Friends and family discount?

Short-Term & Vacation Rental Discussions
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Friends and family discount?

Jonathan BombaciBusiness Member
Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes

We just finished renovating an investment condo in a vacation destination. We do quite a bit of long term rentals but this one was bought with the intention of using it ourselves and then renting it out when we're not using it. I think we bought it right and the mortgage + HOA fee ends up being about $1000 a month. Based on other comparable vacation rentals (in worse condition) in the same area we should be able to get $1200-$1500 per week. Which I see as a bonus since it's really a vacation spot for the family when we want to use it. We're able to support the monthly payments without renting it out but I like having assets, not liabilities, on our balance sheet.

I am pretty bad at saying no to people I like. The question is do we offer a “friends and family discount” of like 50% off to people we know that don’t book through Airbnb? The reason why I want to establish a rule early on is because I’m the kind of person that would let people use it for free but don’t want to back myself into a awkward situation.

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Kenneth Garrett:

@Jonathan Bombaci

Are some of you saying you would charge your parents to use your STR. That's seems completely heartless. If you want to charge your brothers and sisters that's up to you. It depends on your own philosophy. I make enough money for my family to use it occasionally.


I moved my mom to be near me last year and she's living in one of my rentals for free. It's cost me almost $20,000 this past year, but I'll let her stay there until she can't or she passes. However, I wouldn't say it's "heartless" to charge parents something. I would say it's heartless for relatives to expect to reap the benefits of my hard work. I didn't inherit these properties or win the lottery. I have them because I've hustled, sacrificed, saved, self educated, and otherwise taken the road less traveled. My relatives chose to take the common path and do the minimum to get by. 

I think 25% is awfully generous.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y

    If you have a problem saying no, just don't tell your friends and family about the condo.  Are your friends and family the type that will want to stay in it for long periods of time or perhaps have their friends stay in it?

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    I recommend no more than 25% and DO NOT remove the cleaning fee or anything else. 25% off the base rent rate should be sufficient. If you make it too cheap, they'll abuse your graciousness.

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  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    3y

    @Jonathan Bombaci


    It’s good to start think about this now.  I don’t charge family to use it. Close friends I give a 50% discount.  I try to only let them use it in the off season when guests don’t book that often. I’m in a beach vacation market so I have an off season.  When I bought I always wanted to share with family. It’s only been a couple times when family wanted to use it.  Not a problem for me.  

    4Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    3y

    As Hannibal Lector said, "Quid Pro Quo".

    2Reply
  • Nick HierscheBusiness Member
    Lender · Miami, FL · Member since 2020 · 27 posts · 17 votes
    3y

    I use our self booking website for friends and family, then it is simply a discount code that you can give out and not stress!

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Nathan Gesner:

    I recommend no more than 25% and DO NOT remove the cleaning fee or anything else. 25% off the base rent rate should be sufficient. If you make it too cheap, they'll abuse your graciousness.


     This sounds like a good discount and I would not do mote than this.

    2Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    I’ve been chewing on the friends and family discount thing for awhile. I’ve got a different angle on it. I’ve reconnected with old friends with a focus on supporting their businesses. One is a high school friend who now cuts my hair. She does a fantastic job, we get to catch up, she’s a local family owned business etc… on no level would I even think to ask her for a discount. I’m so happy I can afford her price, which is not a lot but still - I always pay about 50% ABOVE what she charges after tips. She has kids, a husband, etc - how rude would it be for me to walk into her business after not seeing her for a decade and demand a discount. 

    What I’m getting at is your true friends will be happy to pay the full price.

    Okay so like, your mom. She carried you in her body for 9 months… give Mom a discount. Haha. But anyone else , shouldn’t expect it. if you want to take off 5% or a cleaning fee okay fine. 

    This is just my 2 cents but it’s part of a bigger mindset shift I’ve been on. Best wishes. 

    4Reply
  • Ash Hegde
    Lender · Fort Lauderdale, FL (Lending in FL CT GA MI PA) · Member since 2022 · 470 posts · 349 votes
    3y
    Quote from @Nick Hiersche:

    I use our self booking website for friends and family, then it is simply a discount code that you can give out and not stress!


