When deciding how to manage your short term rental, you need to know what Airbnb property management fees look like and how much they are.
The first step in starting a successful vacation rental business is buying an investment property. The second step is choosing the management method. You can decide between becoming an Airbnb host yourself or delegating the management responsibilities to a professional. While the second option means passive income, it also comes with specific fees you need to consider in your analysis.
Table of Contents
- Property Management Fee Structures
- A Breakdown of Common Airbnb Property Management Fees
- What Determines the Airbnb Property Management Fees?
- How to Manage Your Airbnb Property by Yourself
Over the past decade, Airbnb rentals have been offering a higher ROI than long term rentals. However, because of the frequent turnover, more work comes with managing a short term rental. You need to respond to guests’ questions, check them in and out, clean and restock the property, and maintain it, among others.
Moreover, investing in your local market is not always the best option if properties are overpriced and visitors are few. For the reasons above, in many cases, Airbnb investors resort to the services of Airbnb property managers. But before they do that, they need to understand what fees they will need to cover and how this will affect their ROI.
Watch our video below for 20 tips on how to optimize your Airbnb property ROI:
In this article, we’ll discuss everything you need to know about Airbnb property management fees so that you can make the right decision for your investment property.
Property Management Fee Structures
Since the establishment of Airbnb in 2008, short term rentals have turned into their own real estate investing strategy and industry. There are more than 6.6 million active listings on the Airbnb platform alone, with many more on other vacation rental listing websites like Vrbo and Booking.com.
The rapid growth of this new strategy has pushed the emergence of another industry – Airbnb rental property management. In the US market, hundreds of short term rental property management firms range from large national companies like Vacasa and Evolve rental management to small, local managers working in a single city or town.
Despite all the differences in services and coverage that these companies provide, when it comes to Airbnb property management fees, there are two main fee structures they all follow. Some charge fixed-rate – or flat – fees, but most charge a commission or a percentage of the monthly rental income.
Fixed-Rate Airbnb Management Fees
Some Airbnb property management companies charge a fixed rate – or a flat fee – for a specified set of services required for running an Airbnb business on your behalf. Under this pricing model, the fee remains the same each month regardless of the number of booked nights.
Instead, the size of the property management fee depends on your location, property type and size, and the services that the company provides. In most cases, Airbnb hosts can expect to pay between $300 and $500 monthly per property under this fee structure.
It’s important to note that this fee covers the basics like managing guests, cleaning and restocking the property, and inspecting it for damages. But the price does not cover things like maintenance and repairs, so you need to budget for these separately when conducting your rental property analysis prior to purchasing.
The great thing about this fee model is that you can know exactly how much you’ll pay for management throughout the year and can include this number when analyzing the potential of a property. Another benefit is that you can save a lot of money on property management during the high season as you’ll pay only the flat fee.
On the flip side, with this property management fee structure, companies are not incentivized to perform better to make more money. They will do only the bare minimum to keep your property running but not put in the extra marketing effort to bring in more guests, as their income does not depend on how many renters you welcome. Indeed, the fewer guests, the less work for them around turnover.
Commission-Based Airbnb Management Fees
The second short term rental property management fee model is more popular and commission-based. In this case, the company charges a percentage of your monthly rental earnings. Usually, the fee percentage is around 20-30%, but it can vary from 15% to 50%. It depends on location, specific property, and included services. Once again, this fee excludes extras such as fixes and repairs.
The main pro of this fee structure is that it gives the property management company the right reasons to want to attract more renters and maximize your Airbnb income. It means they will also make more money from your short term rental as their fee will be higher.
The main con is that management services will cost a lot, especially during peak seasons. Moreover, you never know how much you will need to pay in monthly fees. You should take into account this uncertainty when evaluating the revenue and profit from your vacation rental investment.
The Mashvisor Airbnb calculator allows you to enter both the expected rental income and expected property management fees (as well as other related expenses) to see how this affects your ROI.
No matter which fee structure your selected Airbnb management company wants to charge, negotiate before signing a contract to get as many services for as minimal charges as possible. Furthermore, get a list of everything the company offers for the fee along with a breakdown of the cost of other expenses not included in the monthly charges.
A Breakdown of Common Airbnb Property Management Fees
Here is a breakdown of the most popular property management fees to consider before renting out your investment property on Airbnb:
1. Property Onboarding Fee
When setting up an account with the company, most property management companies will not charge anything. However, some vacation rental property management teams will charge you an onboarding or setup fee.
This fee covers inspecting the property, preparing it for guests, helping hosts understand the process, preparing the paperwork, and launching an initial advertising campaign. You can expect this fee to be no more than $500 per property.
