WELCOME TO PARADISE RENTAL VACATIONS
Owning a vacation home today is better than in decades past – and Paradise Rental Vacations is at the forefront of improving the experience.
We can offer three standard models for short term rental management fee structures: the Fixed, Commission Percentage, and Guaranteed Income models.
Fixed Flat rate: Structure where hosts pay a stable monthly fee independent of bookings and revenue. This structure makes sense if you’re confident that revenue will be consistent.
Commission Percentage: Structure where the property manager earns a certain percentage of each booking’s revenue. The benefit here is that if bookings are slow and revenue is down, so are your fees. However, during peak seasonality, you’re likely to pay more.
Guaranteed income: With this guaranteed model fee structure, the property owner is guaranteed a fixed monthly income, regardless of how often the property is rented. We pay you a guaranteed sum for your home for the season and provide no hassle, no cost management of your home, reservations, and guests.
We are in business to simplify your ownership experience as a vacation homeowner while offering you higher net income than alternatives. We’ve set the new standard.
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Deciding whether or not to hire a property manager for your vacation rental is a big decision. After all, how do you know your property will get the attention it deserves? What about the guest experience? Will problems get adequately fixed? And finally, the most critical questions, how much will all this cost me and what fees should I consider? The simple answer is: there are many rental management fees you need to consider. These range from the cost of the property management company, to routine maintenance fees, and local taxes.
Today we are going to demystify short term rental management fees to help you make more informed decisions about your vacation rental property. We’re experts in the vacation rental field so we are going to give you our insights on short term rental management fees.
Note: we may interchange the terms, Airbnb rental, vacation rental and short-term rental. There may be a slight difference in the offerings, however, they all rely on similar processes and marketing tactics to run successfully. In general, a great vacation rental management company will be able to operate any type of short-term rentals.
Benefits of hiring a property manager
The benefits of a short-term property manager are clear. A vacation rental management company can take over the day-to-day running of your property, ultimately freeing up your time and reducing stress. This can be a really transformative phase in a vacation rental owner’s life: it lets you categorize your investment as true passive income. However, the convenience of a property manager has a cost: management fees.
Today’s short-term rental market doesn’t exactly lend itself to the casual Airbnb host. There’s increased competition, more rental channels, higher guest expectations, new cleanliness standards, and unprecedented booking behaviors. All of this has amounted to a huge wave of professionalization and a growing desire to leverage the power of an Airbnb style property management company.
If you’ve decided to outsource some of the responsibilities involved in managing a vacation rental, the next step is choosing a Short-Term Rental property management company. This is by far one of the most impactful decisions you’ll make as a short-term rental host.
The Best Short Term Rental Property Management Companies: What do they do?
Before diving into how to choose a property manager for your vacation rental, let’s establish what exactly a Short-Term Rental property manager typically does. Here are some of the most common services provided by a property manager:
- Marketing your property: Ideally, your property manager helps boost your listing’s exposure. Services here can include listing your property on multiple social media sites, taking professional photography, and managing its descriptions online.
- Optimized pricing: Many property managers will manage your listing’s using a dynamic pricing strategy. They’ll be well-equipped with data-driven resources (often from AirDNA, Wheelhouse, or Price Labs) to determine how to price your property competitively.
- Guest communication: Communicating with guests is a major reason hosts decide to outsource to a property manager. Many Short-Term Rental management companies will take responsibility for communicating with guests from the moment they make a reservation to their post-stay review. This also includes staying in touch with past guests and managing direct bookings in the future for returning guests or possible referrals to friends or family.
- Maintenance, repairs, and cleaning: Keeping your property clean and functioning is a must-do for managers. When something breaks or needs immediate assistance, they’ll be responsible for finding a solution.
- Payments and Financial Reporting: When you receive reservations from multiple platforms, managing payments can be a hassle. Plus, it’s tough to get a clear snapshot of your rental’s performance. For this reason, many property managers will set up and maintain your payment processing through a robust software system and provide reports on the performance of your rental.
- Local expertise: If you opt for a boots-on-the-ground property manager, they’ll offer tons of knowledge for guests about the local area. They’ll also be more attuned to things like seasonality and peak booking times.
How to Choose a Property Manager for your Vacation Rental: 2 Main Category Types
The first thing to know when choosing a management company is that not all property managers are created equal. Each provides its own unique set of services along with fees and commission structures. There are two main category types of vacation rental management companies: Full-service property managers, and Tech+Distribution managers.
