The Mistake Most STR Owners Make (and Why It’s Costing You Thousands)

You think you’re saving money. You’re actually burning it.

Most short-term rental (STR) owners fixate on property management fees—the commission percentage a manager takes. It seems logical: lower fees = more money in your pocket. Except this thinking is completely wrong.

The Summer Sales Job That Changed How I Think About Fees

In college, I spent a summer knocking doors, selling pest control. Before choosing a company, I did what any 20-year-old trying to maximize earnings would do—I chased the highest commission rate.

Some companies paid 20%. Others paid 40% or even 50%. Obviously, I wanted the highest number. More commission means more money, right?

Wrong.

A mentor set me straight: “Your commission percentage is meaningless. What matters is how much money actually lands in your bank account at the end of the summer.”

Why? Because:

• Some companies had lower commissions but sold bigger accounts in better markets.
• Some trained reps better, allowing them to close more deals.
• Some had better customer retention—if clients canceled early, reps lost their commission.

In short, a high commission percentage on bad deals is worth less than a lower commission on great deals.

Sound familiar? It should. Because STR owners make the exact same mistake when choosing a property manager.

Why Focusing Only on PM Fees Will Cost You Money

A lot of STR owners only ask one question when interviewing managers: “What’s your property management fee?”

That’s like asking what a gym membership costs without considering what kind of results you’ll get. Cheap trainers exist, but they won’t get you shredded.

Property management is the same. Here’s what most owners miss:

1. Other Fees Matter – Some PMs offer low commission rates but nickel-and-dime you with hidden fees (maintenance markups, guest service fees, listing fees).
2. Revenue Optimization Matters More – A great PM increases your ADR and occupancy—sometimes by 25-50% or more. That alone can make up for a higher fee.
3. Net Operating Income (NOI) is the Only Number That Matters – What’s left after all expenses is what you actually take home. That’s what you should be optimizing for.

The Numbers Breakdown

Let’s run two scenarios.

Low-cost PM (15% fee)

• Brings in $50,000 in annual gross revenue.
• Takes 15% ($7,500 in fees).
• You take home $42,500 after their cut.

High-performance PM (25% fee)

• Optimizes pricing and occupancy, generating $100,000 in revenue.
• Takes 25% ($25,000 in fees).
• You take home $75,000—almost double what you’d make with the “cheaper” manager.

This is why fixating on commission rates is a mistake. The right manager pays for themselves many times over.

How to Pick the Right Property Manager

If you’re shopping for a property manager, stop asking just about fees. Instead, ask:

• Can you show me actual revenue numbers from a unit like mine?
• What’s your strategy for increasing ADR and occupancy?
• How do you market my listing beyond Airbnb/Vrbo?
• What pricing tools and data do you use?
• What are your guest retention and review strategies?

A mediocre PM manages your property. A great PM runs it like a business.

Final Thought: ROI is King

If I could charge 50% in property management fees but still send owners bigger checks every month, they’d be thrilled. Because at the end of the day, this is an investment. ROI is what matters—not the illusion of savings.

So next time you’re choosing a property manager, don’t ask, “Who charges the lowest fee?” Ask, “Who’s going to make me the most money?”

Because that’s the only question that actually matters.