Fees for a vacation rental property manager can range from 30-50% of your total bookings.
But what exactly are property managers doing to earn so much of your rental income?
It’s a question worth asking – and we give you the rundown on what a good property manager ought to provide in exchange for those fees.
But First: Why Are Vacation Rental Property Management Fees So High?
If you’ve only worked with a property manager for a long-term rental, you may be surprised to see such high fees. Aren’t property managers supposed to provide services for around 10%?
10% or less is pretty standard for long-term property managers, because they only need to rent your property once for the entire year. They may have to do occasional maintenance or repairs, but they only need to provide marketing and arrange for a tenant once.
Short-term (i.e., vacation rental) property management involves renting your property not once, but many times over the course of the year. That higher fee of 30-50% is an indicator that the service being provided by the property manager is more difficult: they have to market more often, engage more people, and field more inquiries.
Finding a long-term tenant is fairly easy: the tenant likely lives locally (since they’re looking to rent in that area) so the property manager can safely promote your property for free on craigslist and their own website to attract all the potential tenants they could want.
Short-term renters are a little harder to track down.
Where Will Your Vacation Rental Property Manager Find Travelers?
Short-term renters are more difficult to locate than long-term tenants because travelers use different tools to find vacation rental properties.
Where a long-term tenant typically looks for properties on free sites like craigslist and Zillow, a traveler is more likely to go to one of the five major vacation rental listing sites: HomeAway, VRBO, FlipKey, TripAdvisor, or Airbnb.
They may even try several of these sites to find competitive pricing or better properties.
Which means that your property really ought to be listed on several major listing sites to have the best chance of getting booked.
Unfortunately, most property management companies haven’t taken the time to create a sound marketing strategy for attracting short-term renters.
Many use the exact same approach they use to attract long-term renters: creating listings on their own website and promoting them on local, free resources.
Since travelers aren’t often looking on local sites, they’re unlikely to see your property. Which means it doesn’t get booked.
Why do property managers do this? In short: time and money. It takes time and money to promote your property on VRBO, HomeAway, and other listing sites, and most property managers lack the resources or energy to do the job right.
Rather than cut into their profit margins, some property managers may flat out refuse to promote your property in the places where travelers are looking for vacation rentals.
Some especially unscrupulous ones may even insist that you pay for the listing site fees – in addition to the property manager’s 30-50% cut. Which is strange, because didn’t you pay them that fee in the first place so they would promote your property? Why should you have to pay additional fees for promotion on listing sites?
A good vacation rental property manager will promote your property on all of the sites where travelers are looking for vacation rentals.
It’s worth calling and asking your property manager which listing sites your property is being promoted on, and why. If your property manager can easily explain their marketing plan for your vacation rental, then they’re a keeper.
How Will Your Property Manager Make Your Vacation Rental Stand Out?
There are five major factors that can help your property stand out from the crowd of vacation rentals:
- The wow factor: a catchy headline and a great cover photo
- Well-written description that describes the property’s unique selling points
- Professional photos that showcase the property’s best features
- Answering booking inquiries promptly and professionally
- Competitive and dynamic nightly rates
Sadly, few vacation rental property managers are willing to put in the time and effort to properly market your vacation rental. They should – after all, this is what you’re paying them that 30-50% fee to do – but as often as not, properties are presented on listing sites with generic descriptions and lackluster photos.
We’ve even known property managers who manage a block of condos in a vacation destination to put up the exact same description for each property.
These strategies save the property manager time. But they also mean that the majority of those owners are never going to see a penny of income, since their property is “just like all the others.”
And if one of the others got lucky enough to receive a 5-star rating, that particular property will appear first in the rankings every time. If your property is one of the unlucky ones, it’s unlikely you’ll see many bookings.
Property managers also aren’t always prompt with their responses to inquiries, which harms your listing’s conversion rate and makes it less likely that travelers will book your property.
Ask your property management company what they’re doing to make your vacation rental listing more “bookable” to travelers, and whether they can provide a prompt response to inquiries – even on nights and weekends.
