Seasonal Vacation Rentals & 28% Management Fees
I'm working on purchasing a vacation rental in my hometown that is very seasonal, approximately 9 weeks of solid summer bookings and intermittent bookings throughout the shoulder spring/fall months. One of the companies I've looked at using as a property management is called Vacasa.
Is anyone familiar with the company? They're fees are 28% but seem to be extremely thorough with their operations, marketing, and management of guests and the unit. I'm curious if anyone has used them and finds the value and revenue they bring to offset the high management fee.
Financially, I understand that the purchase price and all in monthly expenses should account for that % fee if we choose to go that route, but one thing that was communicated that rubbed me an interesting way was "Owning a vacation rental unit is not a get rich quick scheme. Your objective may be to come as close to breaking even as possible. Even if you a say $2000 in the red at the end of the year - thats okay, especially if you had the opportunity to enjoy the place yourself." Anyone have thoughts on the statement of going in with the expectation you may be "$2000 in the red"?
@Brian Tustin 28% doesn't seem unreasonable to me if they're doing everything and just sending checks to you. Them charging additional fees at booking is a problem to me because that shows me they're greedy and that might show up when there are repair issues and the bills are sky high. Anyone charging anywhere close to a LTR as a fee I would stay very clear of. STR take a LOT more time to manage and if they're not making much on the fees, where are they making it?
@Brian Tustin this is spot on. Also, if a long-term
Property manager company was asking 6%, I'd assume they were no good. For short term, 15% is still crazy low.
Originally posted by @Joey Morea:@Brian Tustin
28% is high. They also charge guest facing fees that get charged to guest that you do not get any part of so that really makes it more like 40-45% worth of fees. They say these are only charged to guest and they do not take off rent but in reality guest are looking at total cost to book not what the rate for the day is. I actually had my condo in Panama City beach managed by vacasa for a year after I purchased it. I was worried that I couldn’t do it myself but it is so easy to self manage. I actually have 2 vacation rentals out of state that I self manage remotely. Find a good cleaner and handyman. Download the Airbnb app and Vrbo app and answer a few questions here and there. Download TurnoverBnB app and get your cleaners set up on it and you do not even need to coordinate times they need to clean. Maybe takes 20 - 30minutes a week of work. if I really measured the time. Don’t be afraid to try to do it yourself. So many people with vacation rentals seem to think it can not be done as I thought originally as well.
Hey Joey. Yeah the customer facing fees + what they charge the owner combo is a bit excessive. We manage an airbnb locally where I live but the out of state does make me a bit more nervous. Obviously not impossible! Didn't know about the TurnoverBnB app! Will check that out! Thanks Joey
Originally posted by @Jay Bell:@Brian Tustin
Mission Beach? 28% seems excessive... My friend owns a duplex there and pays 20% for vacation rental management. I’d shop around.
You may also want to pencil out a 9 month lease/3 month short term scenario.
Good luck!
Hey Jay! No, this property it out of state. We run an airbnb in OB here in San Diego but self manage. Good word on shopping around and yes on the 9 month / 3 month idea. #STUDENTS! ha. Thanks Jay
@Brian Tustin, I am currently doing exactly what you are trying to do: long distance vacation rental hosted with Vacasa. I did a ton of research on this, and cancelled a contract with my first agency to switch to Vacasa.
Folks in this thread talking about 6-10% fees are talking about different products. Period. In most true vacation rental towns, options are limited, and conditions usually mean 20-30% management fees. In the ski town where my place is, 30% is actually pretty decent, some are 40-50% which is ludicrous. No one can make profit from those.
