New to STR management for others and seeking your expert input

Green Bay, Wisconsin
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New to STR management for others and seeking your expert input

Katie HartungPro Member
Rental Property Investor · Durand, WI · Member since 2021 · 15 posts · 2 votes

I was contacted to help manage a STR in my market which is Midwest WI as I already own and manage 3 of my own STRs and am doing well with them. Their property has a TON of potential and I can envision it being a great success. Below is the package I proposed to them as they want to be completely hands off when it is furnished. I would be using my own software and doing the day to day. I have never managed anything other than what has been in our own portfolio which is 3 (although we just closed on our 4th and are going to BRRRR it) long term rentals and 3 short term rentals. When I sent this to the property owner he thought the commission rate was too much. Am I completely off base? I am totally open to ideas and constructive criticism as I stated I am new to this and would like to learn from all of you experts:) Thank you so much in advance!

Here is what I proposed:

  • Setup fees : Administration Setup:

One Time Fee: $400

Guidebook: Using professional photos give the guests a professional tour of the house and how the home works (Wifi passwords // How to use grill // How to use propane fireplace // Hot tub instructions // Sauna instructions //Check in and check out instructions //where extras may be stored

OTA (Online Travel Agency) setups: taking professional photos and actively updating your listing on popular platforms;

PMS (Property Management System) Setup

Smart Pricing Set up

Website integration

Other (furniture arrangement / design / décor shopping and set up)

$50 per hour

  • · Placement fees
  • · Marketing Cost: Variable depending on needs/wants for marketing
    • Facebook Ads
  • Google Ads
  • Cleaners: Set up procedures/take pics of expectations
  • · Management fee—30%

Guest communication

Cleaner communication

Setting Rental rate

Dealing with small maintenance issues

Booking Coordination

Smart Lock integration

Keeping supplies stocked (TP, paper towel, all cleaning products, coffee, filters, creamer, sugars, teas,)

(Receipts would be submitted on a monthly basis for either reimbursement or book keeping purposes)

Encouraging guests to leave good reviews by periodically checking in, providing a review template, and ensuring guests receive the amenities they are looking for

Continued marketing

Major Maintenance fees—Owner

  • Cleaning and laundry services fees: Cleaning fee to the guest depending on how cleaner wants to charge
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Ken Boone
Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
2y

So it really depends on your goals.  You need to ask yourself why would you be managing this other person's property?  We have been asked this question a lot ourselves.  We always say no.  Here are some things to consider:

Are you doing this as more of a side hustle or do you want to start a rental mgmt business?

As someone mentioned, 30% might be high in the area, or it might not be.  But you will most likely not be able to get premium rates until you have a proven record in managing other peoples property.   So the facts are that you will only get paid roughly equal to the market rate for this service in your area.  You might also have to look into licensing in order to manage someone else's property and see if that comes in to play and how much that might cost.

The next question, once you realize what your potential cash flow from this will be, is if the time you spend on it, worth the extra cash you will get.  Would that time be more valuable growing your own business or managing others?

So the time it takes to manage someone else property is going to take more time than just managing your own.  You have to now include the extra time spent communicating issues, invoices, etc..with the property owner.

Whether you do it or not is not a right or wrong matter, but you need to understand why you are doing it and if the extra cash will be worth your time.

We have always turned down the requests to manage other people's properties, because I feel like the amount of money I would receive from managing someone else property would not be worth the time to me.  I would rather put that time in growing my businesses. 

Having said that, I don't have a desire to build a property management business, but you might and that would change things.

Hope this helps.





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  • Garrett BrownPro Member
    Rental Property Investor · Houston, TX · Member since 2024 · 505 posts · 551 votes
    2y

    Hey Katie! Congrats on all of your success and an even bigger step in growing your management business. I think overall the things you supply are on par with most co-hosting companies. What you charge is always completely up to you because only you truly know your value vs. time spent. I will say I think the average is closer to 20% of gross revenue. across the board for this type of service. I have seen as low as 10% and as high as 40% though so if you truly feel 30% is the sweet spot for you, stick to your guns!
    If you want to make a bigger business out of management, then I would maybe drop it down some to get the client on board. Your best referral method will be owners telling other owners how great you have been.

