From the desk:Short-Term Rental Co-Hosting

Flat $650 a unit or 18 percent, plus my name on the permit

Two units in a beach market with a permit cap, same owner, both already registered. He's had a co-host who quit in September and he's trying to close the gap before spring.

What I have: unit A grossed $71k last year on the statements he sent, unit B grossed $44k. Both three bed, both walkable to sand, both furnished already. Average stay looks like 3.4 nights in summer and closer to 2 in the shoulder months, so I'm counting roughly 95 to 110 turnovers a year across the two.

His offer is flat, $650 per unit per month, $15,600 a year, and he keeps all the upside. My counter was 18 percent, which on last year's combined $115k is $20,700. He came back and said the flat number is what makes it predictable for him and he isn't moving off it.

The part I keep circling is the permit. The registration in that town wants a local contact who can respond to a complaint inside 24 hours, and he wants that to be me. I live 40 minutes out. There are fines attached to response failures and I don't know whose name they attach to.

So: take the flat fee for a year to get two units of history under me, or hold at percentage with a floor and risk him going to someone cheaper.

Answer

2angela_burkeServicePRO6

Stop pricing this in dollars per month and price it in turnovers, because that's what actually consumes you. 105 turns a year is roughly two a week average, but they don't arrive average. July is going to be eight or nine turns a week across two units, all of them Friday and Saturday, and that's when your cleaner calls out.

On the flat fee, work out what happens if you do your job well. Say you push combined gross from $115k to $135k with better minimum-stay rules and gap-night pricing. Under 18 percent you earn $24,300 for that. Under flat you earn $15,600 and he pockets the entire $20k. You'd be doing revenue management for free, and the better you are the worse the deal gets.

The local contact thing I'd treat as a separate negotiation, not a favor. In most registration schemes I've read the fine follows the permit holder, but that is genuinely town by town and some ordinances name the designated contact directly, so read the actual ordinance text and get his written agreement to cover any penalty that isn't caused by my own failure to respond. If he won't put that in the agreement, 40 minutes out with a 24 hour clock is a bad thing to sign.

2 replies

-1dpatel_reCS4A

The flat fee is an option he's buying off you and he isn't paying for it. Predictability has a price and $650 is not it.

Before any of that, go back at the $115k. Whose number is it? Owner-supplied statements usually come out of the platform dashboard, and the dashboard gross includes the cleaning fee the guest paid, sometimes includes taxes collected, and does not net out the host service fee. If $115k is booking value and your 18 percent is meant to run on owner payout, you're arguing over a base that is 12 to 18 percent smaller than you think. Pin the definition in the contract with a sample month attached. I've seen that single ambiguity move a management fee by three grand a year.

Second, last year is one draw. Permit caps hold supply down, which is in your favor, but ADR in beach markets moves with how many nights get booked inside 14 days, and that has been softer in a lot of places. Underwrite unit A at $64k, not $71k, and see whether percentage still beats flat. It does, by a wide margin, which tells you the answer isn't sensitive to the revenue assumption.

What it is sensitive to is whether you can actually staff peak Saturdays. If you can't, neither structure saves you.