Property manager says 30% but fees come to 65-80% of nightly rate

[muddy]

@SleepingCoyote

“Nice” is pretty much irrelevant when screening people.

I always say that “nice” is a highly overrated virtue. It’s easy for people to be nice to your face, talk sweetly, and then turn around and leave a filthy mess behind them, not do what they said they would do, help themselves to things that aren’t theirs, etc. I’ve known lots of people like that. Words are cheap, actions are what count. Given the choice, I’ll take someone who may be blunt in speech and without social graces, but reliable and honest, over the other type, any day.

[Rolf]

@PitonView

Lots of whole-house rentals will probably stop listing on AirBnB if they prohibit you from asking the guests to do some exit housekeeping.

This would be great news for us, airbnb hosts who do their own cleaning and live on-site.

“Leveling the playing field” by making anyone listing on airbnb agree to rules such as ‘no requesting of guests to do basic home services’ would be great. I am happy to see someplace run by admins and remote owners charge a LOT more simply because they would be obligated to take on the job of management.

[KKC]

@PitonView

stop listing on AirBnB if they prohibit you from asking the guests to do some exit housekeeping.

I’m assuming that this is in response to complaints about cleaning fees paired with requests to do cleaning chores. Rather than eliminate cleaning fees they are going to eliminate rules requiring guests to clean?

I like that every Airbnb is different but from the guest point of view, the lack of consistency can be frustrating. I’ve never had a bad experience as a guest and I think that’s because I usually read every bit of the listing, look at all the pictures and the first few pages of reviews. I use multiple filters. So finding those good Airbnbs can take hours.

[SleepingCoyote]

@Rolf

“Leveling the playing field” by making anyone listing on airbnb agree to rules such as ‘no requesting of guests to do basic home services’ would be great. I am happy to see someplace run by admins and remote owners charge a LOT more simply because they would be obligated to take on the job of management.

Or even obvious advance disclosure of the chores required by guests would help, so I don’t have to ask before booking.

[Chris]

@mccarras

Hi all. This is our first investment property, and we bought a nice cabin in the woods that was already a successful STR in an area of the US known for its outdoor beauty. We went into the situation knowing that we wouldn’t be able to do the upkeep ourselves (no skills), and we live too far away to clean it.

So basically you thought it was easy money?
Buy a property, pay some breadcrumbs for management and the money would be flowing in.

Where I live the yearly income on an investment property is about 3-5% on the investment.

And property management is a lot of work, you will not understand until you have done it yourself for a year or 2.

I get a lot of homeowners around me that als me to do their property since I am doings so well and the others are so expensive. Until I give them my hourly rate (I do not take percentages) and the expected hours (Including guardening, snow shoveling, seasonal deep clean, decorations, storage of summer furniture etc etc).

I think depending on your investment, minimum stay and rates, 65-85% is not that bad.

Go for a minimum stay of 7 night and you will be down to 40-50%.

[muddy]

When I did property management for a couple of small places, I also charged by the hour for my work. No way was I going to get into a situation where I ended up working for $5/hr. in a job that doesn’t require the same amount of work all the time. And some investor homeowners have an unrealistic idea of how much work it takes to deal with all the aspects of managing and dealing with guests or tenants.

[HostAirbnbVRBO]

I agree with you that it’s a lot of work:

1. To keep the property itself well maintained. Just when you think “I’ve done everything!” there’s always something that pops up. It’s A LOT OF WORK to keep a property in the kind of state that is commercially acceptable.

2. To manage the guests, guest proof the home, anticipate questions, document how to use things in a way that’s easy to understand, be hospitable to acquaint guests with the area and local resources, help out guests who are unfamiliar with the appliances or local customs.

3. Be available 24/7 or have someone close available to deal with these things.

That’s why I think that Home Hosts or those who are very local or just very committed (maybe because it’s their second home/retirement home) are really the most suitable long-term players in the STR business.

[Helsi]

Sorry I don’t agree @Rolf I home share and sometimes do the cleaning

Whether I use cleaners or clean myself I charge guests as my time has a value .

I ask guests to do some check out tasks such as putting used towels and dressing gowns in a laundry bag in the bedroom and checking lights are off.

I also ask them to wash up after themselves .

[Rolf]

I’m the same as you - I do all the cleaning, and yes, my time has value. But my cleaning fee is currently $30 and the rest of the nightly cost to guests contains the rest of my income as cleaner. I’m just happy that those folks who outsource everything and cannot run their airbnb without ‘chores’ will pay the price.

[twokgrad]

Isn’t this a case of “rent shifting”?

The extra fees from the PM (linen fee, Home service fee, protection, etc) are driving up the cost to the guests, but the PM is pocketing those.

[muddy]

In theory, that shouldn’t be the case. Home owners who delegate all the hosting to a PM should not be expecting to make the same profit as a host who manages their rental themselves.

If I manage myself, and charge $100/night, and then decide to hire a PM, it could still rent for $100/night, the homeowner would just be splitting the profits with the PM.

