Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
I received this lovely postcard in the mail today, from a well-known, very large management company in the Smokies. They are offering to manage my cabin for a paltry 10 percent fee! Or are they?
I went to their website to book a property. They've generously marked down the rent by 30 percent, but have made up for most of that with fees that they keep for themselves! Follow along with me on this:
The original rent was scheduled to be $1,533. If that was my cabin, I would have enjoyed 90 percent of that, or $1,380.
But because of all of the fees they charge - $417 in junk fees and "club" membership fees that they keep - they have marked down the rent - the part they share with me - to $945. So instead of $1,380, I get $851 - 90 percent of the reduced rent.
So here are my trivia questions:
1. Is my management fee 10 percent, or 37.6 percent?
2. The couple on the postcard doing the high-five - are those the cabin owners, or the management company owners?
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
3y
I know this company :D
People here in FL do it too. Even Vacasa does it. They shortsell the owners revenue expectation, discount the rent, jack up cleaning fee and other fees and keep all of the profit. It is a pain to compete with but I believe being transparent with fees is paramount to long term success as a PM company.
- Cleaning fee kept by PM has about $20-40 profit depending on unit size and this profit covers all consumables for our starter packs (toilet paper, paper towels, soaps, etc) so the guest foots the bill not the owner.
- Pet fees kept by PM that funds our damage waiver program. Since Airbnb is very difficult to collect damages from we insure every reservation for $1000-2000 depending on unit size.
- Early Check in Late check out fee kept by PM to cover logistics. Capped at 4 hour max, any more time requires an extra days rent paid.
- Extra person fees kept by owner at normal split
- Pool heat fee is split 50/50 if applicable.
Any other way I feel is dishonest. Discounting rent to throw in a bunch of other junk fees and programs to be just a hair cheaper than booking on Airbnb and keeping all of it is immoral.
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Correction: They aren't charging a $128 membership fee. They're just giving away yet another $128 in reduced rent to join their "free" club. But the numbers work out the same regardless.
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
3y
I know this company :D
People here in FL do it too. Even Vacasa does it. They shortsell the owners revenue expectation, discount the rent, jack up cleaning fee and other fees and keep all of the profit. It is a pain to compete with but I believe being transparent with fees is paramount to long term success as a PM company.
- Cleaning fee kept by PM has about $20-40 profit depending on unit size and this profit covers all consumables for our starter packs (toilet paper, paper towels, soaps, etc) so the guest foots the bill not the owner.
- Pet fees kept by PM that funds our damage waiver program. Since Airbnb is very difficult to collect damages from we insure every reservation for $1000-2000 depending on unit size.
- Early Check in Late check out fee kept by PM to cover logistics. Capped at 4 hour max, any more time requires an extra days rent paid.
- Extra person fees kept by owner at normal split
- Pool heat fee is split 50/50 if applicable.
Any other way I feel is dishonest. Discounting rent to throw in a bunch of other junk fees and programs to be just a hair cheaper than booking on Airbnb and keeping all of it is immoral.
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
many PM lenders and HML follow this same play book and or just other lenders.
people focus on POINTS.. but when they get there settlement statements and there are junk fee's that add up to more than double the points
its too late the loan is ready and they just close anyway.. Same concept suck them in on low points and junk fee them to death.
the reality in lendiing though is you cant stay in business only charging a point or so.. you have to either get junk fee's or a pretty nice interest rate spread.
Rental Property Investor · Palm Springs, CA · Member since 2016 · 138 posts · 38 votes
3y
@Andrew Steffens
Interesting set up. Do owners complain about you keeping pet fee and early/late check out? Also why don’t you just charge more for the waiver then it’s costing you?
We charge a 20-25% PM fee and include any upsells in the gross revenue that we are charging PM for. Ex) any upsells like pet fee and pool cleanings go to owners but we charge our PM fee on that. Some owners have expressed disapproval with that as pool heating can be considered a pass through expense.
Interesting set up. Do owners complain about you keeping pet fee and early/late check out? Also why don’t you just charge more for the waiver then it’s costing you?
We charge a 20-25% PM fee and include any upsells in the gross revenue that we are charging PM for. Ex) any upsells like pet fee and pool cleanings go to owners but we charge our PM fee on that. Some owners have expressed disapproval with that as pool heating can be considered a pass through expense.
Owners do not complain I think mostly because we are up front about it from the beginning. The pet fee funds our waiver program, there is no cost other than what we have to replace. There is still profit for the company. As for early check in/late check out frequently we have to re-route staff to accommodate guests which we would normally charge the owner for, so it is not much of a profit for us but it makes the guests happy (hopefully leading to better reviews).