Everything you should know about property management fees for vacation rentals
If you are currently running a vacation rental business, property management fees may seem exhausting if you haven't expected the additional costs before starting your business. You need to pay a particular amount of fees to cover the costs of the specific property management services. Let's now dig deeper into everything you should know about property management fees for vacation rentals and the guide to calculating them for your vacation rental.
What are the average Property Management Fees?
Even though the industry average of property management fees can range anywhere from 25 to 30% of the rental cost, the fees vary broadly across different cities. Depending on the property and its location, some fees can go right from 10% to even 50% or more.
Irrespective of the fees, you can always negotiate with the company before working with them to get a suitable contract. The key is to focus on the objective of owning that vacation rental in the first place. This will help you understand the average fees generally charged by the companies.
Here is the breakdown of the different property management fees charged by the vacation rental companies:
Initial Fees
While working with property managers, you need to pay a certain amount of general fees before starting anything in your vacation rental. It usually covers everything from marketing and advertising to all the paperwork of listing the properties as clients and others.
Initial fees can sometimes be free or range up to $300 in different areas.
Management Fees
Management fees are charged to cover the expenses for any cleaning, advertising, and maintaining the property. This fee will ensure that your property is well taken care of by the company with the right property management tools.
Your management fees can be anything from 12 to 50% or more, depending on the average monthly revenue.
Flat Fee Pricing Structure
Some property management companies offer a flat pricing structure for managing the property throughout the year. This price is usually negotiated and agreed upon by both parties depending on a suitable choice.
The flat fee is highly variable depending on the type of property, the area it is located, rent prices, and the property's market value.
Average Property Management Fee Calculation
Calculating the average property management fee will give you a heads-up on the upcoming expenses before renting out your property. Here are some essential factors you should definitely consider while calculating the average property management fee:
What kind of property management fee does the company offer? (Flat fees, percentage-based, etc.)
What fee model does the company work with? Does the company go with a commission-based or guarantee-based model?
Are there any extra fees for cleaning, maintenance, advertising, etc.?
Final Thoughts
Calculating the property management fees beforehand will prepare you for the upcoming years as you keep renting your house to guests. We recommend not avoiding this fee as it will safeguard your home from any mishaps, which can incur more charges for you in the long run. Look for good vacation rental property managers who are down for some negotiation on the prices and the facilities provided for your property. Ensure that you go through all the terms, policies, and conditions before signing the deal and ask them to explain everything on the list in a comprehensive manner.
Thus, kickstart your research for the best vacation rental management company today. This way, you can settle on a good property management company soon that will not only take care of your property but will also be light on your budget.