[Rolf]

@muddy

If I manage myself, and charge $100/night, and then decide to hire a PM, it could still rent for $100/night, the homeowner would just be splitting the profits with the PM.

Not to split hairs, but 50/50 of the listing price is not splitting ‘profits’, it is splitting ‘revenue’. Profits are what are left after costs. $100 a night probably has only a few dollars of ‘profits’, since you are covering a percentage of your mortgage, utilities, depreciation, etc. in that $100.

[muddy]

What I meant was that it isn’t reasonable to expect to end up with the same amount of money in your pocket if you hire someone to do something for you, rather than if you had done it yourself.

[Rolf]

50% of the GROSS is w-a-a-a-a-y too much, IMHO.

[muddy]

I don’t happen to consider mortgage payments to be an str “expense”. Mortgage payments have to do with one’s equity in the property.

[mccarras]

Hi @Annet3176 - I have given this some thought, and if we weren’t still living in times where multiple infectious diseases were circulating widely, I would probably do it. I’ve stayed at another place in the area that does it–it seems a bit more messy than some AirBnB’s but you can tell that the guests care for the place and abide by the rules to clean it themselves. I would like to catch up with you privately if we decide to go that way, though. Would that be OK?

[mccarras]

I see the cleaning fees by going to the platforms (MSG is their own booking site, AirBnB and VRBO show some fees). I don’t know why the cleaning fees are so different; that’s part of the problem. There’s a lack of transparency across the platforms.

I really like your suggestion to ask for a 30-minute meeting! We’ll definitely ask for that

[HostAirbnbVRBO]

@mccarras

I don’t know why the cleaning fees are so different; that’s part of the problem. There’s a lack of transparency across the platforms.

@PitonView

No, I said it right. Vrbo has a lot of options for fees - lots of different names. AirBnB does not. So the PM added the $90 into the cleaning fee on AirBnB, making the cleaning fee higher.

So that might be the explanation – fitting the fees into their spreadsheet template.

I hope you develop your own spreadsheet with not just the revenue and cleaning/platform/property management fees but all the other costs associated with the property.

You might want to connect with @Novi on this platform, who is in a similar situation as yours and quite adept at Excel. Look for the thread here: How to find co-hosts?

It might not at first seem exactly on point, but follow all the way down.

Good luck and keep us in the loop – you’ll find resources and a good sounding board here.

[mccarras]

@HostAirbnbVRBO

Do you mean to say that VRBO rather than Airbnb “does not give a lot of options for fees.” I ask because the lower cleaning fee is not on Airbnb but on VRBO. And the $90 charge is shown in the VRBO column.

But the numbers work as you suggest. I had assumed that the $90 was for damage protection, which VRBO offers but I suppose it is more likely that it is the cleaning fee.

As an aside the VRBO platform fee did not make sense to me but I didn’t get into it because it was an aside to the main analysis. The Airbnb fee doesn’t look right either. Either this Host is choosing to pay the Airbnb fees, or the spreadsheet is showing the platform fees that the Guest pays, not what the Host pays.

Thanks for all the helpful suggestions. To answer your (and some others’) questions:

• I made up the spreadsheet based on what was visible to the guest; MSG is the abbreviation for the property management company’s own platform
• How the host described the other fees was a bit confusing (i.e., the additional insurance they take that they say they pass along to the guest-I thought they said it cost about $25
• Unfortunately, the refuse to cohost, so I have no idea how to figure out the platform fees they’re paying

Another update: They’ve returned the first month’s accounting in what seems to be their own spreadsheet. It doesn’t include anything about the platforms at all, and the only fees that are listed are the cleaning fee, their 30% (taken off of the nightly rate, not the rate + cleaning fee) and the charge for some handyman stuff that I asked them to do. Here’s the spreadsheet, but I plan to follow the advice here to ask them to sit down and explain everything.

I’ve also learned that they block dates on their own platform for guests who’ve asked dates to be held. This led to me and the family rushing out on the day before Thanksgiving so they could get in and clean. The guests never showed, so we rushed out of our own place needlessly, which is a bummer. Is it normal for a property management company to hold dates like that?

Also, for folks who are curious, we’re not trying to use it as a significant source of investment income, just hoping to offset the additional mortgage costs from refinancing our primary home. We had hoped to primarily use it as a getaway ourselves until we retire. Still have to calculate how much (if any) profit we have after electricity, internet, handyman stuff, etc.

Thanks again to everyone who’s given their advice! We really appreciate it.

[mccarras]

@Chris

So basically you thought it was easy money?
Buy a property, pay some breadcrumbs for management and the money would be flowing in.

Hi Chris,

I’m not sure if you realized this, but the way you worded that comes across as kind of derisive. I’m curious as to why you would want to post in what is supposed to be an online community if your contribution comes across this way.

To answer the question no, we aren’t using it primarily as an investment, so we had no thoughts of easy money or money flowing in.