A short-term lease is any lease that lasts for fewer than six months. While you may occasionally see families signing short-term leases, most often, you’ll see tenants such as businesspersons and nurses looking to relocate temporarily. These types of tenants are often willing to pay more for the convenience of location, which means you can charge a higher rate than you would for a long-term rental. However, short-term leases tend to be less predictable and more inconsistent in comparison to long-term leases, and they typically require more attention, time, and money as a result. If you’re looking to open your own rental property but aren’t sure if you have the budget, learn about the most common short-term rental management fees.
Property Management Services
First and foremost, it’s important to note that managing your own short-term rental, especially multiple short-term rentals, can be very time-consuming. You’re going to have to stay on top of marketing, interviewing, and screening tenants if you want to avoid large gaps of vacancy. However, hiring a rental property management service can eliminate the time you spend scrambling to find another tenant. Property managers will typically take a percentage of the monthly rent, known as a commission fee, and will handle everything from marketing all the way to eviction if necessary. You can typically work out a service package that works for you and your budget.
Marketing and Advertising
If you do end up hiring a property manager, keep in mind that they very well may charge you extra for marketing and advertising your property. In these cases, you’re not just paying for labor—you’re paying for their expertise. Property managers know a lot about marketing and make their career out of it. They know where to market your property, who to market your property to, and how to take advantage of industry trends. Their services may cost an extra fee, but the extra rental income you get in return makes up for it.
Maintenance and Repair
It’s more than likely that your property manager includes maintenance and repair fees in their charges, so if you hire a property manager, you shouldn’t have to worry about this. However, if you decide to manage your property on your own, keep in mind that when you get a maintenance request, you must handle it fast. If a lease is only a month long and it takes three weeks to fix the HVAC system, most of that tenant’s stay will be a negative experience. You can bet that their review of your property isn’t going to be the best if that situation occurs, and when it comes to short-term rentals, reviews are everything.
Tenant Screening Services
Again, this is one of those fees that your property manager will include if you hire one. However, if you do the self-management route, tenant screening services are a crucial step that you should never skip. You should consider paying top dollar for a quality screening service because it will save you a lot of headaches and frustration in the long term. A quality screening service should give you a clear snapshot of an applicant’s financial and criminal history. Skimping out on quality screening services may land you with a less-than-ideal tenant, which can cause problems even in short-term leases.
Cleaning Services and Inspection Fees
You’ll probably never see a cleaning fee on your management bill because most management companies will charge guests for cleaning. However, this isn’t the case for every company, and every time there’s a turnover, you’ll likely see this service show up on your bill. The amount they charge will typically depend on the size of your property and the level of cleanliness you’re looking for. If you end up handling cleaning services on your own, you’ll either have to clean it yourself—which is a serious time-eater—or hire a cleaning service.
However, you may want to save some extra cash for inspection fees. Hiring an inspector, whether you do so on your own or through a property management service, is important because you’re going to see many tenants go through your property. Unlike cleaning services, most property owners do not delegate these fees to the tenant.
Restocking Fees
Many property owners who rent out their units to tenants looking for a temporary relocation won’t make them bring their own furniture, utensils, and other guest supplies. Having these items makes moving in and out a serious hassle. Plus, the shorter the lease, the more often you’ll have to restock. You’ll have to do these things on your own if you don’t hire a property manager, but the good news is you can write it off as a business expense come tax season.
Utilities and Amenities
Just as you would include the cost of hiring cleaning, repair, maintenance, and screening services in your overall asking price, you should do the same with utilities and amenities. Your property manager will do the same. This fee should cover the cost of cable, internet, Wi-Fi, washers and dryers, pools, and any other desirable add-ons in your rental property.
Legal Fees
Whether you manage your own property or hire a property manager service, every property owner should work with a real estate attorney. There is a myriad of Fair Housing laws, both on the local and federal levels, that you need to abide by. An attorney will ensure you’re following the law and help protect you should someone skip out on a payment or injure themselves on your property. They’re also helpful if you need to evict a tenant, and trust us—when you need a tenant out of a rental, you need to get them out fast.
Now that you know about the most common short-term rental management fees, budgeting for and opening your dream rental business should be a little easier.
At Excalibur Homes, we know how much time, money, and effort goes into being a landlord. That’s why we’re dedicated to providing you with top-of-the-line management services that you can afford and rely on. If you’re looking for quality property management in Nashville, look no further. Excalibur Homes handle everything from leasing, management, rent collection, and more so that you can rest easy and get the most out of your investment.
