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Hello,
One of our favourite Airbnb units is up for sale. Since we often use this place to vacation, we figured it might be a good investment since we have a place to stay and it can be rented out for the rest of the year. It is beach front and at a very popular location.
We were told that there is a property management fee that we can opt in. They charge 40% of booking. The expense for this is doable IF our unit obtain at least a 70% booking rate. I’m also told that the resort/hotel usually book their units first before they will allocate the guests to privately owned units.
TDo you think it is worth it? or is this pretty common in these types of resorts/hotel setup?
40% seems high unless they’re rolling in cleaning, inspections, managing the bookings, etc. Does the unit book 70% of the time NOW? You have some research to do with the owners and the property management company. It’s a business. Ask the business questions.
The location and the fact that you know the area makes it a good investment idea, but ask for their books and booking information. Get their income/expense accounts and ask if they’ve opted in to the fees.
Is the unit you normally rent managed by this property manager? If so, and you have had no complaints about your stays in terms of the unit being clean, well-maintained, and the communication being good, then you might want to continue with them.
Otherwise, I would thoroughly research the managers, look at their reviews, etc.
Inany case, make sure that you retain control of the listing, do not allow any management company to be the listing administrator, just the co-host.
Otherwise, if you decide at some point you aren’t pleased with the managers, it becomes a mess to get them to unlist it, and you would have to start the listing again from scratch, with no reviews.
Also be aware that listings and reservations are non-transferrable. If there are current pending bookings when you buy the place, they will not be transferred to you, the seller has to cancel those bookings or refund the guests and tell them they can rebook with the new owners.
The fee includes cleaning, booking, inspections, etc. It’s actually 40% for short-term rentals and 20% for long-term rentals. The fee is automatically deducted at time of booking. The unit would be in their rental pool. This company also manages other resorts/hotel in the area. This fee does not include the strata fee.
make sure that you retain control of the listing, do not allow any management company to be the listing administrator, just the co-host.
Otherwise, if you decide at some point you aren’t pleased with the managers, it becomes a mess to get them to unlist it, and you would have to start the listing again from scratch, with no reviews.
Good to know.
We haven’t stayed in this particular unit, just a similar unit at the resort. We like the floor plan. The resort looks well managed. The unit is currently managed by them. I’m a little concern about maintenance/upgrade cost as condo owners have limited say in it. There was a pool/garden reno a few years back and the cost was passed to the owners even though some of the owners do not like the new look and it ended up costing more then budgeted.
i don’t know how if there are Condo Minutes, but will ask the realtor. Anything else I should ask?
You should look at their reviews, if they have any under their own profile.
What I have found when perusing reviews of big management companies is that they seem to have a much larger percentage of bad reviews than owner-managed listings, or those that employ a small-time co-host. And the reviews can be wildly inconsistent depending on which unit is being reviewed.
I have always somewhat put this down to the listing owners- if some listings have reviews that say the place was poorly maintained, and the furniture is old and shabby (but other of the company’s listings have great reviews), it may be that the owners aren’t willing to invest any money into the place, which isn’t the manager’s fault (although they could decline to manage a place like that).
But if reviews mention that the place wasn’t clean or that the management company wasn’t responsive to issues, that’s a red flag, as the managers are responsible for those things.
I stayed in a Airbnb unit in Florida last year that as a guest required me to have to pay amenity fees even though I didn’t want to use them. (The place was a block from the ocean and I saw no need to use their pool, spa, etc. ) I wasn’t given an option of opting out and had to pay an extra $100 plus $35 a night for parking. The listing disclosed the fees for the amenities but didn’t say they were mandatory. I had assumed they were only if you used them. The unit was very sandy under the beds and missing linens and towels. The pots and pans were gross and the sliding door with a shared balcony didn’t lock. Even though I requested, no one came to fix nor clean or replace linens.
I personally will never stay in an Airbnb that is run that way again. Your opportunity sounds similar.
I’m working with two sets of hosts, different properties who purchased similar properties:
Hi-rise resorts
Multiple amenities-hot tub, lazy river, heated indoor pool, outdoor pool, on-site restaurants, advertised golf course & amusement park discounts
40% off the top to the booking service then further fees for housekeeping, laundry & maintenance
They opted to list on Airbnb. The surprises started.
This is a combination of the surprises for both resorts:
Private rental Guests are not allowed in the lobby to socialize & must enter through a back door
Guests must park in the most distant parking deck
Guests cannot use all the amenities -they can use lazy river & outdoor pool only -the owners pay the same HOA fees as those participating in the resort rental program
Advertised in lobby-golf & amusement discounts not available
No self-check-in. Someone must meet guests to give them keys & explain where to park & allowed amenity accesses
The resort basically punishes them for not participating.
Of the two rentals -1 is reasonable & the only exclusion is “no lobby access”. The other is pretty bad.
I think you listing & managing can work but find out all the rules first.
Btw-the one with the worst exclusions was with the resort program for the past two years & said she didn’t make the recommended occupancy rate so didn’t have the expected earnings.
The resort basically punishes them for not participating.
I was afraid of this. The realtor mentioned that there are some amenities that will not be accessible if I opt-out. As the owner, I will have access but the guests will not. Thank you for the post, really helpful.
I personally will never stay in an Airbnb that is run that way again. Your opportunity sounds similar
Do you mean the property management company was not good in managing the unit?
Keep paying for your vacations. why do you want ownership now?:
Reasons are same as most people - extra passive income, future capital gains, place get away from the cold and snow, etc.
I doubt you will earn much passive income with this arrangement as you will have to pay out to their mgt. - it is possible that you could even fall into the negative in order to keep up the unit. You can rent from someone else, and stil get away from cold and snow…and I know nothing about the potential for future capital gains in this day and age. I would run away from this.
@GingerTea One of my units is in a condo/hotel; if I sign up with the hotel management, they take a 40-50% cut of what the guest pays. I prefer to do my own hosting. If I were you:
I would ask to see some type of record/document showing what a similar unit managed by the hotel has generated in the past 6-12 months.
I would also ask other unit owners about the quality of the hotel’s management and what is the average income generated by their unit managed by the hotel.
If you decide to consider the hotel management, read the contract with great care particularly on items such as repairs, replacement of linens, and even if you have to give X number of nights for free for “promotional” services.
