.
The most common commission range for a vacation rental manager is 15 – 30% of your gross rental income.
Full service management company
This is the type of vacation rental manager you would see in a resort type condominium complex.
The management is typically on site and usually you as the owner are required to use the in-house management. Make sure you do your research when purchasing a vacation rental and find out if you are able to pick your own property manager.
The property is typically run more like a hotel, with daily maid service and more amenities such as swimming pools and exercise rooms.
Obviously this is where things can get expensive for the owner. Many owners like the idea of having an on-site manager to keep an eye on their property at all times, but this level of service comes at a cost.
This type of property management service will cost the owner 35 – 50% of gross rental income.
Ask About the Other Fees your Vacation Rental Manager May Charge
How much vacation rental managers charge is about much more than just the management percentage or commission. A vacation rental manager might tell you he charges only a 15% commission, and his rate is the “lowest in town.” What he may fail to tell you is that there are a host of other fees you will get charged every month.
I have seen many vacation rental managers that are quick to quote simply the percentage of their commission. Here are the other expenses associated with management of your vacation rental that you need to be aware of.
Cleaning Fees
A smart vacation rental manager will typically pass the cleaning fee cost on to the renter. This is standard practice in the vacation rental industry and guests are accustomed to paying a cleaning fee.
Your manager should do a deep cleaning at least once a year. This is obviously a more thorough cleaning and is typically paid by the owner. Ask your property manager how much they charge for a deep cleaning and how often they are performed. The deep cleaning charge should not be more than 3X the normal cleaning fee that the guest pays.
Most vacation rental managers will ask that you allow them to clean your property after your own personal use and charge you an owner cleaning fee to do so. Just make sure you know the policy of your property manager and how much you will get charged for an owner cleaning.
Marketing Costs
We have already discussed the importance of being on as many quality vacation rental listing sites as possible. Some vacation rental managers will absorb the cost, if any, of placing your property on these sites. Others might purchase a vacation rental listing for you at their bulk rate and charge it back to you or just ask that you purchase it yourself.
There is one advantage to purchasing your own listings. You can take the listings with you if you change property managers or decide to self-manage.
Another marketing cost you might incur is professional photos of your vacation rental, which I highly recommend. Your manager will probably pass this cost on to you, but a large operation may have their own photography pro on staff available at no extra cost.
Cost of Linens
Some vacation rental managers will just ask you to provide your own sheets and towels. Most will provide them for you as this looks more professional and uniform to guests.
More than likely you will get charged a monthly or yearly linen fee. These costs can add up so be sure to discuss with your prospective property manager.
Annual fees or “start-up fees”
Taking care of the initial setup of your vacation rental such as building the marketing and setting up the accounting takes time and effort. Some vacation rental managers will charge you a start-up fee when you first join them to cover this effort. I wouldn’t pay any more than $200 for this and honestly there should be plenty of property managers that charge nothing.
Annual fees are just a fancy term for “additional revenue stream” to a vacation rental manager. I would be weary and ask detailed questions about any annual fees. The only exception would be if your property manager has packaged several of the fees mentioned in this topic into one reasonable annual fee for convenience sake.
Fees for credit card processing
Credit card fees are typically around 3%, and this can be one of the biggest expenses associated with renting your vacation rental property.
Since most travelers book online, accepting credit cards is a necessary evil. Even vacation rental listing sites such as Homeaway and Airbnb will charge a booking fee to the owner, which is in part to cover the fees associated with accepting a traveler’s credit card. The question for you to ask is, “Who is paying for it?”
Your vacation manager may simply absorb the cost of accepting credit cards. More likely he will pass this cost on to you or the guest. Many states allow merchants to tack on a surcharge for customers using credit cards. This may be OK for you as the owner, but be aware that excessive fees to your renters can discourage bookings.
Property maintenance
Every vacation rental manager is going to charge you for the maintenance performed on your property. Unless it is damage caused by a guest.
You should ask what their fee schedule is. Do they charge by the hour or by the job to change a light bulb or fix a leaky toilet? How are contracted services such as pest control or plumbers handled? These costs may be passed directly to you at cost or your property manager may mark them up.
Property amenities
These are disposable items for your guests such as paper products, soap and trash bags. A savvy vacation rental manager may build the cost of these items into the guest cleaning fee. The cost isn’t much and the guest probably won’t know the difference.
Find out who is responsible for paying for these items. A $10 or so charge per guest is a nasty little surprise.
