STR property management fee

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STR property management fee

Amy Canfield

Investor · Madison, WI · Member since 2017 · 19 posts · 21 votes

In your opinion, is 30% a reasonable fee to pay a property manager to do the following:

- Arrange for interior designer/furnishing property (actual expenses I have to pay)

- Promote/advertise rental and respond to all inquiries and manage bookings and provide guest reviews

- Arrange for cleaners and maintenance when needed. Lawn care and snow removal too.

- Provide all consumables (shampoo, toilet paper, soap, etc.)

Assume I am NOT interested in doing this myself to save money.

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Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

Take the 30% off your revenue and you are left with the profit you would probably make with a LTR.

If you're going to run a STR, you should be the PM. I've got 83 beds in 23 doors. The only person I pay is the plumber when he has to run a roto-rooter. The only reason I pay for this service is that I don't like feces on my hands. Running a roto-rooter is a shippy job.

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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
Take the 30% off your revenue and you are left with the profit you would probably make with a LTR.

If you're going to run a STR, you should be the PM. I've got 83 beds in 23 doors. The only person I pay is the plumber when he has to run a roto-rooter. The only reason I pay for this service is that I don't like feces on my hands. Running a roto-rooter is a shippy job.
6 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
In my opinion if you are having to pay a PM 30% of your GROSS rents you will struggle to make any money. Only the PM will be making money.

I think a better way to do this is pay someone some one time fees to furnish property and get it up and running and then self manage.

If you are unwilling to do the little bit of work required to self manage then I would advise you only invest in Long term rentals. This is coming from someone that does self manage my Vacation rental and I know how easy it is to run once you get up and running.

This is just my opinion and I mean no disrespect to you or your question.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
Also check out @Avery Carl's Bigger pockets pod cast that just came out today. Her and her husband @Luke Carl remotely self mange 5 vacation rentals from their phone.
4 Reply
Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
No way. If I paid a property manager that I'd be paying them $75,000 a year. With a few apps and automations, the gig is the equivalent of answering text messages. My 2 year old can answer text messages. I'd rather pay her the $75k to put back for college, or invest into more properties. Or you can hire an overseas VA for next to nothing to take care of it. They can amazon your cleaner replacement items when needed, answer inquiries and leave guest reviews, and there are plenty of apps to automate scheduling the cleaner etc. The only part they couldn't do is the up front decorating. There are also several national options like Vacasa and Evolve that charge less than 30%. Check those out! 30% is too much.
Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
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Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 541 posts · 715 votes
6y
Originally posted by @Avery Carl:
No way. If I paid a property manager that I'd be paying them $75,000 a year. With a few apps and automations, the gig is the equivalent of answering text messages. My 2 year old can answer text messages. I'd rather pay her the $75k to put back for college, or invest into more properties. Or you can hire an overseas VA for next to nothing to take care of it. They can amazon your cleaner replacement items when needed, answer inquiries and leave guest reviews, and there are plenty of apps to automate scheduling the cleaner etc. The only part they couldn't do is the up front decorating. There are also several national options like Vacasa and Evolve that charge less than 30%. Check those out! 30% is too much.

Lmao at Avery’s & @Luke Carl 2 yr old responding to guests. They always have been forward-thinking innovators.

Not to mention you’re double paying on the interior designer. Just hire a designer directly - you dont need a PM to manage a designer, omfggggg!!! Maybe you’re independently wealthy & looking for ways to burn thru money?! Just mail me the money instead!
1 Reply
Jon Crosby
Investor · Roseville, CA · Member since 2016 · 893 posts · 1k+ votes
6y
@Amy Canfield Thanks for the post and here is my 2 cents. :)
It's really about your cash flow situation. If you are even exploring this then it likely means you are not leveraging financing at all because it's very difficult to find an STR that will still cash flow with a 30% PM fee that is financed in the normal 20-30% range. If saving money is your goal, using a PM to do all the little stuff (especially one time stuff) would be counter intuitive to your goal I believe. You would be saving time (and time is of course money) but I don't believe the ongoing PM costs are going to pay back those one time setup costs that you would save in time/money.
Best of luck!

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Amy Canfield
OP
Investor · Madison, WI · Member since 2017 · 19 posts · 21 votes
6y
Ok. So I need to suck it up and go nuts for the next few months while I get something off the ground. I already self manage my own home as a Superhost on Airbnb, so I know what it takes. I'm just feeling overwhelmed at trying to balance a new out-of-town property on top of my full time (plus) job and family life. But, a little craziness now will pay off in the end...and I'll have more money to show for it. (that's me trying to pump myself up...the easy (but less profitable) way was looking too appealing)
Thanks everyone.
6 Reply
Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 541 posts · 715 votes
6y
Originally posted by @Amy Canfield:
Ok. So I need to suck it up and go nuts for the next few months while I get something off the ground. I already self manage my own home as a Superhost on Airbnb, so I know what it takes. I'm just feeling overwhelmed at trying to balance a new out-of-town property on top of my full time (plus) job and family life. But, a little craziness now will pay off in the end...and I'll have more money to show for it. (that's me trying to pump myself up...the easy (but less profitable) way was looking too appealing)
Thanks everyone.