Full-service property managers
If you want to truly “set it and forget it” when it comes to your vacation rental while maximizing your reach, you’ll need a full-service property manager. These property managers will take care of everything involved with your rental – from cleaning to marketing and maintenance – to ensure that your place gets booked without you having to lift a finger.
Property managers aren’t always confined to a specific location and some have properties distributed throughout a region or country. Some of them also focus on specific types of homes, such as luxury rentals or beach houses.
While they may have great channel management strategies across all the booking platforms such as Airbnb, Vrbo, and Booking.com, and the many, many others that are out there, due to the volume of properties that these companies manage, they may also have robust direct booking platforms and dedicated revenue managers to drive as much booking revenue as possible.
Tech+Distribution Managers
The second category of vacation rental management companies includes those that offer flexible contracts and help primarily in the online distribution, marketing, and communication components of your rental through a Virtual Online Channel Partner Program. They’ll help get your property booked by listing it on multiple sites online and provide 24/7 customer service for your guests. As Virtual Online Channel Partner managers, their fees are lower than the local managers listed below, but then you’ll be in charge of handling cleaning, maintenance, and anything on-site.
What are the most common Short Term Rental property management fee structures?
There are three standard models for short term rental management fee structures: the fixed, percentage, and guaranteed models. As we’ll explore below, each type of management fee structure has its pros and cons. There isn’t necessarily a better or worse one. It basically comes down to what’s right for you and your property.
These are the Three main common fee structures available when hiring a property management company:
Fixed Flat rate: Structure where hosts pay a stable monthly fee independent of bookings and revenue. This structure makes sense if you’re confident that revenue will be consistent.
- Fixed Flat-rate fees – Some property management companies charge a flat rate for a specified set of services. This fee does not vary depending on the number of nights the rental is booked in a month. For instance, you could be charged $400 a month as the average property management fee for handling cleaning and booking. The great thing about this fee structure is that you can make a good profit during the high season. However, these companies are also likely to charge you extra property management fees on top of the fixed monthly payment for additional services such as maintenance, marketing, and check-in. If you opt for this kind of fee structure, be sure to read the contract carefully and negotiate to get some of these additional services included in the monthly payment.
Commission Percentage: Structure where the property manager earns a certain percentage of each booking’s revenue. The benefit here is that if bookings are slow and revenue is down, so are your fees. However, during peak seasonality, you’re likely to pay more.
- Commissions – In this model, the company will take a percentage of your monthly earnings. The charges will depend on the rental property’s location, as well as the services being offered. Generally, the property management fees could be anything between 25-50% of the rent collected. Be sure to negotiate with the property management company to have as many services as possible included in this fee structure.
Guaranteed income: Many property managers follow a guaranteed model. With this fee structure, the property owner is guaranteed a fixed monthly income, regardless of how often the property is rented. Any income above and beyond the homeowner’s guaranteed income goes to the property management company.This is great for property owners who want a stable and 100% passive income. High or low season, your investment will earn you the same income throughout the year. But for properties in some touristic hot spots, you could make less when compared to the commission or fixed-rate models.
- Guaranteed income (or Master Lease): While not the most common, some property managers will lease your property from you directly and then handle the subleasing, offering dependable income each month regardless of rental performance.
A Breakdown of Common Property Management Fees
Here is a breakdown of specific property management fees to consider before renting out your property:
1. Initial setup fee When setting up an account with the company, property management companies will typically charge you a registration fee, set up fee or onboarding fee. This fee might include costs for paperwork, initial advertising, and inspecting the condition of your Short-Term rental property.
2. Tenant placement fees If the property management company is responsible for finding tenants for your rental property, they will charge you a tenant (guest) placement fee. This fee could cover advertising costs and tenant screening, as well as check-in and check-out procedures. This could be a percentage of the rent or a flat fee.
3. Maintenance fee Short Term Rental property maintenance involves tasks such as:
- Checking if the carbon monoxide detectors and smoke alarms are working well
- Ensuring that there are no bare wires hanging around the house
- Repairing anything that guests have damaged
- Ensuring the Wi-Fi is working
- Checking if the water system is working everywhere – in the kitchen, the bathroom, and the shower
- Making sure the heating and air conditioning systems are in good order
As a Short-Term Rental owner, you need to understand the company’s maintenance process. Here are some of the questions you need to ask the Short-Term Rental property manager:
- Does the company have an in-house team?
- What is their turnaround time for a basic repair job?
- What maintenance issues do they have to outsource?
- Is there an emergency number that guests can call?
- When would they need to consult you as the owner?
