If you’re looking to get into the vacation rental market, you may have heard of VRBO and how easy it is to rent your property…
Disclosure: This post may contain affiliate links and/or links to our own products.
If you’re looking to get into the vacation rental market, you may have heard of VRBO and how easy it is to rent your property on the platform.
VRBO stands for Vacation Rental by Owner, a website connecting travelers with vacation rental properties. VRBO has been around since 1999 and is expanding its service to more countries worldwide. VRBO also offers owners the opportunity to list their property on other websites like HomeAway and earn additional revenue from these listings as well!
However, doing this isn’t free and will incur some costs, for both owners as well as travelers – so you’ll want to make sure that your marketing is on point.
VRBO fees for owners include pay-per-booking charges or a yearly subscription method. Pay per booking will cost you 5% of the booking plus 3% for payment processing fees. If you opt for the yearly subscription method, it will cost $499 plus the 3% payment processing fee.
In recent years, VRBO’s fee structure has changed quite a bit – in some cases doubling or even tripling what they were before! This blog post will explore those changes and how they impact owners.
Percentage Taken by VRBO From the Owner
VRBO is a great way for property owners to make money from the properties when they are not being used. But, this does come at a price. To list on VRBO, you need to be ok with their fee structure.
Pay-per-Booking
One of the options VRBO offers is the pay-per-booking method. If you choose this method, VRBO will charge you 5% of your booking. There is also a 3% payment processing fee on top of that.
VRBO will also charge you a fee for cancellations, which is up to their discretion.
Example: If the rental rate is $500 per night and VRBO takes their cut of $25 plus fees, then what they make off this booking could be as high as $37.50!
Annual Subscription
VRBO also has a yearly payment model for those who rent their property more often, which can make more sense if you have vacation rentals that are popular and in demand.
The fee for listing your property is $499 per year with this option. This doesn’t include the 3% payment processing fee, so that will need to be paid as well.
Example: If the rental rate is $500 per night, then VRBO would charge you 3% for the payment processing and $499 per year.
This comes to $15 per night on top of the $499 per year.
So, if you are renting your property out 100 nights per year, you would pay $1,500 in processing fees but only $499 commission (instead of $2,500 with the pay-per-booking model).
Which Payment Model Is Better?
The pay-per-booking model is better if your property earns less than $10,000/year, otherwise the annual subscription fee will be cheaper.
Another downside to the annual payment option is that the subscription fee is per property. The fee won’t cover other properties you have listings for. The annual subscription will keep your fees lower if you plan to make more than $10,000 per year on your property.
Also, keep in mind the annual subscription does come with access to tools like a reservation calendar to make it easier to track when people are staying at your properties.
How To Minimize Listing Fees
There are ways to spend less on VRBOs fees if you don’t mind putting in some effort. If you are willing to deal with multiple platforms, or with building your own booking website with Lodgify, you can benefit from other booking and listing opportunities.
List on Multiple Platforms
Using other platforms like Airbnb can help you avoid some of the fees because they charge 3% of the booking.
You can use a platform like Beyond to manage and export calendars to each platform, so you don’t have to worry about double-booking. Plus they dynamically price your listings so that you can make even more money.
Create a Website and Book Direct
If you want to avoid commission fees entirely, and don’t need VRBO for anything else, you can use a service like Lodgify to create your own website on their platform or integrate their direct booking software into an existing website.
The one drawback of this is that you will need to market your own property, as you no longer get the exposure of VRBO and their user base. A website would be a good option if you already have a client base.
Is It Beneficial To Rent Out My Property With VRBO?
It is beneficial to rent out your property with VRBO because you can make money on idle properties, charge cancellation fees, opt for short term rentals which will mean less damage, and charge service fees for added peace of mind.
Make Money on Idle Properties
If you have a second home or other property that isn’t always rented out, you can use vrbo to make money, because in most vrbo listings there is an option where the owner can pay to keep their listing active.
