Managing and marketing a vacation rental requires a lot of time and effort – HomeAway found that the average vacation rental owner spends more than 34 hours/month on managing and marketing, and TurnKey found these efforts can total up to over 400 hours/year. Hiring a property manager can give you back that time, while also increasing your bottom line.
Before you sign up with a property manager, it’s important to understand their fee structure and make sure you’re not being overcharged. If you don’t do your research first, you could be missing out on revenue that should be deposited into your bank account – not your property manager’s.
John Banczak, executive chairman of TurnKey Vacation Rentals, says transparency is key when understanding fees charged by vacation rental property managers.
“Trustworthy property management companies like TurnKey are competitive and transparent about all services and their associated costs. They charge low commission fees, pass on distribution costs to owners, and break out all costs rather than bundling everything into one large fee,” Banczak says.
“Without this level of detail,” he adds, “how can you be sure that you’re not overpaying for your property management services?”
Most property managers charge commission rates from 35-50%. But in some cases, those rates don’t tell the full story. Here’s how you can make sure you’re not getting overcharged:
Before you start thinking about property management fees, you should take some time to pinpoint your goals — known as “owner priority requirements” — for how a property manager should take care of your vacation rental. According to Chris Dowler, founder and owner of Connecticut-based Dowler Construction Services, the owner of a vacation rental should consider:
These priorities can be used to come up with standards that help measure a manager’s performance and, therefore, justify the manager’s fees, says Dowler, whose company manages investor-owned properties and private estates.
“By having very distinct performance standards — like ‘Respond to client inquiries within 60 minutes for emergency calls’ or ‘Provide financial reports by the fifth of each month’ — it becomes very easy for our clients to gauge our effectiveness,” Dowler says.
At the outset of your search for a property manager, be sure to compare management fees assessed by several companies. In other words, do some shopping online or over the phone.
“There are different levels of service a manager provides, and most of the time you get what you pay for,” says property manager Teris Pantazes, co-founder and CEO of EFynch.com, a homebuyer and handyman community in the Baltimore and Washington, D.C. areas.
When you’re researching property managers, be sure to ask whether their commission structure includes costs such as cleaning fees and renter application fees. If fees aren’t bundled and a number of extra fees are tacked on, that might be a warning sign. Make sure the property manager makes it clear what exactly you’re paying for in the total cost.
“Once you know how a company structures their fees, you’ll be able to determine if you’re overpaying for their services,” says Evan Roberts, owner of Maryland-based Dependable Homeowners, which buys and sells vacation rental properties along the East Coast.
Before signing on the dotted line, Roberts says, you should study the property management agreement to see whether it’s stuffed with special conditions that could result in additional fees, such as emergency cleanups.
“Any company with a tight scope of work will likely fail to pull through in situations when you need them the most,” Roberts says.
Before you sign a property management contract, check the property manager’s references. That investigative work could uncover issues with management fees or could raise other red flags. By the same token, it could prove that the property manager is reputable.
“Nothing is a better gauge for a company’s performance than current references. Give these clients a call and find out about their experiences when working with the company,” Roberts says. “Focus on times when things when wrong, such as a renter caused damage or there was an emergency repair in the middle of the night.”
Taking the time to do your research can help you get the most out of your vacation rental and your property manager.
Want to see how TurnKey can help you manage your vacation rental? Request more information here.