It’s no surprise that a vacation rental will need to make money. Otherwise, you are renting your property simply for the fun of it (and a property that is being rented without making money doesn’t sound very fun).
As the owner of a vacation rental, you are responsible for ensuring that the vacation rental collects the maximum amount possible from each guest’s reservation. However, the nightly rental amount is a small piece of the pie that makes up the total reservation amount.
This is where you would benefit from hiring a property manager to oversee the rental process from beginning to end with each guest to ensure that all needs in the short-term rental process are being met.
Your vacation rental property will need to be cleaned, maintained, and advertised. These areas are all areas that you may not have time to manage. A property manager can oversee these areas and many more.
You will need to prioritize the reasons in which you need a property manager and discuss the method in which you are going to pay them.
How Much Will it Cost Me?
How much property managers charge depends on the amount of responsibilities they are going to oversee. The property manager may be responsible for managing your listing, scheduling housekeeping and maintenance services, and communicating with guests; just to name a few.
When asking how much does a property manager charge, you should compare the results based on the responsibilities they are supervising. A property manager who is hired to solely communicate with guests will charge less than a property manager who is hired to manage the entire rental process.
Property managers typically describe their fee schedule in one of the following ways:
Guaranteed Income Fee
The guarantee income fee method means that it does not matter how often the vacation rental is booked, the owner will receive a standard fixed income amount from the property each month. This puts pressure on the property manager to ensure the property is rented at its full potential so that you receive the same amount of income each month. On the flip side, this is a good option for the property manager, as any income that exceeds the owner’s guaranteed fixed income can go directly to the property manager.
If the property manager offers a fixed-rate fee, they are giving the owner a list of assigned services they will offer for a certain price. Regardless of how often your property is booked during the month, your monthly fee will remain the same.
If the property manager offers this fee, read the contract agreement to make sure there are no disclosures that will cost you additional money.
Commissions are typically the most commonly chosen among owners because of their appeal to both the owner and the property manager. The commissions fee places all expenditures to be paid within the commissions amount received by the property manager.
If the rental property is booked solid for weeks, the owner earns money, and the property manager earns large commissions. If the month is slow, you will pay fewer commissions.
So, what does this mean?
How much property managers make depends on the fee schedule you choose. This means that you will pay a short-term property manager anywhere from 25 – 50% of the property’s rented amount based on the fee schedule you choose.
Now, this is the important part: you need to know what services are included in the property manager’s fees.
Let’s say the property manager agrees to cover the calendar reservations, communication with guests, and updating the listing on multiple websites; but they do not cover scheduling cleaning or repair services.
The property manager will charge you a separate expenditure for scheduling a cleaning, repair, or maintenance company to visit the property.
Therefore, if you are under the impression the fixed-rate fee includes all services and the vacation rental needs a hot tub serviced, you may see a cost for this item separate from the fixed-rate fee. To avoid surprises, make sure you understand what services are covered by the property manager and what services are not.
How Do I Find the Right Property Manager?
The best way to determine which property management company is right for you is to list the areas that you will need the property manager to supervise. You may need the property management company to have a little or a lot of responsibility in managing your rental.
Fortunately, property managers understand that no two owners are alike. This means, no two owners’ needs are alike either. Therefore, the property management company should offer a wide variety of services for owners of all kinds.
If you only need a small amount of help with your busy vacation rental, you may want to choose the fixed-rate fee. This method will allow you to pay the property manager to supervise the areas that you don’t have time for.
If you would like to know you will be receiving the same amount of income each month, regardless if the property has been rented or not, then you should look for a property management company that offers a guaranteed income fee.
Once you prioritize your needs for a property manager, you will be able to research and decide which one is best for you. Knowing your options and researching the management company will allow you to hire a property manager who will maximize the revenue made from your vacation rental property.