At Pensacola Beach Properties, we believe in full transparency, and that's why we always strive to be open and honest about our practices, including our service fees. Unfortunately, this isn't the norm in the rental market in Pensacola Beach. The other day, for instance, we spoke to an owner who realized he was paying an extra 14% of the total booking, including taxes, as a 'booking fee' to their manager—and that was on top of commission!
Of course, we had to come to his rescue.
Likewise, it often happens that we come across owners who claim that other Pensacola Beach property companies are charging a lower commission rate than ours. We always get suspicious. When we advise them to do their homework and investigate the hidden fees said company charges, it turns out that the costs are much higher.
Never fails! In this business, it's always a smart thing to take a second (and even third) look at the terms and conditions before signing with any property management company.
Managers nowadays have clever ways to boost their profits without their clients knowing about it, and these are practices used even by some of the biggest names in our industries (don't worry, we're not mentioning names, Vacasa).
But we are here to rescue. In this blog, you will learn to identify hidden fees before you hire a Pensacola Beach Property Manager.
Vacation property managers in Pensacola, FL, will surely help boost revenues for your condo or rental home, but it's important to make sure they charge no hidden service fees before signing with one. Pictured: Portofino Island Resort.
In rental property management, we refer to "rent-seeking" as the practice of boosting your management profits without providing any additional value to the homeowner. You can also think of it quite simply as "hidden fees."
As mentioned, some property managers in our industry try to claim a larger portion of the profit than they deserve by charging hidden fees to homeowners. It can also happen that sometimes these fees are not really hidden; sometimes, they are just not fair according to industry practices.
Let's explore some of these fees, but first, a quick note...
Despite fees, Pensacola rental property managers really help your business grow.
We can only go on with this blog by acknowledging something really important: despite the fees (and even the hidden fees), the benefits of hiring a property manager to manage your rental will offset the costs.
If you have been self-managing your properties, you probably know the substantial amount of work that's involved. Counting on the skills of a property manager, owners are relieved from a large part of the heavy workload involved with running a successful vacation rental business.
If they are good at their craft, property managers do a really good job of keeping your beach rental occupied and at the best rates possible.
They'll also handle urgent and unexpected issues that can arise and maintain your beach rental investment in good condition through regular inspections. Their help is indeed much welcome! It's just that, like with anything else in life, you need to stay alert; you need to find someone you can trust.
What are some of the hidden fees property managers charge owners?
For local firms that operate in the Pensacola Beach market, you can expect to pay 30-40% of your gross income for full management.
With bigger, national managers, services can be a bit more affordable, though. In this blog, we'll focus on these bigger companies which, in general, offer higher quality in their services. Still, most of the rules you will learn here also apply to the smaller local players.
Here are estimates of the rates of the big players:
Vacasa: 15-25%; fully managed.
Turnkey: 15-25%; fully managed.
Evolve: 10%; partially managed.
The fees above can be used as a benchmark for the industry.
But our focus in this blog is really the fees that are not so apparent—the hidden fees that you shouldn't have to pay.
Below are some of the usual suspects:
Booking fees: Evolve charges a 3% fee, and Vacasa, besides its average of 20% commission fee in our area, charges on top of that a 12-14% booking fee on all direct bookings. Turnkey, like us, has no booking fees.
Maintenance fees: many property managers will charge monthly fees even if there is not any service performed.
- Insurance fees: some companies charge insurance or "guest insurance," which can start from eight dollars a day, coming out of the owner's income, naturally. So the calculation is your nightly rate minus eight dollars minus commission. We see many owners who don't know how to identify this.
How to avoid hidden fees from property managers?
Now that we have a clear understanding of how rent-seeking works, we should cover how to avoid these hidden fees.
The best way to do so is by asking the right questions before signing with any property management service.
Here are some good questions to ask when vetting companies:
- What services are included in your fee?
- Do you also charge management fees for vacant rentals?
- Could you please explain the full criteria that determine your nightly rates?
- Are there any extra fees I should be aware of on top of your management fee?
The last question is pretty straightforward, and it would be hard for a manager to beat around the bush when answering this one.
Still, sometimes managers may not be willing to tell you everything upfront.
That's the reason we always suggest finding a trustworthy company that will be upfront about it from the very beginning.
Pensacola Beach property managers may hide fees to boost their profits, so it's essential to ask the right questions before signing a contract. Pictured: White Sands.
At Pensacola Beach Properties, we couldn't be more guest-focused, and we have absolutely no hidden fees. In fact, we encourage potential owners who are thinking of enlisting with us for an in-depth discussion about fees, as well as how we can help their properties excel in the vacation rental segment in Pensacola Beach.
We hope this blog was useful to make you more aware of the not-so-nice practices in our segment.
For more property management tips for your vacation rental, head to our blog where we discuss many facets of this business — from decor and revenue management to the fantastic ways you can stand out with your Pensacola Beach property. You'll find it all in there!
