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Vrbo Owner Fees For Investors To Know‍

Simon

August 12, 2022

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https://www.getaway.co/articles/vrbo-owner-fees-for-investors-to-know

While Airbnb is a household name for vacation rentals, many investors are always exploring other ways to rent out their properties. One of these platforms includes Vrbo. Vrbo is a popular substitute for Airbnb; although their focus is much more on families, how do their fees compare to Airbnb?

Unlike Airbnb, Vrbo has two methods to establish fees for owners:

  • Pay per booking
  • Subscription

Unlike Airbnb, the processing fees for Vrbo are more straightforward and have minor variations. If owners are looking for a platform to list their vacation rentals for a smaller price with only slight price variations, they should look no further than Vrbo.

This article will illustrate the Vrbo owner fees investors can expect when listing on Airbnb and what these fees provide the property owners.

What Are Vrbo Owner Fees?

Vrbo owner fees are fees Vrbo charges owners for:

  • payment processing services, including accepting foreign currencies (foreign exchange is charged, though)
  • marketing, including international marketing
  • interactive map
  • photobook
  • secure transactions
  • product development
  • customer service.

Vrbo not only lists the property, but it can also provide excellent tools to better market owner properties. This can be especially helpful for:

  • beginning investors
  • investors looking for a simplified turnkey platform for listing
  • investors who have difficulty listing vacation rentals using other methods.

Pay-per-booking

Vrbo allows investors to pay per booking, which means that Vrbo can receive a commission every time a property is listed. While pay per booking may sound like a waste of money, the fees for booking versus the subscription model would be less expensive if the Vrbo property makes less than $10,000 a year.

There are a few fees involved in the pay-per-booking model, including:

  • Vrbo service fee
  • Credit card processing fee

Vrbo Service Fee

The typical fee for Vrbo is 5% of the total amount from the listing. This fee does not charge from taxes, or the refundable deposits guests pay unless they are used for the listing cost.

Subscription-Based Fees

The processing fees for multiple bookings can add up. In addition, they can vary from very large during busy seasons to non-existent during the off-season. However, Vrbo offers a subscription-based fee structure that can simplify the commission and make the commission even less expensive. A subscription-based fee charges $499 each year for a single property. This covers every booking and does not require any commission throughout the year.

Vrbo Credit Card Processing Fee

Vrbo is a technological advancement for listing rental properties. However, this means they will likely use credit cards as a transaction. These always come with fees. Vrbo charges 3% to the Vrbo owner for processing, including the owners who opt for the subscription-based costs.

Additional Fees

While, like Airbnb, Vrbo has additional fees, they tend to be premium fees where owners can choose whether to have them. These include:

  • Pet fees
  • Cleaning fees.

Pet fees can vary, but Vrbo wants to ensure that the property is prepared for potential damage from pets and to help compensate. While pets are not necessary for these rentals, and many owners may lean away from having pets, as many as 31% of vacationers say they prefer a pet-friendly place to rent. This fee may be worth taking.

Cleaning fees are charged if the Vrbo owners want Vrbo to set up a cleaning service. While this is optional, it is highly recommended, so the property is prepared for the next guests. The cleaning fee varies depending on the property, primarily based on the size and features. In addition, cleaning policies are set by the owners, including:

  • Disinfectant
  • Towel and bedding wash
  • No-contact
  • Minimum days between guests.

Therefore, owners will determine the costs for the cleaning themselves.

How To See The Owner Fee On Vrbo

If Vrbo owners use the subscription fee model, they only need to worry about the $499 upfront. After that, there is a simple 3% processing fee and the premium fees if the owner decides. Vrbo will show these to the hosts during the listing. Even if the host opts for the pay-per-booking prices, they will show the fees on the listing when owners list the cost of their properties.

Unlike Airbnb, Vrbo does not immediately consider taxes for everyone. Vrbo is not liable for any taxes from the property owners. Property owners will need to consider all taxes. All Vrbo owners should consult with experts to understand the taxes they will need to pay from their profits. It is highly recommended that every Vrbo owner hires an accountant to help them with these.

