Hiring an Airbnb management company is a great way to earn passive income from your real estate investments. But before you do that, you need to know how much Airbnb property managers charge to ensure strong positive cash flow and good ROI.
This article provides all the information you need about Airbnb property management fees, from the typical ranges and possible extra costs, through the factors that impact cost and how it is calculated, all the way to practical tips on how to lower fees without sacrificing the quality of services.
On average, full-service vacation rental managers charge 25-40% of booking revenue, while half-service ones ask for 10-15% of income. With these ranges in mind, you can decide whether the company you are considering offers competitive fees or you might be getting charged too much.
Searching for a highly ranked, full-service luxury STR management company that charges industry-low fees for comprehensive property and guest care? Home Team Luxury Rentals fees start at only 10% of revenue and do not exceed 35%. Owners of properties with large monthly revenue enjoy significant discounts.
Airbnb property management fees refers to the amount of money that professional property managers - whether companies or individuals - charge each month in exchange for providing hospitality-quality care to short-term rental properties and their guests and owners.
Hosts typically pay a fixed monthly fee - either a percentage or a flat rate - that depends on multiple factors to be discussed briefly. In some cases, investors might need to cover one-time, ad hoc fees for additional services that the Airbnb manager provides.
What matters the most is that you have a clear understanding of the costs that you will need to cover on a monthly basis and what services this will provide you with before hiring a manager and signing a vacation rental property management agreement with them.
In terms of amount, Airbnb property managers charge a wide range of fees which can reach rather exorbitant rates. Nevertheless, many short-term rental investors are willing to cover these fees, as long as they stay within reason, in order to make money from Airbnb passively.
One of the main reasons why the fees that Airbnb managers charge vary so much is that they cover many different services.
Following is a list of the services that can be typically included in the property management cost (keep in mind that not all property managers offer all of these services):
The best Airbnb management companies adapt the list of services that they provide to the specific needs of each property and the preferences of its owner. The costs that they charge depend largely on the portfolio of services but on other factors as well.
Now that you know what Airbnb property management fees include, let’s take a look at how they are determined. In the US vacation rental market, there are two main types of fees: 1) Commission-based fees and 2) Flat fees.
Most Airbnb property managers charge a commission or a flat fee.
Commission-Based Airbnb Management Fees
The majority of vacation rental property management companies charge a commission, which means that their fees are set up as a percentage of the pre-tax monthly booking revenue which the rental generates. The booking revenue comprises the nightly rates and all extra charges, such as cleaning fees, extra guest fees, pet fees, and others.
From an owner’s point of view, the main advantage of this pricing model is that the cost depends on performance. First, hosts do not pay excessive fees in months when rental activity is slow. Second - and more importantly, the property manager is incentivized to put all the necessary effort into managing the property in a way that maximizes performance so that their own fee is also maximized.
On the flip side, when Airbnb occupancy rate is high, monthly fees can reach significant amounts, up to a few thousand dollars, especially for luxury vacation rentals that earn large income.
Companies that apply commissions-based fees include Home Team Luxury Rentals, Checkmate Rentals, Vacasa, Evolve, Casago, and others.
Flat Airbnb Management Fees
Some, albeit few, Airbnb managers charge monthly flat fees for the services that they deliver to short-term rentals and their owners. This means that they determine a fixed amount of dollars that hosts need to pay month after month, no matter the actual revenue that the property generates.
The main pro of this pricing approach is that you know exactly how much you will need to pay to your property manager each month. This makes your expenses predictable for smooth Airbnb investment property analysis.
However, the con is that the company doesn’t feel the urge to put extra effort into taking care of your property and guests as they will receive the same amount of money regardless of their performance. Thus, you can easily be leaving money on the table if you decide to hire an Airbnb property manager who charges a fixed rate.
Looking at the benefits and drawbacks of the two types of fees, it’s usually better to go for a company or an individual that works with a commission model.
The AvantStay Master Lease option is an example of a flat fee model.
The average Airbnb property management fee can be anything between 10% and 40% of pre-tax booking revenue. Costs below and above this range are also sometimes possible though you should be suspicious of fees that are too low (probably pointing to low-quality services) or too high (services are rarely worth anything on top of 35-40% of revenue).
Having said that, there are a number of factors that impact the costs of professional property management. The main one is the type of management. Full-service Airbnb property managers charge significantly more than half-service ones because of the more work than they do, allowing for largely passive income from STR investments.
But what is the range of typical fees for both types of Airbnb management?
Typically, full-service Airbnb property management companies charge 25-40% of monthly rental income. On certain occasions though, you can see costs between 10% and 45% or even more.
To make things clearer, full-service management refers to providing all the necessary tasks and activities that are required for the running of an Airbnb business, from getting properties ready for listing, all the way to housekeeping and maintenance. As a result, owners don’t need to be involved in the day-to-day operations in their vacation rental, while they are still consulted on the most important business decisions, such as what type of guests to target and whether to allow pets and what kinds of pets.
The services that these Airbnb managers cover include:
The exact work that each company does determines the fees that it charges.
Following is a list of the fees of some of the most popular full-service companies in the US market:
Since many vacation rental management firms do not disclose their pricing range on their website, hosts need to get a custom quote and make sure that it is reasonable for the amount of services to be delivered and competitive in the local market. Keep in mind that anything under 10% for full-service management sounds like a scam, and anything above 35% is usually excessive.
The average fees charged by half-service short-term rental property managers are 10-15%. While they are considerably more affordable than full-service companies, they do not entirely replace the host, so the owner cannot rely on earning passive income.