Our advice, though, is to stay away from Airbnb property management services asking for an onboarding fee, as this is not the standard in the US market. It can be a red flag that the management team is purely after easy money to enhance their profit rather than optimize your property’s performance.
2. Guest Management Fees
Another cost included in the Airbnb property management fees is all the work associated with your guests. It comprises answering guest questions by email, chat, or phone before, during, and after reservations, checking in and out guests, providing them with all necessary information, and others. It is a major part of the responsibilities of property management companies.
In most cases, there is no separate fee for this service because it is part of the job description for this real estate career. Instead, it is factored into the overall management fee, whether a flat rate or a commission. Just in case, before hiring a particular manager, confirm if you’ll need to pay a fee for this service.
3. Vacancy Fee
The Airbnb property management agreement could have a clause that says a fee will be charged for vacancies. This could be a fee per vacant unit or a one-time fee upfront payment. It is set by Airbnb management companies that work for a percentage of the rental income, not those who charge a monthly flat fee.
But keep in mind that having a vacancy fee is not a common practice in the US short term rental market. Your property management team should work on maximizing your Airbnb occupancy rate rather than making you pay when they don’t do their job right. It’s best to look for a company that does not have such a fee.
4. Inspection and Maintenance Fees
Airbnb property inspection and maintenance are must-have parts of the short term rental business management process and involve tasks such as:
- Checking if the carbon monoxide detectors and smoke alarms are working well
- Ensuring no bare wires are hanging around the house
- Ensuring the Wi-Fi is working
- Checking if the water system is working everywhere – in the kitchen, the bathroom, and the shower
- Making sure the heating and air conditioning systems are in good order
- Repairing anything that guests have damaged
As an Airbnb property owner, you need to understand the company’s inspection and maintenance process before hiring them. Here are some of the questions you need to ask the Airbnb property management professional:
- Does the company have an in-house team?
- How often do they conduct regular property inspections?
- What is their turnaround time for a basic repair job?
- What maintenance issues do they have to outsource?
- Is there an emergency number that guests can call?
- When would they need to consult you as the owner?
In addition, you need to understand if the total property management fee already includes the inspection fee or if it’s charged separately. Both options are common. Meanwhile, maintenance jobs outside changing batteries and light bulbs are additional charges.
Make sure to ask all the right questions to know that the Airbnb property management fee rate is worth the services you will receive in return.
5. Cleaning Services Fee
Your cleaning fees will vary depending on the size and location of your short term rental. In the vast majority of cases, you should not worry about this fee as it is covered by the guests. Each listing on the Airbnb platform comes with nightly pricing and a cleaning fee, which is set per stay rather than per night. When making a reservation, guests agree to pay the cleaning fee as part of it.
Nevertheless, when analyzing the cleaning fees charged by your Airbnb manager, here are some factors you need to consider to make sure that they are not overcharging your guests and pushing them away:
- What do the cleaning fees include?
- How long does it take to get a property ready between guests?
- How good is the cleaning?
- Are there checklists in place?
- Can you get the rental cleaned between guests without losing bookings?
- Are there regular annual deep cleans?
One thing to consider is that if you decide to use the property for your own purposes, most Airbnb property management companies will ask you to pay the cleaning fee at the end of your stay. This requirement ensures that the property is adequately cleaned and meets guest expectations.
6. Restocking Fees
Another major part of managing a vacation rental is providing guests with the necessary basic supplies like coffee, tea, salt, pepper, paper towels, toilet paper, and printing paper (if you target professionals). These supplies need to be checked and restocked between stays each and every time to assure that your guests have everything they need for a comfortable stay.
Moreover, towels and sheets must be changed and washed according to industry standards.
Some Airbnb management companies charge a separate fee for restocking and laundry, while others include it in their monthly charges. Make sure you know which fee model your manager uses before deciding to work with them.
7. Pet Fees
Due to the extra cleaning associated with running a pet-friendly Airbnb business, most hosts and property management professionals charge a pet fee. Similar to the cleaning fee, you don’t have to worry about covering this fee as it is paid by the guests. Just check what pet fees your management company charges, whether they are competitive in the market, and how they use this extra money.
In most cases, pet fees are $40-$70 and are paid per stay, not per night. Anything more than that seems excessive.
8. Early Termination Fee
Last but not least, another fee to consider as an aspiring Airbnb host is the early termination fee. Some property management companies allow hosts to leave with a one-month written notice without asking for any fees or costs. However, other managers charge an early termination fee which can reach thousands of dollars.
