187. Property Management Fees Exposed: The Real Cost of Hiring A Manager

Jun 13, 2023

Discover the often-overlooked fees involved in property management for short-term rentals. From cleaning and booking fees to technology charges, the list is extensive. Uncover the shocking reality of charges that can far exceed your expectations, like a $500 reservation racking up over $1100 in fees. The discussion emphasizes the need for property owners to ask probing questions to ensure they fully understand costs before signing any agreements. Don't miss the insights on how these fees can vary dramatically between companies.

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ANECDOTE

Example of High Fees

Tim Hubbard shares an example of a $1,000 reservation with over $1,100 in fees from a large property management company.
This example highlights the complexity and sometimes hidden nature of property management fees.

ADVICE

Understand Management Fee Ranges

Understand the base management fee, which can range from 10% to 50% in the short-term rental market.
Avoid overpaying by exploring virtual management options that often reduce fees.

ADVICE

Set Cleaning Fees Strategically

Use cleaning fees strategically, balancing them with occupancy to optimize revenue.
A good rule is charging a cleaning fee about half the average nightly rate, adjusted by property size.

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As many of you know we recently starting managing other properties - we're really excited to bring on our new partners but as Ive been meeting with owners from all over the place (around the world) I'm finding that the competitive options differ quite a bit.

Not just in services but in fees. Many fees that owners don't even know are being charged. I looked up an example with Vacasa recently to illustrate the example and a $500 reservation had over $1100 in fees.

So as we evaluate our options I thought it would be good to do a recap to make sure you're totally aware of any and all "common" fees in the industry.

Please note that not all property management companies charge all of these fees, and the specific fees and amounts can vary depending on the company's policies and the services provided. It's essential to carefully review and understand the fee structure of any property management agreement before entering into a contract.

Short-term rental fees:

Flat monthly management fee
Cleaning fee per guest stay
Booking/Reservation Fee per booking
Advertising and marketing fee
Technology/software fee for using property management software
Furnishing and decor setup fee
The maintenance fee for coordinating repairs and maintenance
Seasonal rate adjustment fee for adjusting rental rates based on seasons or demand
Guest communication fee
Key exchange fee
Administration fee for managing paperwork and documentation
Monthly statement fee for providing financial reports
Credit card processing fee for handling guest payments
Inventory and inspection fee for conducting property inspections
Security deposit management fee
Late payment fee for managing overdue rental payments
Cancellation fee for cancellations made by guests
The utility management fee for managing utilities on behalf of the owner
Emergency after-hours service fee for handling guest emergencies outside of regular business hours.

Remember:

Your management fee comes off your GROSS income
Who owns your reviews listings / whats your contract policy? Do you need to start over? That could be difficult in a down economy..

I've also worked with a lot of management companies more so on the Long term rental - sometimes it's really hard to find the right one.. If you're interested in help managing your properties and we're a bit different in that we use my team to manage your properties

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