I currently manage 4 of my own rentals here in Hawaii, and going to begin my RE license course in the next few days with the intention of becoming a SFR property manager.
I'm curious if any current or former property managers working in Hawaii have any tips/guidance for someone entering the business.
Also, seeing as I must work under a broker, I'm curious how property managers are paid i.e. Example: 10% fee is paid by the homeowner. How much of that 10% goes to the broker and how much (usually) does the property manager receive? Or, are some situations salary based?
Thanks for your help!
Curious to know the answer to this as well. Also, would a person working under a broker be expected to manage other properties as well, or can they work "independently" under the broker?
@Rob White : Unrelated, but may I ask which course you're taking? Are you taking a course at a physical location or online?
I'm going to take the Seiler class online. Read some good reviews and I believe it's the best price for the Hawaii online course available.
I took Abe Lee's online course a while back. It was fine for me, but it was mostly audio recordings of live lectures, and self study. Not too interactive. There was quizzes to be done online at every chapter which were similar to the Hawaii tests in formats, but most of the Hawaii RE classes will have similar quizzes/tests.
As to commissions, it's going to be different per broker, on what they charge/split is. Our office is 60/40 first year, 70/30 after that. However those are for sales splits, and we don't do much property management.
Since your on Maui I'd ask some property managers like Pali Kai Realty, Shore to Shore Realty, Home Managers Maui, and possibly Ihu Properties, all of which do long term rental property management.
Aloha, Rob. I'm on Maui, too, and a real estate broker and former property manager. Typically property managers are paid a salary to manage a portfolio of clients that the broker already has and are considered employees and receive benefits accordingly.
@Jin Lim what do you mean "independently"? Brokers are not going to pay you a salary unless you're managing a porftolio of 50+ properties. You do not have the liberty to refuse taking on additional clients as an employee.
FYI, many brokerages will not let you manage your own property as it increases liability and raises E+O insurance rates. Also, most brokerages will not let you do property management without prior experience.
Good luck @Rob White for delving into PM!
Thank you for the reply! That's a lot of good info for me. Couple questions from that:
Do you know what an average PM on Maui would make as a salary per year?
You mentioned prior experience. In your eyes, would someone like myself be employable as a PM with experience derived only from my own properties the last 3 years? I also have a bachelors in business and managed at a Wailea resort. Just not completely sure what the typcal resume for the job looks like and barriers to entry.
Whats up @Rob White ! I heard your trip was awesome! If I were you I would look into commercial property management. I worked for a commercial asset management company back in California and it can be a very well paying position.
You will be more likely to find a salary position and will have to deal with less BS than residential PM's.
CBRE, Kokua, Colliers & Kean are the big players. I can send you some contacts if you'd like.
If you are only interested in residential you are more likely going to be on a commission structure with a broker split and will have to build a portfolio.
Let me know if you have any other questions, I'd love to help out any way I can!
Thanks for clearing that up, @Loren Clive !
Hey @Patrick Franta ! The trip was amazing, but happy to be home!
Ive been doing a bit of research on commercial asset management, because you mentioned it, and it does seem like I would be dealing with people on a more professional level as apposed to SFR tenants and owners.
Ill be reaching out to some more people to see what the best fit is while i take my license course and have the time. I would be happy to take some of the contacts and get a better feel of whats out there.
Thank you very much for your help!
@Rob White For the past four years, my colleagues and I have collected data on property management company fees across the United States. We looked at more than 1,000 managed properties across the country of various types, sizes, and values. The properties we looked at were managed by a range of companies too, from small Airbnb managers to nationwide management companies.
Through analyzing this data, we gained a comprehensive understanding of the industry overall, and hope that by sharing our data, you can have a better understanding of property management pricing. (I know this is more of a national.
Property managers usually work on one of two fee models:
Commission model. Most property management companies work on this model, taking a commission in exchange for their services. The property manager earns money when the homeowner does, and usually has a yearly contract. This model offers flexibility to homeowners who regularly use their vacation homes because they can open up their rental calendars only for days they won’t be using the property. On open dates, the homeowner becomes dependent on the manager to produce income, and the homeowner assumes the risk and cost of paying for a property even if it doesn’t get rented.
Guarantee model. In this model, which has been recently adapted by the vacation rental management industry, the homeowner receives guaranteed rental income for the weeks he or she wishes to rent out. The property manager and homeowner agree on a fixed amount of income that the homeowner will receive each month, and the manager pays the homeowner that number every month—regardless of occupancy. This model allows the homeowner to entirely pass off the risk to a property manager. This model is useful for owners who want a guaranteed income each month, but are willing to accept it might be less than you could make with the commission model. The commission model allows the potential for higher-paying months, but also the risk of months where the property isn’t booked at all. With a guarantee model, you get a steady income all year long.
Many property management companies, including those my colleagues and I work with, use both of these payment models, and the right one for a homeowner will depend on their goals for the property. For the highest possible return on investment, a homeowner may prefer to use a manager that can guarantee a certain amount. However, for those that are mainly planning on using the home for vacations with family and friends, a commission model may be right for you.
Full-Service Management Fees
Most management companies cover everything from booking to cleaning to answering guest questions and handling emergency maintenance. The fees they charge are a percentage of the income made by renting out the vacation property. These are the averages found for full-service management across the United States:
Typical range. The typical range of vacation rental property management fees falls between 15-40%. While it is a wide range, it provides the answer to a commonly asked question for those seeking property management for the first time: How much do property managers charge for vacation rentals?
Average range. The average property management fee across vacation rental markets in the United States is 28%.
Urban rentals. As management fees go, vacation rentals in large cities are on the lower end, at 20-25%. Because urban rentals tend to require less maintenance than a beach or mountain home, they also usually have the lowest property management fees.
Beach rentals. Owners in beach markets can likely expect a management fee in the 25-30% range. Beach rental properties typically have lower rates than other vacation rentals because they are often closer in proximity (often within less than a mile) and thus are less costly for the manager to take on. You’ll also find this rate in more well-established vacation rental markets, such as Gatlinburg, TN, because there is plenty of competition to keep prices low.
Mountain rentals. In mountain markets, such as the ski markets in Colorado and Lake Tahoe, fees range from 30-35%. The fees for mountain or ski markets tend to be higher than those for beach and urban markets because mountain homes tend to be more spread out and require more maintenance.
In-house management. In-house property managers (typically found in condos where the company that owns the building also provides property management) can charge fees as high as 40%, a percentage that is costly to the owner. Because homeowners will often choose in-house vacation rental managers out of convenience and without comparing their options, in-house managers are able to get away with these unreasonably high fees.
Even if you prefer to manage your home without the help of a property manager, you still might want to hand over part of the job. In that case, you might want to hire a booking-only management company to handle the marketing and booking.
Because these companies do not operate locally and do not provide full-service management, they can charge a lower rate. The typical fees for these services are in the 10-15% range. Keep in mind, however, this fee only includes the marketing and booking services—not the cleaning and on-the-ground operations.
To stay competitive, some property management companies advertise low commission rates only to later tack on additional fees. These fees vary across management companies but can include fees for credit card processing, cleaning supplies, handyman services, linens, deep cleaning, and more. This can make it difficult for homeowners to accurately compare effective property management costs and project future rental earnings.
Consider the chart below, for example. It highlights the vast differences in how management companies define full-service management and the differences in seemingly identical price structures. Below you can see that for a home earning $20,000 in gross rental income, the higher, all-inclusive rate (Company 1) effectively leads to a lower cost once the competitors’ add-on fees are taken into account.
Hope this is helpful
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