Know what you are getting yourself into before hiring any particular company. As an Airbnb host, you should be free to leave without having to pay ridiculous fees the moment you are not happy with the services you receive from your management firm.
What Determines the Airbnb Property Management Fees?
Above, we have provided a general breakdown of the fees you can expect to pay for your vacation rental.
However, the exact size of the Airbnb property management fees you will incur in running an Airbnb business will be influenced by the following factors (among others):
- Size of the rental: It is obvious that managing a bigger Airbnb investment property is more demanding than a smaller one. As a result, the Airbnb fees charged will be higher.
- Property type: Airbnb property management fees will vary depending on the type of property – apartment, condo, single-family home, multifamily home, townhouse, etc.
- Location of the rental: If your property is in one of the best short term rental markets where rent is high, the Airbnb property management fees are likely higher.
- Condition of the property: In case your property has many maintenance issues, you are likely to pay more in Airbnb property management fees. Similarly, managing a luxury property might cost more as there is more upkeep and maintenance associated with it.
- The extent of services: Airbnb property management fees are determined by the number, type, and quality of services offered. For example, if you only want the company to deal with check-ins and check-outs, you will pay less than a host who wants the company to advertise the property, screen guests, collect rent, handle repairs, and keep financial records.
How to Manage Your Airbnb Property by Yourself
While many Airbnb investors decide to hire a professional property manager, this is not a must. If you like dealing with different people, have a flavor for hospitality, and don’t mind some extra work, you can manage your property on your own and save on the Airbnb property management fees.
We’ve put together three tips to help you get started as a DIY Airbnb host and succeed at running a profitable short term rental business without wasting all your time and effort:
Use Airbnb Property Management Automation Tools
To optimize your Airbnb cap rate and minimize your work, it’s important to choose one of the best tech platforms for automating the management of vacation rentals.
Dozens of software tools can help with the following:
- Listing and marketing your property
- Managing your booking calendar
- Communicating with guests
- Managing check-ins and check-outs
- Scheduling cleanings, inspections, and repairs
- Coordinating the work of hosts and other Airbnb property management team members
In this way, you retain control over the management of your Airbnb instead of giving it up to a manager. Furthermore, the subscription monthly fees of these software automation tools are only a fraction of the rates of property management companies. So, you keep more money for yourself.
Automate Airbnb Dynamic Pricing
To maximize your rental income and cash on cash return, you need to apply dynamic pricing on your Airbnb listing. It means that you need to constantly adjust the daily fee to reflect changes in local supply and demand and remain competitive among rental comps in the area.
The standard way of doing this is through Airbnb market research and competitor analysis to extract the needed Airbnb statistics. However, with the help of the Mashvisor Dynamic Pricing tool, you can have the best rates for each night that your property is available for rent without all the active work on your behalf.
The tool uses AI, machine learning, and data from Airbnb to determine the rate that will maximize your revenue every day.
As an Airbnb host, you can choose whether to review the nightly rates proposed by the tool or get full automation by allowing it to push the suggested rates to your Airbnb listing. If you opt for the second option, you can achieve a nearly passive income from your short term rental without paying management fees.
Build a Team of Local Vendors
To take care of all manual tasks, you should hire a team of trusted, verified local handymen and vendors. You need to talk to other Airbnb investors in the market for recommendations or check out websites with reviews to choose team members that you can trust to do all the needed work on time and with quality.
On your team, you will need someone to clean your property and restock it between guests, inspect the rental, schedule maintenance work, and do the actual repairs. When working on putting together a team, consider the fees each person will charge. Make sure their fees do not exceed Airbnb property management fees charged by companies.
Are Airbnb Property Management Fees Worth It?
Before purchasing an Airbnb investment, you should take a look at the Airbnb property management fees you’ll need to cover whether you hire a professional or manage the property yourself. You should consider how much it will cost and how it will affect your occupancy rate, cash flow, and return on investment.
The only way to know if the fees charged by short term rental management companies are worth it is to understand how they will affect your bottom line. To figure this out, you need to conduct a detailed investment property analysis that takes into account all variables. The best way to do this is with the help of the Mashvisor short term rental calculator.
Our calculator will estimate the performance of your property based on Airbnb comps in the area and show you the expected income, occupancy, cash flow, cap rate, and cash on cash return. Importantly, you can adjust the management fees to see how different structures and amounts affect your ROI. That will allow you to choose the most profitable management strategy for your particular case.
To start making profitable Airbnb investments across the US market, sign up for a 7-day free trial of Mashvisor now, followed by 15% off for life.