     This is really great idea!

    2Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    3y
    My true friends - which is a pretty small circle - I personally would let them use my place for nothing with the caveat that it's an open week not already booked and generally in a slow season. My family members same thing, though I'd probably make a reasonable exception to the slow season thing for family. Everyone else - neighbors, friendly acquaintances, etc - I let them know about the place (always be marketing) and would give them a discount code or something similar that would take 10-25% off the price.
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  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    3y

    @Jonathan Bombaci

    Are some of you saying you would charge your parents to use your STR. That's seems completely heartless. If you want to charge your brothers and sisters that's up to you. It depends on your own philosophy. I make enough money for my family to use it occasionally.

    2Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y

    I will start with saying i am financially comfortable and may have a different policy if I was in a different financial position. 

    We have so far let all friends and family (including distant family) stay for only the cleaning fee (and I would pay the cleaning fee for my guests who were low income).  This has included family that I seldom see. 

    One of our reasons for us having the STRs are so that we can use it.  The we includes family and friends.  So far it has not been an issue except once with my son.  He reserved the place for 3 nights but left after one.  The going rate at that time of year was upper $200 a night (off season weekend rates, very close to a year ago). I considered it irresponsible.  He has asked if any of our STRs are open over Halloween.  I asked him which he was interested in and that he was going to use it for the reserved nights (so he is well aware I am still not happy about him reserving it and not using it for most of the reserved duration).  So far no reply as he knows he better be using it unless there is an emergency (or maybe he is pondering which unit he wants to know availability).

    I think it great you create a policy.  You do not indicate if you use a PM.  In my market the prevailing PM fee is 25% (and what we pay) and not charged for friends and family that book the unit (owner’s bookings for guests).  This implies giving friends and family a 25% reduction would not cost me a $0.01.  I believe this level of discount in all cases (even distant family and occasional friends) is easy if you have a PM as I would never expect to make more from friends and family than I would have made otherwise.  

    good luck


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  • Tiffany Cohen
    Member since 2022 · 57 posts · 43 votes
    3y

    Agree I would go the self booking website and offer a discount code.  It's also nice to be able to track how often and how much revenue is accounted for with friends and/or family. I'm all about having the data to use so any way you can capture that I think might be helpful.  Even to track what times of year and how far out they are booking/reserving it.

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Kenneth Garrett:

    @Jonathan Bombaci

    Are some of you saying you would charge your parents to use your STR. That's seems completely heartless. If you want to charge your brothers and sisters that's up to you. It depends on your own philosophy. I make enough money for my family to use it occasionally.


    I moved my mom to be near me last year and she's living in one of my rentals for free. It's cost me almost $20,000 this past year, but I'll let her stay there until she can't or she passes. However, I wouldn't say it's "heartless" to charge parents something. I would say it's heartless for relatives to expect to reap the benefits of my hard work. I didn't inherit these properties or win the lottery. I have them because I've hustled, sacrificed, saved, self educated, and otherwise taken the road less traveled. My relatives chose to take the common path and do the minimum to get by. 

    I think 25% is awfully generous.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Dan H.:

    In my case, I still pay the PM the full management fee. If it rents for $200 a night, my relative pays $150 a night, but I still pay the $50 a night to my PM. I'm not asking my PM to take a pay cut for my family member's benefit!

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    No more than 25%. Except immediate family varies case by case.

    @Kenneth Garrett If you want to give people freebies, go ahead, but don't judge others. You don't know anything about other people's lives.

    2Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    3y
    Quote from @Jonathan Bombaci:

    We just finished renovating an investment condo in a vacation destination. We do quite a bit of long term rentals but this one was bought with the intention of using it ourselves and then renting it out when we're not using it. I think we bought it right and the mortgage + HOA fee ends up being about $1000 a month. Based on other comparable vacation rentals (in worse condition) in the same area we should be able to get $1200-$1500 per week. Which I see as a bonus since it's really a vacation spot for the family when we want to use it. We're able to support the monthly payments without renting it out but I like having assets, not liabilities, on our balance sheet.