Vacasa is a full turnkey vacation rental company - they take all the photos for you (very high end, and free), have a linen program, do the cleans (charged to renter) with in-house cleaning crews, manage the listings, manage keys or door codes, push the listing to all the other vacation sites (airbnb, vrbo, homeaway, etc.), take all the revenues, pay the local taxes, and then cut you your profits once a month. You do very little. They only call me when something big happens, they don't even call me for the little stuff (changing bulbs, fixing a light, small plumbing), I just see it on my monthly statement. They have a local management crew, with an area GM to run operations, and their own in house cleaning and maintenance teams. I find that very advantageous in the ski town I am in, as other PM's have outsourced these functions and had a lot of issues with quitters and no-shows. I wanted a PM with in-house ownership of employees. So, do research on the town you are buying into, and the Vacasa team built around that town.
After a bumpy start, I have had no issues with Vacasa since last spring. I would give them a thumbs up. I have no plans to change PM's at this time, or try to self-manage Airbnb from long distance. Not worth it to me.
I would say, for many vacation rentals, the break-even / loss statement is sadly not far off. I doubt most owners in the ski town I am in, make money. You have to really buy low, keep costs low, keep nightly rates high, and keep the place booked, to make a profit with PITI + utilities + HOA + PM fees. I have mostly been profitable but not by a big margin, because we do use our place during season and enjoy it as a vacation home, it is not just a pure investment vehicle. But like @John Morgan, mine has already appreciated considerably, and I am in process of doing a cash-out refi to pull some cash and buy another property. So, overall it's been a success. You just have to run the numbers tight and accurately.
I am also local to you (and I know Moniker well) if you want to chat or meet up some time to talk further. Sounds like we have similar goals.
-T
Just not true. Oceanfront, 8br, 9ba. Beach town that has 15m visitors. 6%.
@Brian Tustin @Mark H. Porter @Sean O'Dowd
Depending on your area, 28% is totally reasonable. I manage properties in a ski area and charge 27%, which is significantly lower than some of the other companies in town (average 38-40%, a couple as high as 60%)
Vacasa is a large company, its here in my town as well. I havent heard much from the owner side but all of their reviews for their properties on Airbnb are pretty poor.
Originally posted by @Shelby Pracht:@Brian Tustin @Mark H. Porter @Sean O'Dowd
Depending on your area, 28% is totally reasonable. I manage properties in a ski area and charge 27%, which is significantly lower than some of the other companies in town (average 38-40%, a couple as high as 60%)
Vacasa is a large company, its here in my town as well. I havent heard much from the owner side but all of their reviews for their properties on Airbnb are pretty poor.
LOVE Mammoth and the surrounding gem's! Thanks for sharing your insight. The town I'm looking in, which is where I grew up, really has a 10 week rental period that one can count on high occupancy. Outside of that it's hit or miss.
I've got a couple emails out to some local PMs to gain more knowledge of their perspective and level of service compared to Vacasa. Thanks!
Thanks for that detailed write up @TJ Watson . Super valuable insight. Interesting to hear that breaking even or being a smidge in the red is fairly common for STR in this location. Personally, I feel like that definitely doesn't make it worth it. Why not just base the purchase off LTR and then transition to STR as an added bonus?
We have 2 units managed by Vacasa in San Diego (Mission Beach). They purchased our previous PM. As @TJ Watson indicated, Vacasa attempts to make STR passive. I am fairly sure we are charged a lower percentage of rent than you quoted but they are very well compensated on our units as the units average ~$16k/month rent with near 100% occupancy.
We are fairly happy with Vacasa and not contemplating changing PMs. We make a lot of money on the STR units. I suspect I would be more concerned about the costs if the STRs were going to lose money.
Good luck
Originally posted by @Dan Heuschele:We have 2 units managed by Vacasa in San Diego (Mission Beach). They purchased our previous PM. As @TJ Watson indicated, Vacasa attempts to make STR passive. I am fairly sure we are charged a lower percentage of rent than you quoted but they are very well compensated on our units as the units average ~$16k/month rent with near 100% occupancy.
We are fairly happy with Vacasa and not contemplating changing PMs. We make a lot of money on the STR units. I suspect I would be more concerned about the costs if the STRs were going to lose money.Good luck
Good insight Dan. Sounds like Mission Bay has been a gem for you. Stoked for you all. Yeah, if with the expected PM fees, the STRs were slated to lose money, that's more concerning absolutely.
