So considering a major life move :). I'm new at this STVR biz (about 2 years) but feel I have a good handle on what it takes to make money in this space managing our 2 properties on our own. As we continue to build our own portfolio of properties, I am considering opening my own property management company in my core market. Based on my experience and study, I feel the local property management complanies are not that sophisticated and I have access to deed records and other resources that I can get to the owners of over 1500 properties on the platforms pretty easily. Of course, I would need to energize homeowners of my value... not asking for advice necessarily there. Just wondering what a typical fee would be for high level property management that would include: • Listing property on AirBnb, HomeAway, and Corporate Website • Manage calendar and booking process from start to end • Manage cleaning and basic maintenance (lawn/small repair) • Pay State sales tax and local hotel/motel tax on behalf of owner • Supply basic supplies (paper towels/toilet paper/coffee/etc.) If I provide for a reasonable profit margin, I am thinking 40% of gross revenue would cover all of the above. An example may look like this: Total Revenue $50,000 Cleaning Fees $4,000 Taxes $6,500 Platform Fees $1,500 Suppplies $1,000 Maintenance $2,000 Profit $5,000 Total Fees $20,000 (40%) Am I including too much? (paying taxes for instance). Should I pass through supplies and lawn maintenance? Am I missing anything? Is my profit margin off? Would I be competitive? I know I need to do more research, just asking for a quick view and comments if any to see if I'm on the right track.

@Sean Wilt First thing you should do is look at what the norm is in your market. I own one property where 20% is the norm. I own others where it's 30-40%. You can charge a LITTLE more than others if you're offering more services, but on a gut level, if you're 40% and your competitors are, say, 25%, nobody's gonna call you. Ditto for your services. First learn what your competition provides and build off their model, especially in terms of which costs are absorbed and which are passed through. And really, the FIRST first thing you should do is know your local laws regarding property management, to make sure you meet all the requirements to do it legally. :)

We pay our property manager 30% of the nightly fee, they collect and keep the cleaning fee and taxes from the renter. The management company covers all of the supplies and handles all aspects of the rental process. They are incredibly good at what they do and keep our cabin rented all the time. In February it was rented 21 out of 28 days and has been rented all but 1 weekend since September.

I'm taking a SWAG to say that your cleaning fees and supplies will be higher. Scientific Wild Azz Guess.

In my area, property management for vacation rentals can be as much as 50% of gross income, so you've definitely gotten some solid advice to check around to see what others area charging. I also started managing other units in my area after successfully managing my own. I started with a pretty low percentage for our first management client (25% for full service, which is low in my area) because I wanted to build trust and learn the differences between managing my own units and managing others. As we grew and learned, got more feedback, it was easier to set fees and figure out what should be included and what shouldn't. Also, the first few clients we had were so thrilled about the good service they were getting at a lower price that they've given us rave reviews and brought us other clients by word of mouth. All that to say I would start a little lower than what you think the market will bear to start off with some super stoked clients who will help you do all the advertising for you in the future :) Best of luck!

@Sean Wilt Hi Sean, Congratulations on starting this exciting journey! The standard property management fee for single-family rentals up through small multifamily communities is between 7% and 10% of total monthly revenue. With the exception of select corporate expenses, all associated fees are passed through to the client. In effect, each client will be maintaining a P&L for their assets, and you will be managing it. The fees for larger multifamily communities range between 2.5% to 7%. The lenders on these deals can have significant influence over what managers they approve to manage the property. Please feel at liberty to reach out to me directly if I may assist. I wish you well! All the best, Daniel Reyes

I have heard the norm on PM fees being around 30%. I that is the norm for your area then you should be able to build a healthy business. Try calling a couple of PM companies in your area and see what they say their rate is and what that includes.

@January Johnson Yes, Zillow is a joke. If I could sell any of my properties at their Zestimate, it would be more than double of what the real purchase price was. Zestimate is like a MSRP for a new vehicle. It's a starting price to go down from in a negotiation. Nobody pays MSRP.

Sounds good @Michael Greenberg. If you're not too busy with family stuff, let's grab coffee! Best, Ethan

@Michael Greenberg - I manage the properties myself. I appreciate your advice on setting up more automation and assistance. I am a bit of a control freak, and I actually enjoy most aspects of managing the business. But I’m reaching a tipping point where I’m willing to give up the joys of balancing my books and unclogging broken toilets! ; )

71
Posts: 29
Votes

Sean WiltPoster

Investor
Savannah, GA

Short-Term & Vacation Rental Discussions

Property Management Fee???

Sean WiltPoster

Investor
Savannah, GA

Posted March 13, 2019 17:16

So considering a major life move :). I'm new at this STVR biz (about 2 years) but feel I have a good handle on what it takes to make money in this space managing our 2 properties on our own. As we continue to build our own portfolio of properties, I am considering opening my own property management company in my core market.

Based on my experience and study, I feel the local property management complanies are not that sophisticated and I have access to deed records and other resources that I can get to the owners of over 1500 properties on the platforms pretty easily. Of course, I would need to energize homeowners of my value... not asking for advice necessarily there. Just wondering what a typical fee would be for high level property management that would include:

Listing property on AirBnb, HomeAway, and Corporate Website
Manage calendar and booking process from start to end
Manage cleaning and basic maintenance (lawn/small repair)
Pay State sales tax and local hotel/motel tax on behalf of owner
Supply basic supplies (paper towels/toilet paper/coffee/etc.)

If I provide for a reasonable profit margin, I am thinking 40% of gross revenue would cover all of the above. An example may look like this:

Total Revenue $50,000

Cleaning Fees $4,000

Taxes $6,500

Platform Fees $1,500

Suppplies $1,000

Maintenance $2,000

Profit $5,000

Total Fees $20,000 (40%)

Am I including too much? (paying taxes for instance). Should I pass through supplies and lawn maintenance? Am I missing anything? Is my profit margin off? Would I be competitive? I know I need to do more research, just asking for a quick view and comments if any to see if I'm on the right track.

0 Votes

25 Replies

Jump to Last Reply

Property Management Fee???

Most Popular Reply