If they’ve got ready answers to those questions, you’ve got a property manager who has definitely thought through how to get more bookings and generate more income from your vacation home.
How Will Your Vacation Rental Property Manager Find Desirable Guests?
Every major listing site now offers online booking, where a traveler can hit the “Book Now” button to confirm their reservation.
But every site also offers this feature to protect owners: even when a traveler books online, their reservation isn’t confirmed until the owner has had 24 hours to review that traveler and make sure this is someone they want as a guest in their home.
Not all vacation rental property managers take advantage of this 24-hour window, and even among those who do, not all of them know the warning flags to look out for when vetting guests.
This can result in short-term tenants that are noisy, disrespectful of your property, and damaging to your reputation as an owner.
Your PM can’t 100% guarantee that no nightmare guests slip through the cracks, but they should have an existing strategy for sorting the good from the bad. Do they check to make sure the name on the credit card being used matches the name of the renter, for example? If they don’t, your property might get rented to a dozen high school students celebrating prom night, courtesy of an adult credit card holder.
Ask your property manager what strategies they use to ensure that short-term guests are desirable tenants. You’re paying the property manager to look after your property, and it’s smart to make sure they’re covering this particular angle, because bad guests can cause a great deal of damage both to your property and your reputation with your neighbors.
If your vacation rental property manager can tell you right away what red flags will keep them from saying “yes” to a potential booking, then they’re doing a great job of looking after your vacation home.
What Additional Fees Does Your Vacation Rental Property Manager Charge?
Your marketing and booking costs should be covered by the 30-50% fee your property manager is charging – but some will try to slip additional fees past you when you’re not looking.
As we’ve noted, some will try to make you pay for your own subscription fees to vacation rental listing sites. We’ve also heard stories about extravagant charges for adding amenities to a listing, updating photography or trip fees for each visit to your home. Make sure you know what’s covered and what isn’t ahead of time.
Get a clear picture of what does and does not constitute an “extra” for this property manager. For example, that 30-50% fee should include the property manager meeting your guests, handing over the keys, and being available for questions as they arise during the guest’s stay.
If your vacation rental property manager wants to charge extra for those services, ask what their core fee is meant to cover.
If you get vague responses about “taking care of everything,” be wary. Property managers who aren’t able to justify their fees with real, tangible services are usually looking to do as little work as possible – and charge you additional fees for any they wind up having to do.
A great property manager who knows the vacation rental industry should be able to give you a clear explanation of their fee structure. They’ll be able to tell you how much time they spend providing on-the-ground services, what marketing strategies they use, and how they’ll ensure the maximum possible bookings for your property.
Is Your Vacation Rental Property Manager Worth the Cost?
Well, that’s a question for you to answer.
You likely don’t live near your vacation home, which means you need someone on the ground who can meet your travelers, hand over the keys, and inspect the property after each tenant to ensure nothing is missing or damaged and that it’s ready for a new guest.
Most property managers will do all of this happily in exchange for that 30-50% fee.
But that’s not enough.
You can easily pay a flat fee to a local service provider to greet your guests and vet your property. That flat fee is often as little as $50 – and if your guests booked your property for $500, you’re only paying 10% of your booking fee to have the on-the-ground services covered.
Repairs and maintenance aren’t covered in your 30-50% fee – those are always additional costs, and the property manager generally charges you an extra fee for the convenience of not having to call the repairman yourself.
Cleaning fees are added on to almost every vacation rental booking, so your property manager isn’t covering those either. Which means …
The real reason you’re paying your vacation rental property manager 30-50% – instead of just 10% to handle the meet-and-greet – is for their marketing and booking services.
That’s why it’s essential that you ask your property manager exactly what their marketing and booking strategy is. If they don’t have a good answer, you’re paying them a huge amount of your rental income – and not getting anything in return.
You tell us: do you feel like giving up a third of your rental income in exchange for absolutely no benefit to you?
If you don’t feel like giving up half your booking income, you might consider Evolve. We’re an alternative to traditional property management, and we provide every service listed in this article – and quite a few more – for just 10%. Call us at 877.818.1014 or click here to learn more.