Asking these questions will show you if the Short-Term Rental property management fees being charged are justifiable.
4. Cleaning services Your cleaning fees will vary depending on the size and location of your rental. While some property management companies include cleaning fees in their fixed rate, others charge it separately.
When analyzing cleaning fees, here are some factors you need to consider:
- What exactly is included in the cleaning fees?
- How long does it take?
- How good is the cleaning?
- Are there check-lists in place?
- Will you be able to get the rental cleaned between guests without losing bookings?
Additional short term rental management fees
Be sure to ask your potential property management company up-front what kinds of extra fees they charge for a regular booking. Some will throw in additional charges like a check-in fee which covers the cost of the property manager welcoming guests or exchanging keys.
It has also been reported that many property managers charge extra for parking, hot tub, pool, and booking management.
It may also be a surprise for you to learn that almost all short-term rental management companies charge an annual or bi-annual deep cleaning. This is likely a good thing to do, but make sure you understand upfront the frequency and cost of this additional fee.
Credit card processing fees are also something to consider if bookings are made directly through your vacation rental management company. Finally, if the management company books rentals for you, as opposed to you bringing in the lead through Airbnb, HomeAway, or VRBO, they may take a higher percentage.
What Will You Pay for Short Term Rental Property Management?
Above, we have provided a general breakdown of fees. But the Short-Term Rental property management fees you will incur in running a Short-Term Rental business will be influenced by the following factors (among others):
- Size of the rental – It is obvious that managing a bigger Short Term Rental investment property is more demanding than managing a smaller one. As a result, the fees charged will be higher.
- Type of property – Short Term Rental property management fees will vary depending on the type of property – apartments, condos, single family homes, multifamily homes, boutique hotel, etc.
- Location of the rental – If your property is located in a neighborhood where rent is high, the Short-Term Rental property management fees will also be high.
- Condition of the property – In case your property has many maintenance issues, you are likely to pay more in Short Term Rental property management fees.
- The extent of services – Short Term Rental property management fees will be determined by the number of services being offered. For example, if you only want the company to deal with check-ins and check-outs, you will pay less than someone else who wants the company to advertise the property, screen guests, collect rent, handle repairs, and keep financial records.
Are Short Term Rental Property Management Fees Worth It?
Before purchasing a Short-Term Rental investment, you should have a way of determining how much of an impact property management fees will have on your cash flow and ROI. That is the best way to determine if Short Term Rental property management fees are worth it.
Because professional property managers can help you earn passive income and even boost your occupancy rates, if their fees also allow for positive cash flow and a high ROI, then they are definitely worth it!
Best Short-Term Rental Property Management
Tried-and-true vacation rental managers who operate locally are usually your best bet. They typically have years of experience in property management and differentiate themselves and their business by being experts in their local, geographic markets. Some cover just a small geographic area, while others can cover multiple regions within the US.
These property managers capitalize on the increased distribution from listing channels like Airbnb and VRBO while still retaining capital and delivering a branded experience through direct bookings. Many also provide end-to-end service for your rental and take care of marketing, maintenance, cleaning, channel management, and everything else needed to run your short-term rental successfully. Fees here are on the higher end and can be anywhere from 30%-50% of revenue for full service.
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INCREASED INCOME GUARANTEED
WHAT YOU GET:
- We Provide a Dual Guarantee
- You’ll make more money with Paradise Rental Vacations
- We can you a guaranteed sum for the entire season.
- We take on the responsibility of rentals and you as the homeowner get to rest easy knowing your home is cared for and your income is ensured.
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COMPREHENSIVE SERVICE
Whether you need to book a reservation, answer a guest concern, or call an emergency plumber, managing your vacation home can be burdensome. The average vacation homeowner spends 8-hours a week managing their vacation home! With Paradise Rental Vacations, you get comprehensive A-Z management of your property, and guests with no hidden fees or worries about chargebacks. We lay out everything upfront in our customized pricing quote, so Relax, we’ve got it!
PROFESSIONAL PARTNERSHIP
How do you partner with Paradise Rental Vacations? It’s easy, contact us via phone, email or submitting our web-form and we’ll setup a phone consultation. We’ll then do a home walkthrough and determine the rental income we think you can achieve and give you a customized quote. If you’re satisfied, we’ll send you our Standard Owner’s Agreement to fill out – then you just sit back and relax and we manage everything from there on out!
Partner with US – We Make Ownership Easy
We’re currently expanding our family of partners and would love to assist you with the onboarding of your vacation rental.