Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
I am in the process of taking on clients for co-hosting in addition to continuing to self-manage my own portfolio want to get a feel for what folks are charging their clients.
I've spoken to a few folks already that manage between 15-30 and I've received feedback that they charge anywhere from 20-30%.
For context, I've already decided to charge a percentage of Gross Booking Revenue excluding Cleaning Fee. The Cleaning Fee will be distributed to the Cleaner 1:1.
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Here are my questions for folks here:
- What percentage of bookings do you charge your client? Gross or Net?
- What services do you include for that percentage?
- Do you offer tiered services or one flat rate?
- Do you charge a set-up fee? Any other monthly maintenance fees assessed?
- Minimum period contract term or agreement?
- Add-on services offered and how do you calculate the price?
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Thanks in advance for any insight into your business that you can provide.
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
2y
It is really market dependent. I see you are in NJ and I am managing one in Ventnor (for a client who lives in NY but has 4 other houses managed by us in FL) at 20%. Full service.
The majority of my clients are at 20%. I used to be able to get 25% in the past but not anymore. My competition ranges from 15-20% but I have some value adds that allow me to be at the higher end. I also have some high producing properties and multi unit owners priced 15% and 17%.
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
2y
Thanks for the feedback! 20% just seems a little low to me for full-service (communication, revenue management, multiple channels, turnover and maintenance).
I've had some intake calls and 25% seems to be agreeable when compared to competitors.
Do you have a minimum that you charge per month to cover fixed costs? Is there a minimum revenue amount you look to make it worth your while?
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
2y
Thats great, the more you can get the better!
We do not have any minimums - although we do have seasonality here in Tampa, our units are active and get activity year round so it is not really necessary. I could see in NJ where you would want to because the winter time is dead.
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
2y
Yes, cash flow is hard to come by but STR management is certainly a full service offering and requires a good amount of time, energy and care to be done right. I don't dream of managing dozens and dozens of listings so this will be quality versus churn and burn service.
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
2y
It would be great if more folks could provide responses to the survey to aid in discussion instead of just commenting on their objection to performance fees :-)
It would be great if more folks could provide responses to the survey to aid in discussion instead of just commenting on their objection to performance fees :-)
well i mean, you are on a board who's members primarily self-manage. You had to have expected similar responses. and with loan rates, purchase prices and the economy, I couldn't imagine paying 25% to anyone unless they could guarantee some pretty high returns. Ones that I wouldn't believe they could do after my experience of managing mine and the returns i get.
Property Manager · Los Angeles, CA · Member since 2022 · 590 posts · 463 votes
2y
We're property managers in Los Angeles for STRs and MTRs. We charge 15% for MTRs, 20% for STRs. I know some who do 25%, 30% sounds way too high to me. This is off gross rent.
We provide full service management with the goal of making it hands off for our clients.
No tiers, just one service package.
Yes, we have an onboarding fee which includes professional photos and a cleaning. No monthly fees besides the management fee.
No long term contract
We sometimes help with design and furnishing as an additional service.
I help others who want to start a co-hosting business, so please let me know if there's any other ways I can help you =)
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
2y
To be honest, I am surprised by the responses. They seem to be quite negative with not much intended value add.
The questions that I asked were thoughtful and were more about the composition of service offerings from folks who offer those services to property owners than just about the percentage charged for management.
The title of the thread is co-hosting and management of STR's.
I would have expected to get more feedback about the questions that I asked from people that property manage or co-host.
There are many people who have experienced down years due to poor management (listings, channels, revenue management) which means there is plenty of room for improvement and an opportunity to earn more for these clients even with the management fee ranges mentioned.
Real Estate Agent · Indianapolis, IN · Member since 2022 · 184 posts · 75 votes
2y
Personally, I would say that anything more than ~22% is a little steep, in my opinion. I am in the Indianapolis market so it may be different, but we charge 18% and thats pretty standard. We also do full management, not co-hosting. We charge on gross revenue.
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
2y
It's not how much you pay, but how much you net. This seems to be a very difficult concept to comprehend.
Property Managers are not an off-the-rack commodity that perform equally.
Patrick Mahomes and Carson Wentz both play quarterback for the Kansas City Chiefs. But is Carson Wentz the better value because his salary is less than 10 percent of Mahomes'? If I go and volunteer to play for the Chiefs for free, does that make me the best value of the three?
I have one Full Time Employee (and well paid) for every 10 properties we manage. I don't make much money this way, but that's the way I want it, because my performance bar is very high. So what I "charge" versus some other random company is irrelevant.
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
2y
For us it varies by market but in our primary market 15% plus a small monthly fee to help cover software costs etc if it's a lower gross property.
That's full service, host doesn't have to worry about anything and can forget the property even exists if they want to.
We do have tiered services where it's 10% (w/ no or lower monthly fee) if the owner wants us to only do one side of it (either manage bookings but not guests/cleanings/maintenance, or vice versa).
25-30% used to be more normal but that's legacy pricing now, for a couple of reasons.
1) Of course margins are much thinner for owners now that revenue has generally come down across the board from the peak, while home prices and interest rates have risen alongside that.
2) Probably even more important, a simple supply/demand equation, particular to the case of increased supply. Simply put, there are a lot more co-hosts/managers like myself and yourself who got started self-managing their own properties around covid and are now afraid or unwilling to buy new properties at current prices/rates, but want to use their knowledge/experience to keep increasing income in the space. So if owner's shop around at all, they're going to find plenty willing to do it cheaper. We even see some charging 10-12% in one of our markets now.