VRBO gives you all the tools to cash in on your idle property with a lot less hassle than doing it yourself. More than half of homeowners listing on VRBO can cover 75% or more of their yearly mortgage payments using VRBO rental income.
Charge Cancellation Fees
If your reservations don’t work out, not all is lost. If you choose to charge a cancellation fee, VRBO will take care of all that for you.
VRBO offers several cancellation options for peace of mind. These include:
- No Refund: Should a guest cancel, they will not receive any refund. As the host, you keep whatever the guest has already paid.
- Strict: For cancellations 60 days or more before their scheduled stay, guests are refunded 100%. If the cancellation is closer to the check-in date, the host keeps all of what the guest has paid.
- Firm: There is a 50% refund if the guest cancels at least 30 days before check-in. There is no charge for guests who cancel their reservation less than 30 days in advance of the reservation.
- Moderate: Full refunds for guests who cancel at least 30 days before check-in, they’ll get a full refund. If the cancellation is at least 14 days before arrival, guests receive a 50% refund.
- Relaxed: Those guests who cancel at least 14 days before check-in receive a full refund. Guests who cancel at least seven days before check-in will receive a 50% refund.
Short Term Rental = Less Damage
Short term rentals usually have less damage because the renters typically take better care of the property. Guests are typically more mindful of where they walk, sit or place things in the house so that when it comes time for them to leave, everything looks as good as how they found it.
Service Fees for Piece of Mind
Finally, VRBO offers several services fees you can add to guests’ bills if they qualify. These include:
- Damage Deposit – If you are traveling as a group, don’t be alarmed if you see a damage deposit added to your bill. The deposit is designed to protect the property owner and encourage people to take care of the place they are staying in.
- Owner Fee – One additional fee a VRBO rental property may include is Owner fees. This will contain cleaning, pet, parking, and administration fees. If this is included, that means the cost has been combined for convenience.
- Cleaning Fee – Almost every VRBO property charges a cleaning fee which will typically only vary according to the location, size of the property, and how much you pay for your cleaner.
- Pet Fee – To bring your pet with you on your vacation, expect to be charged by the host both a refundable pet deposit fee or a flat fee. Considering service animals are not considered pets, you may ask the host to remove this charge if traveling with one of these certified servicemen.
- Extra Guest Fee – VRBO properties show up on your search results page and state if they are suitable property for groups of at least three or more travelers. If you are looking for accommodation that will sleep 3-5 people or are traveling with children over 12, the ‘Extra Guest fee’ will be added to your total cost.
- Parking Fee – If you are staying in a condo or apartment with parking for a fee, don’t be surprised to find this expense on your bill. Check with the owner to see if they offer any discounts for not using the parking space.
Final Thoughts
For owners of VRBO listings, it’s important to understand how much you’re paying in commission fees so that you can decide which model is best for your business. Pay-per-booking will cost 5% plus 3% payment processing fee and the yearly subscription will be $499 plus a 3% transaction fee.
If your property gets a lot of bookings and does well over $10,000/year in revenue, then you can save significantly by opting for the annual subscription. Otherwise, the pay-per-booking model will be cheaper.
Did you find this article helpful? Help out your community or share it with a friend!
FAQs
What percentage does Vrbo charge owners? Vrbo fees to owners are typically 8% per booking. This is made up of a 5% Vrbo manager fee and a 3% Vrbo payment processing fee.
How much does Vrbo charge owners 2022? ›
Whichever option you choose, Vrbo also charges a 3% processing fee on total payment and taxes for their owners.
How is Vrbo payment processing fee calculated? ›
A 3% payment processing fee is charged on the entire payment amount, including taxes. The processing fee doesn't apply to the Vrbo service fee or products like Property Damage and Cancellation Protection.
How does Vrbo pay owners? ›
You get paid through our secure payment platform which allows you to take advantage of Visa, Mastercard, and American Express processing.
Which has cheaper fees Vrbo or Airbnb? ›
Why is Airbnb more expensive than Vrbo? Airbnb charges guest service fees typically under 14.2%, but when searching for properties, we found consistent service fees of 16%. There are no guest service fees for experiences. Booking with Vrbo, guests are charged a 6% to 15% service fee of the subtotal (minus taxes).