    I am pretty bad at saying no to people I like. The question is do we offer a “friends and family discount” of like 50% off to people we know that don’t book through Airbnb? The reason why I want to establish a rule early on is because I’m the kind of person that would let people use it for free but don’t want to back myself into a awkward situation.


    Also something to think about is limiting the number of people that can stay. What if you have 3 groups of family or friends wanting to come for a week each during peak season? That could kill your yearly cash flow if you're giving 50% discounts.

    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    So our cleaner and her family and extended family are staying at the lake house right now. I am not charging for her stay at all. She is doing all the clean up and meeting the furnace guy for service. She does a great job on our house. It is about an hour down lake from town.

    Family members who want to use the house get to for zero cost except for the cleaning fee.

    I would most likely do the same for friends but so far none have asked. 

    2Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    We have discount codes programmed for various things.  The discounts aren't huge but are appreciated.  Anyone booking directly already saves the Airbnb or VRBO fees.

    1Reply
  • Melissa Nash
    Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
    3y

    this is a hard one! I set expectations immediately. 

    Setting Expectations 

    #1 My family knows that this is a business for me upfront. 

    #2 If they want to "book" then they have to pay full price with 10% discount for family/friends * off airbnb- so no other fees are charged

    #3 If property isn't booked then I do allow for last minute big discounts,  then I do a flat $150/night plus cleaning fee. Its better than sitting empty and your family should be grateful they get to stay there at such a big discount. 

    This provides rules and open communication so there are no misunderstandings or family/friends taking advantage.  

    Best of luck and congrats on your property. 

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @John Underwood:
    Quote from @Nathan Gesner:

    I recommend no more than 25% and DO NOT remove the cleaning fee or anything else. 25% off the base rent rate should be sufficient. If you make it too cheap, they'll abuse your graciousness.


     This sounds like a good discount and I would not do mote than this.


     I would be the absolute worst I could never charge family and friends.. would feel to awkward. 

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  • Albert Blair
    Member since 2022 · 33 posts · 15 votes
    3y

    That does seem like a good discount. You are still making income in the property while keeping the peace with the family.

    1Reply
  • Tiffany Cohen
    Member since 2022 · 57 posts · 43 votes
    3y
    Quote from @Leslie Anne Morris:

    We have discount codes programmed for various things.  The discounts aren't huge but are appreciated.  Anyone booking directly already saves the Airbnb or VRBO fees.

    Curious what some of the different types of discounts you offer and the percentage? Friends, family and… 
    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Dan H.:

    In my case, I still pay the PM the full management fee. If it rents for $200 a night, my relative pays $150 a night, but I still pay the $50 a night to my PM. I'm not asking my PM to take a pay cut for my family member's benefit!


    In our case no PM fees is automatic when the owner reserves and in the management agreement. The PM knows that we want to be able to have friends and family use our units. Also at 25% for their bookings (excluding our friends and family owner bookings) they are doing ok as we have not asked for discount for having 4 STRs (at least not yet - I have contemplated asking for a discount as I pay the same percentage as those with one STR). I do not look at owner bookings as a cut of PM compensation, the owner bookings pretty much only uses the cleaning service. The PM is not expected to answer questions, etc for the owner reservations.

    By the way, the PM does not charge the mgmt fees when their employees book our units.  we also give the PM employees a discount.  2 of our units are booked by a PM employee this weekend.  We are only charging $100/night for each unit which is significantly below our usual rate.  

    2Reply
  • Alex F.
    Investor · Plymouth, MN · Member since 2020 · 157 posts · 102 votes
    3y

    @Jonathan Bombaci. Interesting discussion. We give immediate family free. Everyone else (friends, cousins, etc) gets a 5pct discount and booking via our direct site so no Airbnb/VRBO fees.

    1Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y
    Quote from @Tiffany Cohen:
    Quote from @Leslie Anne Morris:

    We have discount codes programmed for various things.  The discounts aren't huge but are appreciated.  Anyone booking directly already saves the Airbnb or VRBO fees.

    Curious what some of the different types of discounts you offer and the percentage? Friends, family and… 

     We usually only do 5 or 10%.  The codes are for cabin owners to give to their friends and family (I own a property management company).  We also use retargeting codes to get guests to rebook.

    2Reply
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