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WE PUT THE PROFIT BACK IN VACATION RENTALS!


VACATION RENTAL PROPERTY MANAGERS TAKE 40 TO 70% OF THE PROFITS MOST PEOPLE DON’T REALIZE IT!



When my wife and I decided to move out of the country, we were going to Airbnb our house in the Nashville area, as that is our business; however, we do Timeshare condo rentals. We decided to get estimates from the vacation rental property manager. We came to find out they charge 15 to 25% of the gross booking price.


When I asked one of the biggest companies (Vacatia) why they charge so much, they said because they were full service and handled everything. I said that was great, so you take care of the landscaping; and everything? They then said no, they don’t handle landscaping I have to do that on my own. I asked if they took care of the licensing, and they said no, they don't do that either.


Then I ran the numbers according to my Vrbo estimate, which was around $175,000 per year for my 5,000-square-foot house on 3.5 acres with a park like setting and 20 minutes from downtown Nashville and the airport. That seemed like a lot of money, and we would be happy until we did the math.


I would have to rent it out at $600 per night for 300 nights, which is 82% occupancy, to equate to $180,000.


Now that is an ideal scenario, and they are making as much as I am, and essentially, I am paying them $2,700 per month to schedule the cleaners and the occasional maintenance person, as well as messaging the guests.


This seemed extremely high for the services they provide.


This doesn’t take into account if the rentals drop by 20–30% for any reason or economic conditions.


If bookings dropped to 60% occupancy, then the numbers look a lot worse.


According to Airbnb, the average occupancy rate in the Nashville area in 2023 was around 53%. Of course there are many factors into this, but just to get an average to do my estimate and see what I could expect.


If I had that average occupancy rate for the area, I would actually be losing money and I have all the risk to my property, plus I have no idea if I could even get $600 a night.