    [email protected]
    BiggerPockets
    0Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    2y

    So it really depends on your goals.  You need to ask yourself why would you be managing this other person's property?  We have been asked this question a lot ourselves.  We always say no.  Here are some things to consider:

    Are you doing this as more of a side hustle or do you want to start a rental mgmt business?

    As someone mentioned, 30% might be high in the area, or it might not be.  But you will most likely not be able to get premium rates until you have a proven record in managing other peoples property.   So the facts are that you will only get paid roughly equal to the market rate for this service in your area.  You might also have to look into licensing in order to manage someone else's property and see if that comes in to play and how much that might cost.

    The next question, once you realize what your potential cash flow from this will be, is if the time you spend on it, worth the extra cash you will get.  Would that time be more valuable growing your own business or managing others?

    So the time it takes to manage someone else property is going to take more time than just managing your own.  You have to now include the extra time spent communicating issues, invoices, etc..with the property owner.

    Whether you do it or not is not a right or wrong matter, but you need to understand why you are doing it and if the extra cash will be worth your time.

    We have always turned down the requests to manage other people's properties, because I feel like the amount of money I would receive from managing someone else property would not be worth the time to me.  I would rather put that time in growing my businesses. 

    Having said that, I don't have a desire to build a property management business, but you might and that would change things.

    Hope this helps.





    2Reply
  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    To be a property manager in Wisconsin requires you to have a real estate broker's license.  If you want to be what is called a co-host, where you don't need to be a broker, then you can't handle the money or financial negotiations with guests.  So that means the owners will still have to do some work.  Most co-hosts I'm aware of are charging 20% of the gross.  Your $400 set up fee seems low for all you've listed.  I've seen set up fees of $1500 or so.  

    1Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    2y
    Quote from @Lauren Kormylo:

    To be a property manager in Wisconsin requires you to have a real estate broker's license.  If you want to be what is called a co-host, where you don't need to be a broker, then you can't handle the money or financial negotiations with guests.  So that means the owners will still have to do some work.  Most co-hosts I'm aware of are charging 20% of the gross.  Your $400 set up fee seems low for all you've listed.  I've seen set up fees of $1500 or so.  


     I agree that the set up fees seem very low for what you are doing.  I mean just the photographer alone is going to cost more than that.

    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    I agree with most of what is said above.  Our onboarding fee (which we currently waive for new clients as a marketing strategy) was $1,500.  However, and I am not certain of your local market, 30% is high.  Here in FL I would say 20% is standard.  The range for full service is 15-25%.

    Also as mentioned above you ought to be licensed and properly insured if you are to be a property manager.  If you are co-hosting it is then not really full service.

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
    WebsiteView Page
    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2y

    My first question to protect you and the property owner is are you licensed and insured to be able to manage someone else's property?

    1Reply
  • Sean O'KeefePro Member
    CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 870 votes
    2y

    @Katie Hartung we work with a lot of real estate investors and help them evaluate property managers in their area, if they ask. 

    Would be happy to connect and learn more about your new PM business and learn more about how you provide a great customer experience to STR owners in WI.

    [email protected]628-241-0888
    0Reply
  • Braedon Page
    Member since 2024 · 31 posts · 16 votes
    2y
    Quote from @Andrew Steffens:

    I agree with most of what is said above.  Our onboarding fee (which we currently waive for new clients as a marketing strategy) was $1,500.  However, and I am not certain of your local market, 30% is high.  Here in FL I would say 20% is standard.  The range for full service is 15-25%.

    Also as mentioned above you ought to be licensed and properly insured if you are to be a property manager.  If you are co-hosting it is then not really full service.


     Echoing this - Andrew is the man in this department and has provided us with tons of value. As we've brought on clients for management and talked percentages with them, it seems that most people have a hard time differentiating the service they'll be getting from a manager that charges a high percentage vs a low percentage. If you're going to swing for the fences and try for anything above 20-25%, you're going to have to make a strong case that you'll be putting more money in their pocket as opposed to a manager who charges less. If you can articulate this to them and get them to understand it you might have a shot but for your first management client it might be a bit aggressive. 

    1Reply
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