Landlords new to short letting tend to assume most property management companies just charge a flat rate fee (usually 15% of gross revenue).
As a management company, we already know there’s a lot of money to made in short letting. However, it’s how that money is distributed that determines if a client stays with you or moves his properties over to the competition.
15% of what?
Most property management companies will charge 15% of the gross revenue that comes in. This means they take commission on any cleaning fees charged to the guest in addition to any commission charged by the travel site. That doesn’t sound very fair.
When you add up all these additional fees, more often than not you are actually paying more than 15%, sometimes as high as 25% on shorter bookings.
Fact Check: Property Keeper charges 15% net commission on the booking revenue only. That is the net take home amount we received from the booking site (after they have taken their commission).
15% is only the beginning
Imagine taking a £5,000 booking at your house for the month. Lets say it came from Booking.com (who also charge 15%). Your property management company has already taken £750 commission, Booking.com also took 15%. That’s £1,500 in fees!
Remember.. In addition to net commission, we cap commission at £500 per month for houses (£250 per month for apartments).
Your take home amount from that £5,000 booking would be as follows:
Property Keeper: 3,750
Now lets assume that £5,000 was a direct booking.
Property Keeper £4,500
No matter how you look at it, £250 is a lot of extra money to pay out for one property. But it doesn’t end there. You also need to factor in the additional monthly charges…
What people often overlook is the additional property management fees, linen hire (up to £200 per month), condiments (£40 – £60) per month. Always ask your property management company to clarify what their additional fees are.
Fact Check: Property Keeper offers condiments and photography free of charge to all its clients. Our linen hire fees are included in the cleaning fee which is charged to the guest, not you.
Our linen hire fees are modest, so the guest never feels like they are being overcharged. Overcharging the guest could mean you loose the whole booking.
Happy guests book again
It’s important that guests get a good deal. Our client base is primarily building contractors. By grouping people together in houses, contractor companies enjoy significant savings compared to hotels. We want guests to book direct and we incentivise this by offering small discounts.
However, what matters most is the people who actually stay in our properties. More often than not, the person who books never actually stays there. They receive feedback from the guests. By offering perks at the property, the guests will tell their HR department to rebook our properties.
We work with owners to ensure their properties are setup to ensure guest satisfaction.
If something goes wrong, our property management team are on hand 24 hours a day to ensure issues are resolved as quickly as possible. In the event that something can’t be fixed within our guest service level agreement time frame, Property Keeper holds a small stock of overflow properties where we offer guests additional free stays. Outstanding customer service is paramount. Some building contracts can last up to 1 year, issues must be handled the right way to ensure guest retention.
As a management company, we have lots of experience dealing with investors, landlords and property developers. These people want straight to the point answers and complete transparency. The question we get asked is “How much does it cost?”. Thanks to our commission caps, we can confidently say “Never more than £500 per month!”, if it’s an apartment that cap is £250 per month.
It doesn’t matter how much revenue they promise. If during the good times you are paying £1,000+ per month in property management fees you are always going to feel like they are taking too much.
Don’t be a cash cow
As a management company, our mission is to gain clients and keep them. By offering fees that stack, our clients never feel like they are the cash cows. We’ve kept our fees capped because in the long term, keeping clients ensures not only profitability for us but also for you. This is how our clients are able to quickly grow their property portfolios.
As a larger property management company, we have already streamlined our operation and brought the entire workflow in-house. Lower overheads affords us the ability to keep our fees low.