In general, half-service Airbnb managers focus on the use of technology to streamline some tedious daily tasks, but the bulk of on-the-ground work remains the responsibility of the owner or their team of local housekeeping staff.
The typical tasks included in the portfolio of half-service firms cover:
This range of services helps hosts spend less time on the management of their property and frequently improves performance, mostly due to dynamic pricing and speedy guest communication. Still, hosts need to take care of many other things, such as cleaning, restocking, inspections, and maintenance. That’s why they pay lower fees.
Some major half-service Airbnb property managers have the following costs:
For owners who’d like to spend less on professional property management and don’t mind doing some legwork, half-service could be a viable option.
While most reputable Airbnb property management companies have a single monthly fee to keep things clear and transparent, others charge a span of additional costs for what they consider to be extra services.
To have you prepared for the reality of the vacation rental management market, let’s take a look at the most popular extra costs that you can expect from your Airbnb manager:
You should know that some of these additional Airbnb management fees make perfect sense as they cover the costs incurred by managers when providing extra services for your property. This includes remodeling, furnishing, licensing, and others. Nonetheless, if you come across companies that want to charge you for onboarding, cancellation, or inspections, these are major red flags that there might be something fishy about their practices.
Another category of additional property management fees includes the fees that Airbnb managers charge to guests.
The most common guest fees include:
When choosing the best Airbnb property manager for your rental, ask about the fees that they charge to guests as well. If they expect guests to cover unreasonable fees, this will negatively impact the number of bookings that your property gets.
We’ve already highlighted that vacation rental management costs can differ majorly. This is because the exact rate depends on a few factors that change in each particular situation.
The 12 most important factors that impact the cost of management include:
When analyzing the fee that your selected Airbnb property manager asks for, make sure to include all these factors into your consideration. That’s the only way to ensure that you are getting the best value for your money.
Typically, vacation rental property managers charge their fees on the total pre-tax booking revenue earned over the course of the calendar month. This amount includes the nightly prices, the cleaning fees, the extra fees, and any other source of revenue generated by the property under their management.
Considering an average fee of 25% in the US market, let’s have a look at an actual example.
An Airbnb property was booked for 25 days in a month, over 10 different reservations. The nightly rate is $220, and the cleaning fee is $120. Five guests brought a pet, and the pet fee is $70. None of the reservations hosted extra guests. The property management fee is 25%.
How much did the Airbnb property manager charge for this month?
Total Booking Revenue = 25 x $220 + 10 x $120 + 5 x $70 = $7,050
Airbnb Property Manager Charge = 25% of $7,050 = $1,762.50
With a rate of 25%, the fee amounted to $1,762.50.
For comparison, let’s consider a 10% fee, which is at the lower range of fees charged by Home Team Luxury Rentals, for properties with strong monthly revenues.
Home Team Luxury Rentals Charge = 10% of $7,050 = $705
This example clearly shows that you can save more than $1,000/month in Airbnb management fees if you opt for a company that charges affordable rates.
The majority of property management companies take care of the payment processing. This means that they collect fees from guests throughout the amount and deposit them in a dedicated account.
At the end of the month, the property manager adds up the total revenue earned over the month and calculates their fees. Then, they subtract any additional costs such as maintenance fees that were incurred over the course of the month. At the end, they transfer the remaining revenue to the owner via a direct deposit, a wire transfer, or another agreed upon method.
This means that Airbnb hosts don’t need to actually pay the vacation rental management fees. All they have to do is to receive their payout at the end of the month.
In rare cases, the booking revenue is transferred directly to the owner’s account, so they have to pay the relevant costs to the property manager at the end of the month.
Airbnb property managers can charge expensive fees, but they provide a lot of valuable services that allow owners to not only achieve the ultimate dream of passive income but also enhance revenue and profit. With this mind, you should look for possible ways to save on costs without compromising the quality of service that your rental receives.
Here are 12 proven strategies to lower your Airbnb management fees that even beginner hosts can easily apply:
These tips can help you bring down the cost of professional Airbnb management for your property while maintaining a high quality of services. Still, you should know that there is a limit. If a property manager is willing to take full care of your rental for less than 10% per month, they are likely not going to do a good job.
Well, it all depends on the fees that you pay and the services that you receive in return.
In many cases, Airbnb property manager charges are totally worth it because they allow hosts to improve property performance via access to professional services and earn passive income at the same time. Moreover, they allow you to invest in the best places to buy an Airbnb (in case they are away from your home) and build a portfolio of short-term rentals while working a full-time job. Professional property management is also a good option for beginner real estate investors who have no experience and skills but would like to take advantage of the many benefits that vacation rental investing provides.
On the other hand, management fees are not worth it if the amount you pay to the property manager significantly exceeds the boost in revenue you experienced after hiring them. There are plenty of Airbnb management companies that charge extravagant fees that are not adequate for the services that they provide.
To make sure that costs are worth it, put the necessary effort into finding the best Airbnb property manager in your market that offers the right value for money.
With such a wide range of fees that Airbnb property managers charge, it’s worth spending the necessary time to look for a company that applies competitive rates while delivering comprehensive services. The exact amount you’ll have to pay will eventually depend on your market, the property you own, the services you require, and the company that you hire. Once you’ve settled on an Airbnb manager, try to negotiate the cost using the tips above.
If you’re looking for a top-ranked, full-service, yet affordable property manager for your luxury vacation rentals, check out Home Team Luxury Rentals. Our fees start at only 15% of revenue for end-to-end management that exceeds guest expectations, boosts income, and leads to endless 5-star reviews. Get started now and have your first month’s fee waived.
Categories: Airbnb, Property Management