We’re not saying you need to do it all yourself. Its perfectly fine to hire a designer. Just pay them yourself, not through a PM! Be smart about how you spend your $$, thats all.
I know PMs who offer to hire me handymen, cleaners & landscapers. I don’t need that, I can hire those people directly! Pay for each service once not twice :)
2 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Avery Carl can u talk a little about your experience with virtual assistants? Been thinking g about it
0 Reply
Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 541 posts · 715 votes
6y
Originally posted by @Jonathan R McLaughlin:
@Avery Carl can u talk a little about your experience with virtual assistants? Been thinking g about it

I use them a ton. While everyone else wastes their money on a PM (or wastes their time self-managing), I outsource all PM activities & operations to overseas virtual assistants for $4/hr. Win win. My properties are super profitable & I help someone in a 3rd world country afford to feed their kids.
And it frees me up to spend my time doing things I enjoy, like leisure activities or buying new properties. Or posting on here ;-P

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David Bergmann
Property Manager · Columbia, SC · Member since 2017 · 121 posts · 163 votes
6y
In my opinion, 30% is too high. Managing these properties efficiently doesn't take 30% of the gross revenue, it is really not much work if optimized correctly. I would keep trying to find the right person who would be willing to take the responsibilities on for closer to 15% - 20% if you are intent on not self-managing. Also, I do agree with others that the furnishing & design piece should be done ad hoc, rather than lumped into the property management fees.
1 Reply
Wendy Schultz
Property Manager · Wisconsin and Florida · Member since 2017 · 346 posts · 227 votes
6y
It's a matter of personal preference if it's worth it to you to not have to manage your properties and be on call 24/7/365. Most of the owners we manage for don't want to deal with guests and they're willing to pay to have us handle it all. Other property owners want to DIY and handle it all themselves. We have also had owners who started out doing it themselves burnout and ask for us to take the management from them after awhile. The majority of our owners' properties are vacation homes though and not primarily investments so they have different motivations. Try running some numbers to see what makes sense for you!
3 Reply
Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 541 posts · 715 votes
6y
Originally posted by @David Bergmann:
In my opinion, 30% is too high. Managing these properties efficiently doesn't take 30% of the gross revenue, it is really not much work if optimized correctly. I would keep trying to find the right person who would be willing to take the responsibilities on for closer to 15% - 20% if you are intent on not self-managing. Also, I do agree with others that the furnishing & design piece should be done ad hoc, rather than lumped into the property management fees.

I'm with Avery on this - even 15-20% PM fee would cost me like $40k in annual revenue. That's my next downpayment! Simply not worth it to me to use US-based property mgrs. When my cleaners tell me I need a plumber, my VA in Cambodia (who works US hours) can easily call & schedule a plumber for me - no need to give away $40k/yr so someone can call a plumber for me
1 Reply
David Bergmann
Property Manager · Columbia, SC · Member since 2017 · 121 posts · 163 votes
6y
Originally posted by @Mark Miles:
I’m with Avery on this - even 15-20% PM fee would cost me like $40k in annual revenue. That’s my next downpayment! Simply not worth it to me to use US-based property mgrs. When my cleaners tell me I need a plumber, my VA in Cambodia (who works US hours) can easily call & schedule a plumber for me - no need to give away $40k/yr so someone can call a plumber for me

Don't disagreee with your rationale Mark, and I have the same exact mindset which is why I also self manage. In this case though, the OP specifically said in her post "assume I don't want to self manage to save money". So just telling her to self manage seems unhelpful.
1 Reply
Jim BlackburnBusiness Member
Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes
6y
@Amy Canfield
10-15%
954-993-1625
Stairway Mortgage, a Division of NEXA Mortgage LLC597 Reviews
Website View Page
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Ken Latchers
Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
6y
Once it's on the market, almost everything the property manager does can be done very cheaply with software, virtual assistant, well chosen handyman and cleaners, automation, etc. This has been covered many times here.
property managers keep trying to present themselves as doing something useful, when all they do is suck all the profit out of the deal.
3 Reply
Amy Canfield
OP
Investor · Madison, WI · Member since 2017 · 19 posts · 21 votes
6y
@Avery Carl I listened to your podcast tonight - thanks, it was really well done. I've got a whole page of notes. TurnoverBnB and IGMS look great.
1 Reply
Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
@Amy Canfield I'm so glad you found it helpful!
Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
0 Reply
Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
30% is probably not over the top crazy, considering there's probably a lot of running to the property to set it up for the next tenant. While it's a lot of money to pay a PM, especially when you consider what a PM usually does (little). Probably be cheaper to make it an LTR like others have said.
1 Reply
Ruth Blue
Realtor · Pigeon Forge, TN · Member since 2018 · 230 posts · 111 votes
6y
@Amy Canfield PM at 30% seems high. There should be other PM that do not charge as much and still do a great job. Definitely. Something to price and run numbers to see what you want to do with your time. Do what feels right for you.

