Working with a vacation rental management company is a great way to streamline business operations and help reach your goals. Of course, having a suite of services to support your success also comes with short-term rental management fees that need to be factored into your bottom line.
It’s important to understand how these fees work, how much you may pay on average, and what they typically cover before choosing the best option to help your rental run smoothly.
Short-term rental management fees work differently depending on the company. Many operate on a commission or booking fee structure, meaning they take a percentage of the revenue from your bookings. These fees are usually collected monthly, and the total you pay depends on your earnings for that month. So, you only pay when guests stay –– and you put more in your wallet during busy seasons.
Some traditional property managers still use a fixed-rate model, however, where you pay the same amount every month. Others use a guaranteed income model, where you make the same revenue every month regardless of bookings — and you pay a fixed fee, too.
These fee structures aren’t ideal: fixed rates force you to pay the same money in shoulder seasons, even when earnings may be lower. And while a guaranteed income model can offer stable revenue month after month, it also means you may not pocket all of the earnings you deserve during busy seasons.
For example, let’s say you’ve agreed on a guaranteed income of $3,000 a month from your property manager. But in one busy month, your rental earns $5,000. The extra $2,000 would go to the company instead of you.
The average property management fees for vacation rentals vary widely across the industry, ranging from 10% to 50% of your revenue depending on the property manager.
Fees look different based on a number of factors, from a company’s model to the suite of services they provide. When you’re looking into how much vacation rental property management costs, be sure to do your research on exactly what will be covered by a company’s short-term rental management fees. That way you know you’re getting the most bang for your buck –– and keeping as much of your revenue as possible.
While different management companies offer distinct services, short-term rental management fees often include services for the following aspects of a vacation rental business to some degree.
As part of your standard management fee, the company you choose should create a custom listing to market your property and bring in bookings. This listing should be an accurate representation of your home, show off the sought-after amenities you have, and include professional photos to make a great first impression on potential guests.
Your management company should also be able to utilize strategies that help make sure your home is found by the right guest at the right time. That includes being found on all of the best vacation rental sites, so a robust promotion and distribution plan should come with any short-term rental management fees.
It takes a lot of behind-the-scenes work to make sure calendars are correct, sites are secure, and travelers can book with the click of a button. Property management fees generally cover the tech that companies use to make all of these processes run smoothly.
Partnering with a company that can manage your booking calendar and reservation process takes a ton of pressure off of owners doing it all themselves, making short-term rental management fees feel like money well spent.
Some level of guest support is also likely to be included in your management fees to help make sure travelers are having five-star experiences — and bragging about them afterward.
It’s ideal if fees also include your property manager handling pre-booking and pre-stay questions from guests, following up with them to request reviews, and responding when any feedback is less than stellar.
Many property manager’s fees will include a strategy to help you (and their company) earn money from your vacation rental. With the market constantly changing, it’s best to partner with one whose revenue optimization strategy includes dynamic pricing and policies that help you earn the most overall –– and make your management fees well worth it.
Fees may also help cover the costs of tech and revenue experts needed to gather historical data and real-time industry insights to inform this strategy.
Depending on the company you partner with, there are a few services that may not be included with your vacation rental property management fees. If you’d rather not take care of these items yourself, you can usually find a third party to help out for an additional fee. Your management company may also be able to connect you with providers for some of these services.
While a few traditional property managers may include cleaning services in their short-term rental management fees (meaning that money comes out of your pocket), most companies are set up to have cleaning fees paid for by guests.
This is great for your wallet –– and even better when there’s flexibility to find a cleaning company you trust to check all the boxes. Cleaning fees can vary widely based on property size, type, and location, so you may want to work with a management company that allows you to choose cleaning partners who can service your property at rates you feel comfortable with.
Similar to cleaning, some companies may replenish inventory in your rental as part of their management fees, while others leave it to owners to make sure their vacation rental is stocked with essentials.
If your company’s fees don’t cover stocking, and you don’t live nearby or would rather have help, you’ll need to arrange for a service provider to take inventory and keep your home fully stocked for an additional fee.
Some management companies include basic maintenance in their fees (although they may charge more as a result), but others leave these expenses to owners.
If your property manager says maintenance is covered as part of the management fee, clarify what is (and isn’t) included to avoid surprises when something breaks or needs upkeep. Note that extra services you might need, like snow removal and landscaping, may be add-ons to a management fee.
As mentioned above, many companies handle guest communications at some level as part of their fees. But if they aren’t a traditional management company, you may need to arrange for someone to help guests with questions or urgent issues during their stay.
Of course, this isn’t an extra expense if you decide to be that person, or have a friend or family member do so. But if you’re looking to find a trusted service provider to serve as your on-the-ground contact for guests, you’ll likely need to pay an extra fee.
When guests pay with a debit or credit card, there is a 3 to 5% fee that payment processors charge to complete the transaction and get the money to your account.
Many vacation rental managers charge this fee to owners as a separate line item because it falls outside of the commission or booking fees they receive. This fee goes directly to a payment processing company like Stripe or VacationRentPayment, so it is not covered by management fees.
Paying short-term rental management fees is worth it when you get the most bang for your buck. It’s crucial to do your research on what’s included, and find out how you’ll get support at every stage of the journey.
That’s why it’s best to work with a company who consistently helps owners out-earn the competition, while handling a lot of the heavy lifting. Evolve can help your rental run smoothly for an industry-low fee, so you can keep as much money in your pocket as possible. Plus, our Risk-Free Guarantee lets you take the leap toward rental success with confidence.