I'm a newbie, who is looking to start with a buy and hold of vacation rentals. Being my first time, I've got a ton of things to figure out. One of them is property management fees. Property management fees seems to be around 10% of the rent for traditional homes and condos, but I haven't found a good number for management fees of vacation properties.
I was looking at a property management company's website, who happens to manage several condos in a development I'm interested in. They had a spreadsheet for potential investors. One of the things that surprised me was their management fees was 25% - 40% of rent depending on the size of the unit.
I'm not surprised that vacation rental management is higher, but are those rates typical? If not what is the typical management cost of a vacation rental?
Hey @Clint Cook
Welcome to Bigger Pockets, glad you could join us.
Vacation Rental managers charge a higher fees because of the extra work of managing a vacation rental. More work around check in and check out, communication with potential tenants, and cleaning between guests are extra work that typical property manager doesn't need to do*.
There are a handful of startups that handle aspects of the extra work VRs bring. BeyondStays and SuperHost come to mind. You can also coordinate with a local handyman and cleaning person to handle those aspects of the process.
*PMs need to do this stuff with longer term tenants, but the turn over process happens more frequently with vacation rentals.
@Evan R. Thanks for the response, and I agree. I expected VR to have higher fees for the very reasons you mentioned. Granted, I've only been able to get the fees from 1 company, but I didn't expect them to be, as much as, 4 times higher than those for long term renters. Are they typically that much higher?
We own vacation condos in the Myrtle Beach area. Independent property management company fees are roughly 25%. On-site management at resorts can be over 40%. They also charge separately for credit card processing fees, cleaning fees, and maintenance items. We self-manage by using local contacts for cleaning/handyman services and VRBO/FlipKey for marketing. Good luck!
Welcome to the wonderful world of vacation rentals! There are sevaral ways one can go about handling the management of a vacation rental property.
- You can hire a full-service property manager
- You can hire a service that assists in the management of the bookings & communications with travelers
- You can handle all aspects of your vacation rental property themselves ("by owner".)
I worked for VRBO.com & Homeaway.com for 11+ years before I retired last year, so I am pretty familiar with the ins & outs of this industry. I managed properties for the owners of VRBO.com as well as the General Manager, and in addition I own my own vacation rental property located in Dillon, CO (Summit County.) You can view my property at http://mydilloncondo.com or http://www.vrbo.com/382.
I also own a Marketing & Booking Management service to help owners of vacation rental properties manage their VRs. It is VRAssist: http://www.vrassist.com (Option 2 listed above.)
A full-service property management company is just that: they handle every detail and aspect of offering a property for rent on the vacation rental market, from advertising the property on their own Property Management Company website, to handling inquiries and reservations, key-handling, cleaning and maintenance. Rates for a full-service property manager range on average from 25% - 60% (depending on your area.)
A service like VRAssist helps owners with the advertisement(s) of their vacation rental property as well as handling all communications with travelers before, during & after their stay, handles payment schedules, send rental agreements, communicate with your housekeeping/maintenance staff and follow up with the guests to request that they submit a review of their stay at your property. The professional and comprehensive handling of your reservations is critical if you want to maximize your investment in your vacation rental business. Typically the fee for this type of service is not as expensive as a full-service property manager and well worth the benefit of the extra time you'll have for the things that are more important to you.
Good luck in your new venture!
Sounds like you're the person to talk to! With VRassist, it sounds like they handle manage much of the work. What would I, the owner be responsible for managing?
I'd recommend taking a look at the information at http://vrassist.com for a more thorough explanation of our services, etc. Specifically in answer to your question:
Q: What does VRAssist consider to be the responsibilities of the property owners?
A: VRAssist partners with owners to create a successful collaboration for their vacation rental properties. We'll handle the marking and bookings….you handle the rest!
• You must own the property or have a legal right to advertise & rent the property
• You must secure a professional, dependable housekeeping service
• You must secure a dependable maintenance service who will be available to address maintenance issues at the property. (This service must be available 24/7…. issues don't always occur during normal business hours!)
• You must honor all reservations
• You must keep the property in good condition with regular maintenance
I hope this helps!
It can be extremely difficult to compare property management costs, considering how widely management companies vary in their offerings and what is included in their commission rates.
The average vacation rental management fee is 23%, and vacation rental management fees vary widely (as you may be able to see here):
Unfortunately, however, these rates are not all-inclusive, and the effective percentage that you are charged may be much higher than the commission you are quoted. See this example:
Likewise, be wary of the costs of full-service management in comparison to companies that help only with marketing or booking (who will likely charge ~10%).
My company, Rented.com, has been collecting data over the past four years on full-service management fees charged by U.S. vacation rental management companies (meaning they pay for cleaning, light maintenance, etc. and there are no additional fees), and we've seen the average effective vacation rental property management commission rate to be about 28%.
Of course, the effective management rate will also vary by geography and the type of home. For example, beach and ski houses will likely be charged a higher commission rate should the management company be responsible for upkeep and maintenance.
Rather than reach out to multiple vacation rental management companies to try to compare costs, rates, responsibilities, & fees, you can also have multiple companies make competitive offers on your home using the same contract. It's an easier way to get transparent pricing and see what companies would be a good fit.
If anyone would like help generating offers or evaluating property management fees for a vacation home or short-term rental, I'd be happy to help.
Best of luck!
Sorry I'm a little off topic probably I was trying to find the correct place to post this. I would like to know the average cost to clean a vacation rental home two bedroom 2 bath located at Myrtle Beach South Carolina.
I don't do VR. Management fees are generally VERY high. Often, returns are lower on a % basis than investing in annual rentals. It can take some time to develop a good book of steady tenants and in the meantime your returns may be dismal.
John Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com | FL Agent # BK3098153
@Brock Cole that has been my experience-20-50% for bigger companies. Percentage also depends on if they are onsite or off.
Cece- if you need some recommendations I'd be more than happy to get a list together for you
I would charge you 30% for STR management, or 15% to schedule cleanings and answer the phone. I charge per hr on service calls to the owner. Pretty standard in my market.
Hey everyone! I was hoping to get some advise. I am a property manager for residential, Vr, and land. I don't get a lot of Vr in my area as there is not much in the way of "vacationing" around here. I had someone reach out an ask me to help them manage 2 Vr's on the lake. However she is o lay wanting assistance in getting more reservations for bookings.
This is a bit non traditional for me as I operate a full service management company. So typically the rates are 25% for VRs. What would be a fair rate to charge as I will makerting and booking the properties. I just will not be coordinating repairs, cleaning and what not.
Any advise would be appreciated. Thank you
Apologies that I'm just now getting back to you. I have been extremely busy. If you could offer any advice that would be amazing. I'm trying to gather list for prices on linen , cleaning weekly vacation rentals, and possibly Property Management. This will be in North South Myrtle Beach, Sunset Beach, and Ocean Isle Beach . Thank you again for reaching out and I look forward to speaking with you soon.
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