Property Management Fees – What To Expect?

Property Management Fees – What To Expect?

With so many financial considerations for buying a tiny home or investment property, it’s easy to push property management fees to the back of the list. However, property management is essential for any rental property owner and should be calculated into the investment.

Property management companies vary widely for short-term and long-term rentals in their services and what they charge. A good property management company should be able to keep your property booked out, maximize profits, and handle most of the responsibilities of managing the property.

The world of property management and the threat of hidden fees can be overwhelming. Let us make it easy for you.

Here’s Property Management made easy:

Property Management Fees Explained

When researching property management companies for any rental investment, it’s essential to understand the details of their services.

Different management companies are available depending on the property owner’s needs. Understanding if the company focuses on long-term or short-term rentals will be the first thing to look for. Then learning what services they offer and how they collect fees will be a significant deciding factor on who the property owner uses.

How do Property Management Fees Work for Annual Rentals?

A property management company can structure fees on annual leases in two ways: Either by taking a percentage of the monthly payment or charging a flat rate for the year.

Percentage Fee

This is the most commonly used option. Paying a percentage fee means that when the rent is paid each month, the property management company takes a cut off the top before paying out the investor.

Percentage fees range between 8%-10% of the total monthly amount. For example, if the property rents for $2,000 a month, the investor can expect to pay the property management company $200 monthly at a 10% average fee.

Flat Fee

As with all things in life, a flat fee service model has pros and cons.

Investors can expect to pay $100 monthly for a flat rate contract. This may be more affordable than a percentage fee depending on the monthly rent; however, some property management companies may not put forth as much work to get top dollar for the rental if the cost is the same either way.

Management Fees for Short Term Rentals

Short-term rentals, such as Airbnb or vacation rentals, have a wide range of fees that can be collected.

An investor can expect to pay between 10% – 50% for short-term rentals, depending on what the property management company is tasked with. A full-service property management company will charge more than a company that manages a few aspects of the home.

There are three different models for short-term or vacation rentals:

Guaranteed Income

The property manager pays the rental owner a fixed monthly rate with a guaranteed income. This rate is paid whether there are bookings or not.

A benefit of this model is that the property owner receives a consistent passive income all year.

The downfall of the guaranteed income model is that the payout will not change during peak season rentals when the nightly fee may be higher.


Similar to annual rentals, the fix-rate model will charge the owners a flat fee for a certain number of services.

The property manager and property owner will determine what services are needed, and then a flat fee will be calculated. Any additional services throughout the year will be treated as an add-on and cost more money.


A commission-based model means that the property manager is entitled to a percentage of the monthly rental rate.

Depending on the services performed and the rental location, fees can range between 15% – 40%. The average commission fee is 28%, with a lower percentage for urban vacation rentals and a higher percentage for mountain rentals.

What Services does the Management Fee Cover?

There is no one-size-fits-all for the services that property management companies cover. When looking into a company, it’s essential to ask questions about what problems are covered, what structure they use, and to understand the fees if the owner needs the management company to do an additional service at any time.


One benefit of hiring a property management company is staying up-to-date on the rental trends in specific areas.

Count on local property management companies to know what to charge per night/month, where to advertise, and how to get guests into the property. Marketing might be included in your property management fees or an additional charge, so make sure to ask!

Cleaning Services

After each guest leaves, the property must be cleaned before the next one arrives. Some companies have the cleaning fees already worked into their rates, while others charge an additional cost.

Maintenance and Repairs

Upkeep and repairs are essential to maintaining any structure. Additionally, sometimes emergencies happen that aren’t converted by insurance or warranties.

Extensive repairs such as a leak or something breaking have to be addressed immediately, especially if a renter is in the home at the time. Many property owners don’t have the time or ability to rush to the house if something arises.

Additional Fees for Rental Owners

Many other fees can come up, so reading through the contract and understanding what is included is essential. Here is a list of additional services that can come up when renting a home.

  • Setup fee – this is usually a one-time fee that is charged when creating an account with a property management company.
  • New tenant fee – when it comes time for the property management company to find a renter, they may charge up to 100% of the first month’s rent. The company is expected to do tenant screening, deal with application processes, etc.
  • Booking management – The site will charge a booking fee if the home is a short-term rental or an Airbnb.
  • Vacancy fees – some companies don’t charge for vacancies; others charge an average of $50 a month for a vacant property.
  • Eviction fee – there is typically an hourly rate charged if a company has to present an eviction notice, work with attorneys, and potentially attend court.

The First Step

Hiring a property management company can save time and undue stress. It provides a barrier between the property owner and the renter and a sense of security that the renters will be screened correctly and the unit will be adequately cared for.

If you have further questions about property management fees or anything else in the world of Tiny Homes or Tiny Rooms, we’d love to help you answer them.

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Does your Vacation Rental need a Property Manager?

Does your Vacation Rental need a Property Manager?

Managing an investment property or vacation rental can feel overwhelming, and hiring a rental property manager or company can relieve stress.

A rental property manager takes some pressure off the owner to focus more on their investments and less on their guest’s vacation. Managing a tiny home or traditional vacation rental has many moving parts; hiring a property manager can keep those parts from moving away from you.

