A $3,100 monthly floor instead of 20 percent, and the spread runs the wrong way

The part that would stop me cold is a 24 month payment obligation sitting on top of a permit that renews every 12 months in someone else's name. If that permit lapses, gets pulled, or the city changes who can hold one, you still owe him $3,100 a month for a house you can't legally rent nightly. Ask him in writing what happens to the rent if the permit goes away, and see how fast he wants to talk about something else.

Also your November number. 8 booked nights at $239 is $1,912 against a $3,100 rent plus utilities. You are writing him a check for roughly $1,500 that month and you get to clean it too.

Your two options aren't the same business, so compare them on downside first.

Option A pays $868 a month for labor and carries no fixed obligation. Option B pays $2,709 a year on last year's revenue and carries $37,200 of fixed cost regardless of what books. The whole case for B rests on one assumption, that you can add about 13 percent to gross without adding proportional turnover cost. Check that assumption directly. A rate lift on existing nights keeps roughly 97 cents on the dollar after the platform fee. Nights added by dropping minimum stays cost you $165 plus $18 each, so a marginal $180 shoulder-season night nets closer to nothing than to $180. Split your $8,000 gap into rate-driven and occupancy-driven dollars and see how much of it has to come from rate.

Your cleaning line is the second assumption. $165 for a 3BR that sleeps 8 with a hot tub and 63 turns a year, some of them same-day in peak, is a single quote. Get two more and get the same-day surcharge and the linen policy in writing, because a $30 miss per turn is $1,890 a year, which is 70 percent of your modeled B net.

On the 30 day cancel in A, that risk is real and it's usually addressed with a term and a tail, meaning bookings you sourced still pay you a fee after termination. It's negotiable and cheap for him to give.

Whether an operator can hold or be named on the permit varies by city, and in some states managing for a fee touches real estate licensing, so confirm both with the city in writing and with an attorney licensed where the property sits before you sign either version.

Your option B net isn't $2,709, it's $2,709 minus your labor. 63 turns of scheduling, guest messaging at 11pm, restocking, and the drive out for the lockbox that eats batteries. Put 8 hours a stay on it and you're at 500 hours for $2,709, which is $5.40 an hour and you're wearing the vacancy risk.

Option A at $10,420 for the same 500 hours is $20.80 an hour with no downside. Neither is good, one is much less bad.

The other line I'd fix is the cleaning shortfall. He collected $9,300 on 63 stays, that's $148 a stay against a $165 cost. Under option A that gap is the owner's problem. Under B it's yours from day one, and raising the guest-facing cleaning fee $30 changes your conversion at his rate point.

What does his monthly revenue curve actually look like? A 59 percent annual average could be four great months and eight bad ones, and option B pays rent all twelve.

Take A and stop trying to buy the upside on your first unit.

Five years in and I'd tell you the money in this isn't the spread on one property, it's having eleven of them on a fee with no fixed obligation. Your first unit exists to build the cleaning bench, the pricing rules, the message templates, and the reference. If you sign B you've spent your entire first year of attention and about $37,000 of exposure learning on a property you don't own, and you'll have nothing portable at the end except the memory of November.

On the 30 day cancel, that has never been the thing that hurt me. Owners fire you when the reviews slip or when a guest calls them directly, and both of those are inside your control. Ask for 60 days and a clause that you keep the fee on bookings already on the calendar. He'll give you both, he wants out of the work.

$165 a turn for a 3BR sleeping 8 with a hot tub is a real quote in some markets and a fantasy in others, and either way it's the price for a normal turn on a normal schedule. What you'll actually hit in February is a Sunday checkout at 10 and a Sunday check-in at 4 with six sets of towels and a hot tub wipe, and that's a premium call.

We run five cleaners across nineteen units and my blended per-turn on that size is $190 with linens outsourced, plus about $40 a month per unit of consumables that nobody remembers to model. Your $18 a turn is soap and paper only. It doesn't cover the coffee, the replacement bath mat, or the four pillow protectors a year.

Also ask him who has been doing the cleaning. If it's been his sister at $110 and she quits when you take over, half your spread was hers.

$140 a month on a hot tub service contract covers chemicals and a weekly water check, and that's it. Heaters go, pumps go, covers get destroyed by one guest who stands on it. Budget $1,200 a year for parts on a tub that's already a few seasons in, and find out its age before you sign anything where repairs are yours.

Under option A that's the owner's bill and you just make the call. Under B it's the second thing after cleaning that eats your $2,709. Ask for the tub's install year and whether the last cover replacement was under warranty.

Before you price either one, get a copy of the actual permit and read who it names and what it requires at renewal. Some cities tie the permit to the owner-occupant or to a specific responsible party with a local phone number, and that language decides whether option B is even available to you. Ask the city clerk in writing rather than asking the owner what he thinks it says.

The two options land in different regulatory buckets and people miss it. Taking a percentage of revenue to manage someone else's property can trigger a real estate license or a property management license depending on the state, while a lease where you're the tenant of record generally doesn't, and which side of that line you're on depends on your state's statute, so ask an attorney licensed there before you pick.

That's not a reason to sign the lease. Plenty of co-hosts operate under a broker or with the license, and the cost of getting licensed is small compared to $37,200 of fixed rent. I'd just rather you find out now than after a complaint.

One more thing on option A. Insist on the owner keeping their own policy and getting you named as additional insured, and get the platform account structure written down. That's where these deals actually break.

Fourteen percent revenue growth on a mountain 3BR in a year of supply growth is an assumption, not a plan. What's new inventory doing in that town?

Under option A, whose account holds the listing and the reviews? If it stays his, then in 18 months you've built a five-star history that walks away on 30 days notice and you start from zero reviews on your next one. If you're going to accept the cancel clause, at least ask to be added as a co-host on his listing rather than running it from a login he can change the password on. That's the piece I'd negotiate harder than the percentage.

Underwrite B at his numbers minus a bad year, then decide.

Base case is what you built, $2,709. Now hit it three ways at once, because that's how it actually arrives. Cleaning at $190 instead of $165 across 63 turns is minus $1,575. Consumables at $40 a month plus $18 a turn adds about $340. One shoulder season that runs 10 percent light on gross is minus $6,140, and that one is the killer because your rent doesn't move. That's negative $5,300 for the year and you owe him $3,100 on the first of every month while it happens. Your upside case, the 13 percent lift, gets you to roughly $10,400, which is exactly what option A pays with zero downside. A trade where the good outcome equals the risk-free outcome and the bad outcome is a five figure check out of your pocket isn't a trade.

So the numbers say A, and the real work is fixing A's two defects. Ask for the term to be 12 months with 60 day notice, a fee on bookings already on the books at termination, and the cleaning fee set at cost so the $148 versus $165 gap stops being anyone's argument. Then ask for something that costs him nothing and is worth a lot to you, which is a performance step. 20 percent up to last year's $52,100 of accommodation revenue and 30 percent on every dollar above it. If you really can add $8,000 of gross, that step pays you $2,400 of it and he still keeps $5,600 more than he made this year. He'll say yes to that far more readily than to handing you the whole property for $3,100 a month.

Get 24 months of monthly gross out of him before you sign anything. Twelve months hides the year he had a good March.