How much does your property manager charge?

1

Do you agree on a fixed fee, a percentage, and how much?

Our property manager takes care of everything: hands keys, arranges for cleaning, schedules maintenances, deals with emergences (such as guest locked out from the apartment at 2 AM, a pipe bursting in the middle of the night, arranging the transfers to/from the airport). We have “inherited” him from the previous owners and we like the guy and his service. However, at the end of the day his fee takes away about 25% of our gross earning and we are wondering if this is the norm or if we could do something more ourselves to reduce this percentage.

2

Different companies and individuals charge differently for providing support services. 25% is not unusual.

The best way for you to research this is

  1. Work out what you would be happy to do, to reduce down on costs (for example you haven’t mentioned whether you or your property manager deals with bookings)
  2. Get some quotes from local support services
  3. Remember if this guy lists your property under his own profile and you move it - you will lose all your reviews and ratings - that can affect bookings.
3

Most bookings are directly managed by the owners, who listed the property on VRBO only. Once the booking is confirmed and the check-in dates approaches, the owners put the guests and the property manager in contact to make arrangements to meet at the apartment. In this case, the property manager’s fee is 10%.
If he is who find the guests, then his fee is 20%. Both cases are on top of his monthly flat fee of USD 150.

We will be able to transfers the reviews on VRBO, so that’s no concern.

4

How does this equate with your earlier comment that your property manager takes 25%/

This is a forum for BNB hosts so I didn’t know you were referring to VRBO.

5

I believe, the PM takes 20% + fixed fee, which equates to 25% of @PennyM gross earnings.

That is about 750 for 3000. Does that commission include cleaning services/laundry or just “arrange for cleaning”? Your PM seems to arrange a lot of things, but does this commission includes the actual services?

6

You understood correctly, and no, cleaning fees, laundry and supplies are charged separately. The property manager just arranges for them, but they are not included in his fee.

I don’t know if he arranges also to buy in bulk (he manages 15 properties) to save on supply and laundry.

7

If I were in your situation, I would check the competition. There is no norm in this sector, but I have seen similar rates including check-in, cleaning and laundry (actually, for the same services, you may pay 25 or 60% depending on where you are…).

In addition, it’s not uncommon now for PMs to offer to pay a fixed rent to the owner rather than charging a percentage-based commission, especially in competitive urban areas.

8

Did this VRBO policy recently change? You used to be able to transfer, then they moved to a policy where the new property owner had to start with a new account - the reviews did not follow the new account. So VRBO has confirmed you will be able to transfer the reviews?

What else is the PM handling? He arranges with the guest to handle check in. But who answers the guest questions about local recommendations, giving directions, sending out house information, etc.

Is the PM on call 24 hrs. a day?

How does the PM find guest bookings on his own?

1 Like
9

VRBO policy didn’t change - they won’t transfer the property ad, just the reviews. I emailed VRBO explaining I was purchasing a holiday rental listed on their website and that I wanted to keep renting it through VRBO, and they informed me they would transfer the reviews when it comes the time. I haven’t yet signed the contract, so I have not yet publicly listed the property (new ad under my account)

10

The PM is available 24/7 during the guests’ stay. The current owner live abroad, so the PM handles everything local. We live 1 hour away from the apartment. He said his fees can be discussed.

The current owners have made a guide for guests, so they provide the info on what to do and where to go. However, the PM can arrange tours

11

The PM owns a property rental business and has about 15 properties in his portfolio. I guess some guests contacts his through his website where the various properties are listed. Also, he says there are regular guests that come every year, so those skip VRBO.

12

I’ve dealt with two PM’s, both of whom owned their companies and maintained their own staff of housecleaners.

One PM managed about 20 similar units in the same building and ran them in a rental pool so as to spread the 'wealth" amongst the owners. Crappy system. If I recall, the management fee was between 10%-15% back then and supplies were extra. Every month for a year there was a charge for replacing whole sets of towels which guests supposedly ruined or walked off with. All I know is, the monthly management fee turned out to be closer to 30%-35% and left us with a piddly net off the investment, so we got rid of it.

The second PM was inherited with the purchase of my current rental. The owners were out-of-state and had no part in the management. I could see the similarities in dealing with a property manager again and decided to learn how to self-manage. Four months later, I took over and in the first month almost doubled what went into my pocket!

That PM handled about 80 units in the building and really had a slick operation going. The contract said the percentage was 20% of the rental income or $xxx, whichever was greater. In reality, he was getting closer to 40% per month with all the add-ons of linen service, housekeeping, accounting, etc.

He was also juggling rental assignments between the units, sharing my supplies with other units, giving unauthorized discounts for weekly/monthly stays, putting more bodies in my condo than I allowed, not maintaining the care, etc.

The condo had been totally renovated three months earlier and the custom-painted walls were marked up with black luggage scrapes, the sofa smelled of urine from babies and toddlers, and other damage. He also had separate contracts with the guests and charged fees for lock-out, early check-in/late checkout, special cleaning and for damage, smoking infractions, etc. None of those fees were shared with the owner! I figured I was in the wrong business.

My “property manager” is my housecleaner of over 6 yrs. She receives a per reservation prepping fee (paid by the guest), and I pay her for purchasing and maintaining the supplies, doing repairs or arranging for it with outside techs, and basically being on-call for guests. Works beautifully.

13

Thanks for your feedback.

Me and my husband and running some numbers and currently the gross to net ratio is close to 60% (taking into account the PM, cleaning, laundry, accountant, taxes, expenses, etc.). The PM takes the biggest chunk, and I can’t really see why the current owners offer discounts for weekly and monthly stays if the PM’s fee is a percentage, and plus you have to include weekly light cleaning service and change of towels.

The property has, on average, 2-3 guests per month, who stay for 10-14 days. I’d rather have it rented for shorter stays with no discount on longer stays, since we have a PM dealing with it.

Also, since the PM says his rate is negotiable, I am looking for suggestions on how to negotiate it. Better to agree on a fixed monthly fee, regardless of the turnout? Or to go entirely proportional?

14

If you agree on a fixed fee, will it discourage your PM from achieving maximum occupancy rate?

15

@PennyM:

Sorry for the delay. As is often the case, I read a little, post a little and go off and do other things.

I’m afraid I don’t have an answer or suggestion for you about negotiating or contracting with your PM because I am just not a proponent of ‘professional’ property managers. It’s not only the trust issue but also the reluctance of giving the PM such a large hunk of my pie.

Good luck to you in your new venture!

16

It could, however it’s the owner doing most of the marketing part (on VRBO, and I plan to use also AirBnB).