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Our neighbour owns an apartment which is currently furnished with the most basic furniture and amenities. She lives in another country and visits once a year or even lesser. A year ago, she had listed her apartment with two rooms on Airbnb, took a couple of bookings, and decided to stop taking further bookings. Being halfway across the world and with her work commitments, she said she found it difficult to reply to guests all the time, coordinate cleaning with a local cleaner and to keep an eye on her guests. I have offered to manage her property on Airbnb for a fee - a percentage of monthly earnings. We will split recurring expenses (housekeeping, utility bills, cleaning supplies etc) in the same percentage. What percentage (e.g. me-her: 60-40, 50-50, 40-60) should I suggest as fees? My scope of work will include:
Doing the place up some more in consultation with her (getting some of her art framed and put on the walls, better quality bed linen, getting a Wi-Fi connection, buying a microwave, etc). Some of these she will pay for and some I will pay for.
Getting fresh photos taken and uploading them on her existing listing with a reworked description of the place.
Finding, training and managing cleaners who will maintain the place.
Managing and coordinating ongoing maintenance services like plumbing, electrical and air-conditioning services.
Replying to all guest enquiries for the property (before, during and after bookings)
Coordinating check-ins and check-outs
Meeting guests occasionally and troubleshooting whenever there are concerns or problems.
Reviewing guests based on my interaction with them and feedback from cleaners.
Supervising house cleaners, some of whom decided to quit on Christmas Eve (so that meant I was doing that instead of having mulled wine and watching Little Women and making cookies.)… responding to constant guest questions, issues and complaints… finding people to do the yard, troubleshooting broken appliances, searching for handymen, scheduling those, taking off my other job to wait for repairs or technical people or deliveries. Hauling propane tanks and refilling them, Purchasing all the stock needed to run a busy vacation rental… helping guests who locked themselves out, helping with cable that won’t work or internet that needs to be reset, helping find a way to get rid of rats… crawling up to the attic once and getting the dead rat out myself … Shop for, Schedule and replace appliances, spend all day communicating and coordinating with the owners… and on and on.
When a guest called me up to move their lounge chairs from the lanai to the beach, I was done. I quit.
I think it is kind of weird that you all are splitting the expenses. I guess, in this scenario, I would think that the owner would assume all expenses. Then, I would suggest that you take a 30-40 percent cut for your services. I think, if you’re spending $$ for an Airbnb business, at least some of your expenses might be tax deductible. Then, you abide by some ground rules, like you make all decisions about guests and how to handle them. But I have no practical experience in this, so perhaps i am just sticking my nose in where it doesn’t belong.
While setting up initially will take a lot of my time, i would estimate, based on the current b&b I run, that I’d be spending about 3hrs a day in managing the apartment.
I would suggest you charge a one off charge for the set up. As @Debthecat says estimate an hourly rate that you put on your time and then estimate how long these activities take you.
On an ongoing basis Airbnb suggest a maximum of 25% for managing all aspects of a listing as a co-host.
Why are you splitting expenses? They’re all hers as the property is hers. You’re offering to help manage her listing and for that you should be charging a fee. Anything up to 40% is reasonable but best in mind you will both need to agree the fee.
I’m considering splitting expenses as I thought it would help keep the relationship healthy in the long-term. Since money is often the cause of a lot of drifts, I thought if I’m not splitting expenses, then there might some point where she questions if a certain expense was called for or was exorbitant. But if I’m splitting it, I presume that’s less likely as she would know that burning a hole in her pocket would also burn one in mine.
It’s not your property. Taking on the expenses is bizarre. You get receipts and you get authorisation for big repair bills. You get three quotes which you pass on to the property owner and you let them decide what they want to do. You don’t, however, absorb costs that are not yours to begin with.
When her property is valued x amount more in a few years time will she be sharing a percentage of the appreciation with you? No? Then the expenses on running the Airbnb have nothing to do with you.
To be honest you are showing alarming inexperience.
Thank you for pointing out my ‘alarming inexperience’. If I did have experience at managing someone else’s property, I wouldn’t have asked for suggestions in the first place. And do note that I mentioned I will be splitting recurring expenses. Anyone with some financial sense would know that such expenses are different from big repair bills. Also, your explanation about an increase in property valuation makes no sense as that is an asset appreciation, and that is of no concern to me at all. And no, splitting recurring expenses is not bizarre. Having worked as a corporate and real estate lawyer, I have had several clients entering into joint ventures splitting costs, which ultimately boils down to bearing expenses in proportion to their investment ratios. This not only brings in accountability, but as someone else also pointed out earlier, tax deductions become permissible.
Maybe I’m missing the point but I don’t see you assisting a property owner with their Airbnb as a joint venture. I see it as a situation where you are being employed to assist. Their property, their listing, you’re just there to assist. If it was a joint venture then you’d get a part of all profits including asset appreciation… because you’d have put money in at the beginning. Or am I missing something and you have indeed put investment into this property?
I suggest you contact a couple local property managers and ask to see their contract form on the premise that you are considering hiring their services.
You will never find a clause stating they will split expenses with you, recurring or otherwise, and why would you suppose? Because they have no interest in the property, no skin in the game.
Your clients splitting expenses is because they were in a joint venture of investment. What is your claim to fame – it’s your neighbor’s property, all hers.
I’ve dealt with two property managers in the past. Their contracts read that their base fee would be between 18%-20%. In actuality, what they received was closer to 37%-40%. They have ways of tacking on additional fees for costs and expenses and they certainly don’t offer to split it with you.
That is where you make your biggest mistake.
Do not start with investing money (not yours and not the owners), first start renting it out and make some money.
The owner had bookings before, so the place gets booked like it is.
First make some money, and show the owner you are able to do it.
Then convince the owner in spending some of the money you made her to upgrade the place.
@p_rose - it really seems that you haven’t thought this out properly, if your original post is anything to go by. I know someone locally who recently started using Airbnb and is making so many errors simply because he hasn’t done enough research and doesn’t understand that hosting guests via Airbnb is so unlike any other type of renting.
It’s all very well using cleaners (and presumably someone to do the laundry) but these are going to hugely cut into your profits.
Are you going to be available for emergencies?
What will happen when a guest calls you at 3 am because they need something urgently?
What will you do when a neighbour calls you at 2 am saying that your guests are partying noisily?
Will you always be available for the house tour?
Have you a plan for times when advertised amenities aren’t available? (Such as the wifi - grounds for guests to get a refund)
You won’t just have to arrange for regular maintenance contractors, you’ll need plumbers, electricians etc. for emergencies during a guest’s stay.
Will it be you who has to purchase all supplies?
Will you be able to rush to the apartment if your cleaners can’t get there and you have a same-day turnover?
As for your estimate of three hours a day, you’ll also have to take into account time spent with Airbnb for resolutions, customer service help, writing reviews, evaluating clients … then there’s dealing with your insurance company, paying local taxes, general accountancy work … coping with guests who bring too many people, needy guests who contact you three times a day, guests who have medical emergencies, guests who deliberately steal or accidentally break something…
I think you realise that I could go on and on and on!
As they say, if it was easy, everyone would be doing it.
Maybe I should have stressed more on the fact that I was seeking on advice ONLY on what percentage to charge and NOT how to run the new place. I am not a new host on Airbnb, and know fully well what commitments it involves.
I cant help but notice how vicious some of the forum members can be in their comments, even to topics that have little controversy around it. Making nasty comments takes no talent whatsoever, but being polite in replies to fellow members does. Thanks to a few members who posted here, I have a good sense of what percentage to go with.
… Shop for, Schedule and replace appliances, spend all day communicating and coordinating with the owners… and on and on.