Vrbo may be required to collect taxes in some areas, including:

  • Canada
  • Colorado
  • Hawaii
  • Maryland
  • Minnesota
  • Montana
  • New Mexico
  • North Dakota
  • Texas
  • Vermont
  • West Virginia

Vrbo owners can choose in every other area, for Vrbo does not collect taxes immediately (which is not recommended). Otherwise, Vrbo owners can opt for collecting taxes. Vrbo owners will need to provide the documentation for accurate collection, including:

  • Taxpayer identification number
  • Business license number
  • Certificate of authority number
  • Tax registration number.

Vrbo can use this to pay federal and state taxes accurately. They use Avalara MyLodgeTax to prepare, file automatically, and pay taxes. However, Avalara does charge an extra fee for their services; the fee size will depend on the place. However, the Vrbo owners themselves are responsible for the local taxes.

Example Of Vrbo Owner Fee

If a Vrbo property owner opts for the pay-per-booking fee, they will charge 5% in commission and 3% for processing. If a Vrbo owner lists their property for a total of $9,900 on their property per year, this will total 8%. The standard fees will be $792, and the Vrbo owner will make $9,108 on their property. If the Vrbo owner lists their property for a total of $10,000 each year, they will pay fees of $800 and will make $9,200 on their property.

If the Vrbo property owner opts for the subscription-based fees, they will need to pay $499 each year in addition to the 3% processing fee. Therefore, a Vrbo property owner who lists their property for a total of $9,900 on their property will need to pay $796 each year and make $9,104. If the Vrbo owner lists their property for $10,000 each year, they will pay $799 and earn $9,201 on their property.

Therefore, pay-per-booking fees will be less costly if the owner expects to make less than $10,000 each year. The subscription-based fees will be less expensive if the owner wishes to make more than $10,000 yearly. Use the calculator below to find out how much your property will cost for listing on Vrbo.

Is It Worth Being A Host On Vrbo?

Vrbo is a listing platform that can help short-term vacation rental investors start. In addition to being a well-known name, Vrbo provides many tools for these investors. These include marketing tools and transaction processing. These services are not inexpensive, and Vrbo is an excellent way to help to absorb these costs.

Vrbo may not be as recognized of a name as Airbnb; they have become recognized as a place for families to find good vacation rentals, while Airbnb focuses on businesses and individuals.  In addition, Vrbo provides its services with a more simplified fee structure. Airbnb can charge an average of 15% for processing and booking alone. Vrbo will charge 8% for pay-per-booking and potentially less depending on if the subscription service is used. 

Therefore, Vrbo can be a less expensive platform on which property owners can list their vacation rentals. In addition, Vrbo fees do not vary as much as Airbnb’s under normal circumstances. While Vrbo is not as recognized as Airbnb, it is a close alternative and quickly growing in recognition.

How To Become More Independent From Vrbo

Vrbo is a less expensive form to list vacation rentals. However, the fees can add up over time. Even at 8%, vacation rental investors can expect to pay over $1,000 for their properties each year, not considering premium fees and taxes.

Many are looking for good alternatives to Vrbo. These include:

  • Creating your listing site
  • Using different vacation rental listing sites.

Creating your listing site includes paying money for site services, including hosting a domain name. Investors trying to list their rentals can expect to spend extensive cash and effort on marketing efforts that Vrbo could provide.

Other vacation rental listing sites can provide services similar to Vrbo. For instance, Booking.com is the most extensive listing site on the internet. However, their fees are more significant than Vrbo at 10-25%. Other listing sites are more minor than Vrbo. For instance, TripAdvisor is a smaller vacation listing platform, but they only have a 3% processing fee.

Anyone listing their properties on Vrbo should consider listing on a variety of sites, including their own, to reach as broad a market as possible. In addition, it can help minimize the costs of listing while trying to grow their brand. Who knows, maybe the following large site is an individual site set up by a vacation property investor.

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