Sorry @Mark H. Porter, just not believable as apples to apples PM for 6%, no PM can make money at that rate if truly full service (photos, run your listing, promote to airbnb for STR, cleanings, manage maintenance, taxes, etc.). You have a link to your prop managers website? Even for turnkey multifamily I see 7-10% and that requires far less work than an STR (no photos, no listings, just collect rent).
@Shelby Pracht and I are talking about the same ski town. So, Shelby I am an owner with real world Vacasa feedback for you. Your rate is very competitive. I was on MRB before, from when I bought my unit, and they were low-end and terrible website and advertising, made you drive into their office to pickup / dropoff keys, too old school for modern rental clientele. Vacasa bought out one of the larger PM's in town and has cleaned it up and hired a solid team. So far I am pleased. They are pretty much a tech company, and they have it down pretty well, but their website does lack some functionality that a tech company should have. They are still growing.
@Brian what I will say about breaking even / in the red - I have not been on Vacasa program for a full year, so I cannot make a decision based on a full year's breakdown of income vs expenses. My prior 2 years were either in the red or close. The main reason I dumped my last PM was due to extremely poor summer rental vacancy, so all the profit I made from winter went down the tubes in summer, through shoulder season, until snow hit the ground again later in the year. Vacasa had my place super rented out (80%+) this last summer, so I believe I should be well into the green when looking at a full 12 months P&L on their program. But make no mistake, any STR with 25-30% PM fees AND a good size HOA fee (which any mountain town will have because of snow removal) will cause your expenses to be much higher than a typical rental. Thus for a vacation rental of this style, you cannot base the purchase off LTR because in a place like Mammoth an LTR income is peanuts compared to STR off the bat, not even close. The only way units in Mammoth can be profitable are if you pimp them out, have prime location, and get top STR rates. Also currently Mammoth you cannot STR a SFH, only condos, so again, every location has quirks. A SFH would be much easier without HOA, more rooms, private jacuzzi, higher rates. I have been eyeballing another property here for several months, but so far none of them would be profiable by my numbers. I have started considering properties in 3 other locations instead. I would prefer to buy again in Mammoth because I know the market, have a system down, have a team of people I trust there, but the market is a bit frothy and many properties are way overvalued right now.
Also, I bought the place to use it and rent it out, so LTR is always out of the question if that is part of the business model. I have renters that pay for my family to have a ski condo, and the place is appreciating while the mortgage is being paid down. Win win. I am looking to do the same thing in Palm Springs currently.
@Brian Tustin
I live in Park City Utah, ski town USA and most STR management companies are full service and include cleaning, they range from 25-50%. I would say the average fee is 30%.
@TJ Watson I'm so glad to hear that you are happy using Vacasa (I've got a couple friends that work for them locally). A few of my clients now were formally on MRB and had some mild horror stories.
Thanks @Shelby Pracht. Assume you know Arwen? She is my main PM and has been great. MRB is just stuck in the 80s-90s, and I was on MRBO after that, they outsource too much. Vacasa focusing on building out their own full in-house managed staff was the deal maker for me. Too many horror stories of outsourced housekeeping that caused headaches, as I am sure you are well aware of in Mammoth. Hard to keep good staff around. Hope you and your business is doing well! Also fingers crossed for this big storm in March :)
@TJ Watson
Yes, Arwen and her husband Jason who's on the maintenance team there. They are both phenomenal. It's just a difficult business to really scale large and still give the personal touch and quick assistance that people expect these days.
(we're always hoping for that dump too, but the snow conditions have still been amazing! Mammoth does such a great job of keeping the groomers in top shape)
I run STR through my company, and we are up in Bozeman, MT. I charge 15% flat fee, and take all cleaning fees. So if the nightly price is $150, I will only take 15% from the $150, but I will ask to set my own cleaning fees, as I have to pay my cleaners a living wage.