Why are Vrbo cleaning fees so high? ›
Cleaning fees help hosts get their vacation rental properties cleaned and ready before new guests arrive for their stay. Setting a cleaning fee also protects Vrbo hosts from absorbing the cost of cleaning up after their guests depart.
Why does Vrbo charge so many fees? ›
The service fee is a percentage of the total amount of the reservation, excluding taxes and refundable fees paid by the guest. This fee helps cover the cost of secure transactions, product development, and 24/7 customer service.
How much do you pay to list on Vrbo? ›
Vrbo offers two options for property owners: a commission model and a subscription model. For owners who choose the commission structure, they pay a 5% fee to Vrbo on each reservation, and they may also pay a 3% payment processing fee depending on how their payouts are set up.
Is the Vrbo fee worth it? ›
Is it worth paying these fees to list your house on Vrbo? The answer is definitely yes! This platform gives you lots of visibility, however, earnings from short-term Vrbo rentals vary greatly.
Does Vrbo report income to the irs? ›
Don't panic if you get an IRS letter
However, because of reporting laws, companies like Airbnb, HomeAway and VRBO may report to the IRS all income you receive from short-term rentals, even if you rent for less than two weeks. If reported, this income will likely be reflected on a Form 1099-K.
Hosting Fee means the monthly fee payable for the provision of Hosting Services as specified in a Quote.
How much does Vrbo charge up front? ›
In most circ*mstances the rental agreement will require a deposit of 10% - 50% to confirm the reservation, with full payment received 8 weeks prior to arrival. It is important that all payments be submitted as specified in the rental agreement in order to avoid losing your reservation and/or your booking deposit.
Can you make a living off VRBO? ›
Yes, listing your vacation home on Vrbo is a good way to make money. Not only is it one of the most popular vacation rental sites in the world (attracting 15.9 million visitors each month), Vrbo also cross posts its properties to fellow Expedia-owned sites.
How do I make my vacation rental pay for itself? ›
6 Tips To Make Your Vacation Home Pay For Itself
- Rent your property short term. ...
- Handle your rentals yourself. ...
- Tax deductions. ...
- Buy your vacation home with your IRA or retirement account. ...
- Rent seasonally or long term instead of short term. ...
- Trade for services.
Aesthetics aside, however, Vrbo offers far better filter and sort functionality than Airbnb. For example, Vrbo lets you filter by user reviews, including properties rated highly for cleanliness and properties rated 4 stars and above. Vrbo's filters are also more intuitive.
Is there a cheaper alternative to Vrbo? ›
If someone is looking for the cheapest place to stay, they'll have a lot more options on Airbnb. Airbnb and Vrbo both charge guests booking fees, but the commission that property owners pay is slightly different between the two sites.
Do Vrbo have hidden cameras? ›
VRBO allows for cameras and other surveillance devices only outside a property. The one exception: Smart devices that cannot be activated remotely. Guests must be informed and given the option to deactivate them.
Do you tip housekeeping for Vrbo? ›
The amount you tip will depend upon the quality and quantity of service, length of your stay, and the size of your group. A suggested gratuity of 20%-25% of the villa rental cost is split among the staff.
Do you tip the cleaning people at Vrbo? ›
If the place is rented out 2 or 3 days at a time she'd get 5 or 6 paydays in that time period. There is no daily service. The cleaning fee is to ready the unit for the next guests. Unless you leave a particularly big mess, no tip!
Where do cleaning fees go on Vrbo? ›
To add or edit fees:
- Log in to your account.
- Select the listing if you have more than one rental property.
- Select Calendar.
- Select Settings, then Fees.
- Under Standard Fees, select up to three appropriate fees.
- Select Fee type.
- Enter amount.
- Add custom fees details, if needed. You can select up to 3 custom fees.
