Short-term rentals (STRs) have become a lucrative investment, but managing them can be a full-time job. For many property owners, hiring an STR management company seems like a no-brainer—until they realize just how much they’re actually paying. While most management companies advertise their services as a simple percentage of your rental income (typically between 25-40%), the real cost goes far beyond that. Let’s break down the hidden costs and explore whether these hefty fees are truly worth it.
1. The Management Fee Isn’t All-Inclusive
At first glance, 25-40% might seem reasonable given the convenience of hands-off management. However, many STR management companies don’t include crucial services within that percentage. Here are some of the hidden expenses:
- Cleaning Fees – Often charged separately to either the owner or guest, but some companies take a cut of this too.
- Maintenance & Repairs – You’re still responsible for paying for repairs, and some management companies charge additional service fees just to coordinate the work.
- Guest Supplies & Amenities – Many STR management firms require you to provide toiletries, linens, and welcome gifts.
- Marketing & Listing Fees – Some companies charge extra for premium placement on platforms like Airbnb, VRBO, or Booking.com.
- Occupancy Tax Handling – While some managers handle tax collection and remittance, they may charge extra for this service.
2. Booking Commissions & Platform Fees Still Apply
Even though you’re paying a management company, your rental income is still subject to Airbnb, VRBO, and other platform fees—which typically range from 3-15%. This means that between your STR manager and the booking platform, you could be losing 50% or more of your rental earnings before paying for maintenance, cleaning, and utilities.
3. Markups on Services & Maintenance
Many STR management companies have preferred vendors for maintenance, cleaning, and repairs. While this can be convenient, it often comes with a markup. You may find yourself paying higher-than-market rates for simple fixes because management companies either add their own fees or have exclusive deals with vendors that don’t benefit you.
4. Revenue Optimization or Profit Skimming?
Some property managers claim to maximize your revenue through dynamic pricing, but the reality is that many use generic pricing tools like Beyond Pricing or PriceLabs, which you could easily manage yourself. Worse, some companies prioritize occupancy over profitability, discounting your listing just to keep it booked—at the expense of your bottom line.
5. Lack of Transparency & Locked-In Contracts
Some STR management companies require long-term contracts with steep exit penalties. If you’re dissatisfied with their service, you may find yourself stuck or forced to pay an early termination fee that eats into your profits.
6. The Only Real Value: Guest Communications
When you break it down, the only real value these companies bring is handling guest communications. Everything else—cleaning, maintenance, pricing, and taxes—can be easily managed by the owner without sharing 40% of their revenue. Instead of paying a management company, it’s best to hire Conci to handle guest communications. Not only will this ensure seamless guest interactions, but it also provides an added value that property managers do not offer: a concierge service for guests, enhancing their experience and increasing positive reviews.
Is 25-40% Too Much? Absolutely.
While an STR management company can save time, the actual cost of outsourcing your rental can be much higher than expected. Here’s what to consider before signing up:
- Self-Management Is More Feasible Than Ever – With tools like Hospitable, Guesty, and Smartbnb, automating bookings, guest communication, and pricing is easier than ever.
- Hybrid Management Models Exist – Some companies offer à la carte services, allowing you to pay only for what you need instead of a massive commission.
- Hiring Local Help Saves Money – Instead of a full-service manager, hiring a cleaner, handyman, and virtual assistant separately can reduce costs by 50% or more.
Final Verdict: Know Where Your Money Is Going
It’s better to pay as little as $50 a month for Conci to handle guest communications and manage the rest yourself than to give away up to 40% of your revenue to a third-party management company.
Would you rather pay 40% of your earnings, or take control and build a sustainable rental business? The choice is yours.