A Closer Look At The Airbnb Property Management Fees

Dated: July 16 2020

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Property management fees are a vital part of the Airbnb business. Knowing what to expect in terms of management fees will help you to plan your expenses properly and estimate your ROI before investing. This post will address all you need to know about property management fee structures and where each of the expenses comes from.

Let’s start with the common fee structures of Airbnb property management fees.

1. Fixed-rate fees

While some Airbnb property management companies charge for certain services per night or per the number of booked nights in a month, others work with a flat rate. The latter arrangement is called the fixed-rate fees, allowing Airbnb owners to make maximum profits during the high season. Companies that adopt a fixed-rate fee structure may also charge additional management fees for services like check-in, marketing, and maintenance. As a property owner, do not go into a fixed-rate fee agreement with a management company except you understand the terms of the contract. More importantly, negotiate to integrate the charges for these extra services into the fixed-rate monthly payment.

2. Commissions

The commission model is such that you pay the management company a pre-agreed percentage of the monthly earnings. Factors like the location of the property and the kind of services offered contribute to the extent of the charges. However, it is not usually less than 25% and not more than 50% of the rent. Again, feel free to negotiate the commissions so that it covers as many services as possible. What Makes up the common Airbnb Property Management Fees?

Below are the main components of any Airbnb property management fee structure:

1. Registration Fee

This is the same as the initial setup fee the property management company charges when you are about to setup your account with them. It covers expenses like property inspection, initial advertising, and paperwork.

2. Maintenance Fee

The maintenance of an Airbnb property is a huge task. For instance, the maintenance company will ensure the proper functioning of smoke detectors, fire alarms, Wi-Fi, air conditioning systems, water system, heating systems, and other essential fixtures in every part of the unit. It will also repair any faulty fixtures or units. That said, the maintenance process differs from each management company to another. Feel free to make necessary inquiries about how this works. You can speak to the property manager about their approach to repair, the turnaround time for simple repair jobs, the availability of emergency call services, and if they work with an in-house team or outsource the repairs. Your findings will help you to decide if the fees charged corresponds to the value proposition.

3. Tenant Replacement Fees

This is only applicable in cases where you ask the property management company to help you look for tenants. Such services may attract a tenant or guest replacement fee, which covers advertisement, tenant screening, and check-in/out procedures. These charges may be either a flat fee or a pre-determined percentage of the rent.

4. Vacancy Fee

If the signed agreement between you and the property management company includes a vacancy fee, you may either pay such per vacant unit or a one-off, upfront amount.

5. Cleaning Services

You need to keep the Airbnb property clean at all times, and your property management company can handle this for you. However, the fees chargeable for these services depend on the location and size of your rental. In some cases, it is part of the fixed-rate charges, or separately charged in other cases. The cleaning fee is determined by some factors: the type and extent of cleaning proposed, the duration it will take, and the possibility of cleaning the property between check-outs and check-ins. What is the ideal fee to pay for the management of your Airbnb Property? It is not the best decision to give your Airbnb property management company the sole power to decide what your property management fee will be. It is better that you know what factors are considered before arriving at a specific fee. This gives you the much-needed leverage to negotiate as appropriate.

Here are some factors that influence Airbnb management expenses:

1. Size and type of the rental property.

It is normal to pay more for a bigger Airbnb investment property. Likewise, the type of the property also determines how much is charged as the management fee. For instance, apartments and condos will cost less while single and multi-family homes, as well as boathouses, will definitely cost more.

2. Location and condition of the rental property.

If the rent is relatively high in your neighborhood, you will most likely pay more for your Airbnb property management. Also, properties with maintenance issues will cost more in management fees.

3. Type and extent of services.

The number of services your Airbnb property management company is offering will determine your bill. For instance, if the company only handles the check-ins and check-outs, they will charge less compared to an arrangement that includes guest screening, advertisement, rent management, repairs, and financial record keeping. What are the best Airbnb property management apps?

Any serious Airbnb investment property owner must take advantage of the productive real estate investment tools out there to improve their business. Some of the software can help to gain more positive reviews. Others are designed to help you boost the occupancy rate of your property. We have listed some of these apps below:

1. Microsoft Office

The Microsoft Word and Excel programs are multifaceted and can help you to run your Airbnb business seamlessly. You can calculate and analyze your finances using Excel and document your strategies or notes with Word.

2. Google Drive and Dropbox

Effective record-keeping is crucial in the Airbnb property business. Tools like Dropbox and Google Drive can help you to store information while making it available remotely. You can store vital data like payment details, contracts, and property pictures on these storage spaces.

3. Unlocking Doors

It isn’t easy to physically hand over keys to new occupants of an Airbnb property, especially when you are handling multiple rental properties or out-of-state rentals. The easy way to do this is to use the Unlocking Doors app, which allows you to grant new occupants access to the property remotely. Designed by Lockitron, this app will authorize the occupants to open and lock the door with their smartphones. You can use all of these apps by yourself, with little or no help whatsoever.

Final Thoughts

We hope that you are now better informed about Airbnb Property Management Fees and how they work, as well as essential knowledge to get the best deal for yourself and your business. Good luck!

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