Here’s everything to know about hiring a Property Manager for your Vacation Rental.

What Does A Vacation Property Manager Do?

There is a wide variety of tasks that a vacation rental property manager can tackle. Property managers typically manage items, such as bookings, determining rates, marketing, scheduling cleaning for the home, handling maintenance and repairs, and more. The manager can be involved as much or as little as an owner wants.

Market Your Vacation Rental Property

A property manager should be well versed in marketing and know what renters look for in a vacation location. They should also be knowledgeable about major vacation rental websites such as VBRO and Airbnb.

To market a vacation rental property, it is vital to have a well-written description of the home, calling out any exceptional amenities and what is nearby, plus clear photos of the rental space.

Pricing Your Vacation Rental Property

Prices generally fluctuate throughout different seasons for vacation rentals. Finding a property manager that understands the ebb and flow of pricing will create the best benefits for property investors.

There will be peak seasons when renters are willing to pay more to visit the area, but it’s essential to know when the slow months are so the nightly rate can be lowered to stay competitive with other rentals on the market.

Note: Some host share sites like Airbnb or VRBO will calculate your rental rates.

Manage The Calendar For Your Vacation Property

To keep the vacation property from being double booked, having someone keep an eye on the booking calendar and blocking out dates is a must. One thing no business owner wants is bad reviews on their site due to a last-minute cancellation.

Since one property is often posted on multiple channels, it’s essential to keep a comprehensive list of bookings; making sure that the calendars are in sync is something that a property manager will typically do.

Handle Communication

Communication is huge in the vacation rental space. Not only will potential renters have questions about the property, but they also need to know how to access the property upon arrival and a contact in case of emergencies.

Potential guests want to book and expect a punctual response. If they have a question and don’t get a timely answer, they’ll likely move on to another property without a second thought. A property manager who communicates with those interested can make a difference in getting a 5-star review.

Coordinate Third Party Vendors

A property management company will be the middle person between the property owner and all the tasks needed to keep the rental in tip-top shape.

They will coordinate with cleaners to ensure the property is pristine before guests arrive. Property managers also work with maintenance companies to keep regular maintenance on track, ranging from changing light bulbs to landscaping.

Industry Knowledge

When looking for a property manager, an interview is important to ensure they have industry knowledge.

A good property manager knows what to look for and how to keep the pulse on the rental business. They can suggest changes to the property to make it more desirable to renters, what the pricing should look like between seasons, and have tips on photos or amenities to make the property stand out.

A property manager’s primary focus should always be to make the vacation rental successful.

What to Look for in a Property Management Company

We recommend interviewing multiple property management companies to ensure you find a great partnership. Leaving the investment in someone else’s hands initially feels stressful, especially for those who like to do everything themselves.

Proven Performance

An effective property manager should be able to show their experience and talk about the successes they’ve had in the industry. They should be local experts, familiar with the neighborhood’s rental market.

  • When are the peak seasons, and when is the slow season?
  • What are the laws and regulations specific to the area?
  • What do renters look for/what are competitors offering?
  • What are the going rates for similar vacation rentals in the area?

Evaluate Fees and Contract Terms

Property management fees can range from 15% to 40%, depending on the services offered and area of operation. Always make sure to do your research or consult with a lawyer to make sure that you’re satisfied with the contract.

Compare Management Services and Value

Renters want to know what they are getting when they book. They will keep looking if the information isn’t clear or the photos aren’t professional. Investing in photography, marketing, a well-written description for the listing, and hiring third-party management for cleaning and maintenance can significantly impact a vacation property’s success.

User-Friendly Booking Services

Vacation renters want to be able to find information quickly. Calendars that display available dates and rates created are essential.

Picture the renter scrolling on their Airbnb or VBRO app looking for a place to stay. They find a desirable location but have a question about something. The renter will send a question and then likely continue searching while they wait for an answer. How likely are they to find another property in that amount of time?

Punctual replies can make or break a booking. 

Consistent Property Updates

The vacation property management company is the second set of eyes directly overseeing your investment. It’s vital to ensure they are trustworthy and transparent in their responsibilities.

Some questions to ask about property updates:

  1. How will you be notified if something is broken?
  2. What information will you be kept in the loop about?
  3. How do they keep an inventory of items in the house – dishes, towels, bedding, etc.?
  4. How do they handle big emergencies like broken pipes?
  5. Will they do routine inspections?

Reference Contacts from Previous and Current Clients

Just as a property owner would get referrals about renters if they were managing the property themselves, it’s a good idea to contact past or current clients of the property management company.

ROI of a Vacation Rental Property

The average rental income varies by location and size of home. A one-bedroom vacation rental earns about $38,490 a year, while a three-bedroom brings in approximately $98,688.

Hiring a vacation property management company is worth it to create a seamless business for an investor. Outsourcing things like marketing, booking, maintenance, repairs, cleaning services, and more will remove the stress from the property owner.

See also: Tiny Home Rental ROI.

Taking the First Step

At Turn Key Fabrication, our passion is helping you build the tiny house of your dreams. Reach out to us today to get started!