That's not to say 25-30% isn't possible anymore, but it most likely would have to come via a referral where the owner isn't shopping around at all.
Given the audience I'm not surprised. If you've found your way to this forum and stayed for a while, you are probably in the upper tiers in terms of hosting savvy and have therefore learned how to automate the process while giving excellent service. Whereas the kind of hosts who don't post here are more likely to be in the "afraid of getting calls about flooding tolets at 2 am" camp and/or work long hours that make hosting a challenge.
If I worked a true full time+ job where I couldn't pull my phone out or take a call whenever I please then I would gladly farm it out, but since I usually can I will gladly pay myself $60-100/hour to self manage from a smart phone.
We're property managers in Los Angeles for STRs and MTRs. We charge 15% for MTRs, 20% for STRs. I know some who do 25%, 30% sounds way too high to me. This is off gross rent.
Allen,
Thanks so much for providing this!
Do you provide consumables (toilet paper, coffee, paper towel, etc.) for your clients or do you set aside money for to replenish?
Do you own the listings you create or do you include them for your clients?
Would love to connect more and will send you a DM.
Personally, I would say that anything more than ~22% is a little steep...
Hey Kiki,
Thanks for your thoughts and I think everyone is entitled to their opinion. I do believe that it is different for everyone depending on their goals, needs and the quality of the services provided.
Do you have any other insights on what you do for your clients or if there is a part of your core service that you think is most valuable in your offering?
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
2y
Ryan,
Thanks for providing this insight. I agree with a lot of the points that you made and while I know it's late to the party as many have already leveraged the COVID boom into managing others, I feel like a lot of folks will be changing managers this year due to poor performance from under-skilled or stagnant managers who set it and forgot it.
I think two tiers of services to offer flexibility to the owner is a good idea and makes sense.
A few more questions for discussion...
What do you, or anyone else reading on the thread, do when a potential client has a property that needs decor work before listing?
For example, I have a potential client that has decent unit with a solid location but the decor/furnishings remind of a frat boy out of college meets IKEA/Amazon.
A unit like this will suffer from poor design and the reviews will show as well which I do not want affecting my reputation or Super Host status.
Do I just decline taking them on if they are not willing to work on it? I assume so but would love some opinions on how you handle this!
Rental Property Investor · Victor, ID · Member since 2016 · 59 posts · 94 votes
2y
We’re now at 30% of gross rents.
We’re in an expensive mountain market, but the key takeaway here is our clients are NOT investors. Wealthy 2nd homeowners looking for someone to manage their home 11 months out of the year will gladly pay higher fees if you can demonstrate you’ll properly take care of their home and perform well. I also have zero interest in positioning ourselves as a “value” offering in an industry where top performers can 2x + the cheaper companies. The high PM costs can absolutely be justified.
There’s plenty of opportunity to charge higher rates if you can build a brand, find the right clientele, and of course deliver results.
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
Sorry for all the negativity but due to the influences in Biggerpockets, self-managing is the way to go on this forum. But as a co-host myself that is part of a large (several hundred) STR co-host mastermind, I can answer all your questions!
The market rate for a full-service STR co-hosting company is 25% gross after cleaning fees.
On average the following would be included... 24/7 guest communication, vender oversight, weekly updates on the OTA listings, make sure maintenance and deep cleanings get done...but owner pays the expense, stain removal on linens, marketing the property, keep supplies stocked...again owner pays the expense, keep property guidebooks updated (digital copy and hard copy), security (locks, cameras etc.) oversight, bi-weekly pricing software management, walk the property regularly, provide monthly reports, and obviously any guest problems that arise time to time. Some companies offer social media marketing as well. The list could go on and on! It's pretty much a no stress, no hassle vacation homeowner experience, and I wouldn't take anything less than 25% for all the work we put into a property.
For the most part we only offer one flat rate, but some companies do offer tiers depending on what a potential client is interested in and if they want the contract.
Definitely charge a set-up fee! We include the cost of all the smart tech we want installed that the homeowner keeps, safety items we require in each property, and the items/signs we use to "brand" the home to our company, as well as our time setting up the listings, pricing, guidebooks, auto messaging, cleaning up the supply closets, kitchens, etc. We stand out by provided clean and organized homes to guests and cleaners by labeling where things go in cabinets and supply closets.
Our contract is a month-by-month basis, but we want a 30-day notification of cancellation, and we would do the same if we let a client go. If we are convinced to go down to 20%, the client would have to commit to at least a 1-year contract.
So far, we're not offering any add-on services, but some companies do. I'm not exactly sure how you would want to calculate the price since I've heard so many different ways to do it. Many add 10% to the original cost of the item or service, or if they partner with a cook, massagist, etc. they would get 5-8% of the amount the person received. But the host does a good bit of marketing for that cook, massagist, etc. It's not exactly "free money".
Hopefully that answers some of your questions, feel free to ask any more if you want!
You're so right that many homeowners can't host due to time constraints, flat hate hosting, or other personal reasons, yet have a bad PM that is not pushing the home to be the best it could. There's so much low hanging fruit when it comes to homeowners willing to make a change that it's not even funny! So, if you're interested go for it! Create a standard...including on the design side of things...and stick to it. If you know the property needs improvements, professionally make them known to the owner. If they aren't willing to bring their property to the standard that you know would make a difference in bookings, don't take it on. There are always other homeowners waiting to meet an operator like you! Knowing your worth and what you can do to help homeowners, makes all the difference as you embark on this new journey! It's also important for all the naysayers that'll come along and trust me they do in many different ways.
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