@Avery Carl Great Podcast Guest. I've been waiting for someone to go on there and talk about our neighborhood. My Mom @Rhonda Blue always mentions about growing up coming here and it was refreshing to hear you mention it. Totally love the aspect of analysis paralysis points and OH Man especially the airbnb guests who ask a million questions. You definitely know they will be the type of guest who moves the bed to find dust bunnies! Hiliarious.
Only thing I would add is the software YourPorter. For those of us who do like to take reservations ourselves. This app allows for returning guests to just call or email and we can book them through this app plus it has a great interface, syncs with multiple platforms, sends reports and helps to keep high ranking on airbnb. Worth a look!

0 Reply
Marcello Di Gerlando
Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
6y
@Amy Canfield

I get your pain. Working full time with a family and juggling other opportunities dose not leave a whole lot of time for texting back and forth with guests and cleaners and insurance claims, maintenance etc etc. I appreciate the fact that others find these tasks easy and no big deal. For me however they are not so easy; I would rather have others manage most of the day to day operations. Keeping and eye on the things, occasionally chatting with guests and inspecting the cleaning from time to time is all I want to take on. For this we pay Evolve vacation rentals 10% for the marketing and other chores and also charge a fair cleaning fee.

We recently starting operating our first STR and chose to go with Evolve vacation rentals as a management option. I recommend you look into their model. It's not for everyone. Some folks here on BP don't care for their model or like how they operate. However, much of the negative chat shared on BP about Evolve has turned out to either false or exaggerated.

We are in the early days with our STR and Evolve. So far things are going very well. I'm still more involved with this project than I intend to be, but right on track with expectations. By the spring, systems and contingencies should be in pace that will allow me to fully disengage as I am with our LTRs.
1 Reply
Andy Becker
Investor · Member since 2018 · 24 posts · 6 votes
6y
Originally posted by @Avery Carl:
No way. If I paid a property manager that I'd be paying them $75,000 a year. With a few apps and automations, the gig is the equivalent of answering text messages. My 2 year old can answer text messages. I'd rather pay her the $75k to put back for college, or invest into more properties. Or you can hire an overseas VA for next to nothing to take care of it. They can amazon your cleaner replacement items when needed, answer inquiries and leave guest reviews, and there are plenty of apps to automate scheduling the cleaner etc. The only part they couldn't do is the up front decorating. There are also several national options like Vacasa and Evolve that charge less than 30%. Check those out! 30% is too much.

If you folks who do the PM yourself, instead were forced to outsource for some reason - what do you think a reasonable fee is that would get you good management? maybe not limited to a % but a flat fee? % of net cash flow?

0 Reply
Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
@Jonathan R McLaughlin I don't actually use them for my property management. But you can find a lot of very competent VA's on Upwork, and there are also a number of VA companies you can go through that do the vetting for you. I have one client who has a $15 million STR portfolio, and his VA charges him around $6 an hour to do all of the management tasks.
There is definitely a time and place for property managers, so I am not saying that none of them are worth it, because some of them are. But for investors whose main goal is to bootstrap and maximize cash flow to scale more quickly, the traditional PM model just might not be the most efficient or cost effective.
Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
1 Reply
Jean H.
Rental Property Investor · Miami, FL · Member since 2016 · 173 posts · 206 votes
6y
@Amy Canfield I totally understand about not wanting to self manage. Ever since I had to call ATT to deal with a guest’s downed Wifi, at 4 in the morning in a hotel bathroom (to not disturb my sleeping family) while on vacation in Hawaii, I decided self-management was not for me. I still liked the Airbnb model though, so I hired a property manager and a designer to furnish my next property.
However, 30% is ridiculously high. At those numbers, it would make more sense and be less risk for you to just find an AirBnb arbitrager. You would charge a higher than LTR rent/month and they would pay for and deal with furnishing the property, all the utilities and repairs, and all the interactions with the guests. This is even less of a time and financial commitment from you than a property manager since you wouldn’t have to deal with the added time and expense of furnishing the property.
0 Reply
Amy Canfield
OP
Investor · Madison, WI · Member since 2017 · 19 posts · 21 votes
6y
@Jean H. exactly! That's what attracts me most to a property manager - I don't want to deal with the middle of the night headaches. Managing the bookings, finding cleaning people, decorating (as long as I hire someone...I have zero skills) I can handle. Like @Andy Becker was inquiring (kind of), I wonder what would be a reasonable fee for partial property management...does that even exist? Maybe I can make it exist...pay someone a flat fee per month to be on call. They would get the money no matter what, I would get piece of mind. Anyone have a relationship like this?
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