Airbnb offers a specialized safety feature for solo travelers. It allows them to share their reservation itinerary with family and friends. The feature also offers safety tips and provides questions to ask hosts. Vrbo has fewer complications regarding guest safety since they only offer private rentals.
Do Vrbo owners rate guests? ›
Hosts can rate their guests when they book and pay through our sites. When a guest submits a booking request and they've been rated by previous owners, their rating will display within the conversation for the owner. On checkout day, a marketplace feed card will display in the host's account to review their guests.
How does the IRS know you have rental property? ›
Ways the IRS can find out about rental income include routing tax audits, real estate paperwork and public records, and information from a whistleblower. Investors who don't report rental income may be subject to accuracy-related penalties, civil fraud penalties, and possible criminal charges.
Can you write off furniture for Airbnb? ›
The cost of furniture and similar personal property can always be depreciated—deducted a portion at a time—over five years. However, you also have the option of deducting the cost in a single year with Section 179 expensing, bonus depreciation, or the de minimis deduction for items that cost less than $2,500.
What is the average income from a VRBO? ›
Homeowners who offer short-term rentals through VRBO earn an average of $33,000 per year. Of course, those earnings aren't guaranteed. Factors like location, property size, and occupancy rate influence how much you can earn on VRBO.
Does the host get the cleaning fee? ›
Cleaning fees help hosts get their rentals cleaned and ready before guests arrive for their stay. It also protects the host from absorbing the cost of cleaning up after guests depart. Although it's common to see the fee on listings, there are some things to consider to avoid scaring off potential guests.
How are hosting costs calculated? ›
Calculating hosting costs boils down to a few basic factors: how much data you need to store on the servers, how much traffic you expect to have on your site per month, and the amount of data each visitor will consume.
Why do I have to pay for hosting? ›
For most websites, web hosting is provided by a web hosting company that owns and maintains many servers and allows customers to essentially rent space on them. You pay the web hosting provider either monthly or annually for that space and, in return, they keep your website up and running.
How long does it take for a property to go live on Vrbo? ›
It takes between 24 and 48 hours from publishing a new listing to it being visible in search.
Does Vrbo pay for damages? ›
Most damage deposit claims are processed immediately and the funds are deposited into your account within 3-7 business days. We'll cover valid claims up to the maximum amount of your damage deposit — even if we can't collect the money from your guest or your guest's card is maxed out, expired, or unusable.
A 5% commission fee is charged on the rental amount and any additional fees you charge the traveler (such as cleaning, pet, and boat fees). Bookings that originate from our expanded distribution partners may have higher fees.
What is a good ROI on vacation rental property? ›
Typically, a good return on your investment is 15%+. Using the cap rate calculation, a good return rate is around 10%. Using the cash on cash rate calculation, a good return rate is 8-12%. Some investors won't even consider a property unless the calculation predicts at least a 20% return rate.
What is a good profit margin for vacation rentals? ›
Vacation rental operators should look for a rate of return between 10% and 20%.
What percentage does Airbnb take from owners? ›
With this structure, the entire fee is deducted from the Host payout. It's typically 14–16%, though Airbnb Plus Hosts and Hosts with Super Strict cancellation policies may pay more.
What is the cleaning fee for Airbnb? ›
They're separate from the base price and are in addition to service fees or charges for optional add-ons. A June 2022 NerdWallet analysis of 1,000 U.S. Airbnb reservations with check-in dates in 2022 or 2023 found that the median cleaning fee per listing for a one-night stay was $75. But cleaning fees vary widely.
How much does the average Airbnb owner make a month? ›
Airbnb Owner Salary
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $158,500 | $13,208 |
| 75th Percentile | $89,000 | $7,416 |
| Average | $74,713 | $6,226 |
| 25th Percentile | $31,500 | $2,625 |
The average host in the USA made $44,235 in host earnings on Airbnb in 2021, compared to $25,553 in 2020. Australia is the second highest earning country, with hosts pocketing on average $27,988 in 2021, which is significantly higher than the $16,610 they made in 2020.
