How Top Property Managers Can Handle (and Profit from) Short-Term Rentals
While legislature is fighting Airbnbs through zoning laws, enforcement remains low. In addition to day-to-day operational challenges, now many multifamily property managers are tasked with navigating short-term rentals and shared apartments. At Vaporware, we help property management and multifamily real estate companies leverage technology to turn these types of challenges into new business opportunities. Here, we share how multifamily property managers can tap into short-term rentals to drive revenue, fill vacancies, and gain a competitive edge, and how technology can streamline the entire process.
From ride-hailing companies like Uber and Lyft, to parking space-sharing apps like JustPark, to odd-job platforms like TaskRabbit, the sharing economy has quickly become essential in nearly every aspect of our daily lives….and our homes. As short-term rental sites like Airbnb and VRBO continue to grow, multifamily developers and property managers are tasked with figuring out how to navigate this new economic trend.
In a 2018 survey by the National Apartment Association, apartment executives named coexistence with Airbnb as one of the top issues facing the industry. And it’s no surprise. Despite many cities aggressively regulating short-term rentals (New York State law prohibits rentals of less than 30 days in buildings with three or more apartments, unless the owner also resides there), use of Airbnb in multifamily complexes continues to skyrocket.
In fact, the National Multifamily Housing Council found that about 65% of recent Airbnb bookings were in multifamily buildings, and nearly 43% of property managers have had short-term rentals occur without their approval.
Peer-to-peer home sharing raises some concerns for multifamily property managers. Subleasing is typically not allowed, and tenant lease violations can lead to confrontation, or worse, lease termination and vacancy. Many property managers also worry about a transient culture disrupting the sense of community, increasing wear-and-tear on amenities, and heightening on-site security concerns. All of this only adds to the strain on your management and maintenance staff.
Yet short-term rental platforms continue to gain popularity and efforts to limit or prohibit home-sharing can feel like an uphill battle. So if you can’t beat ‘em, how, exactly, can you join ‘em?
First, multifamily operators should look at platforms like Airbnb as an ancillary revenue source. While property managers have traditionally made money off long-term leases, short-term rentals have the potential to bring in extra cash flow. In 2016, Airbnb launched the “Friendly Buildings” program as a new way for property managers to capitalize on the sharing economy trend. In exchange for letting tenants host on Airbnb, they’ll receive a cut of the profits—anywhere between 5 and 15 percent of what the tenant earns each stay.
Additionally, short-term rentals can help challenged and/or brand new communities fill vacancies. WhyHotel, for example, has built an entire business around this idea. According to WhyHotel CEO Jason Fudin, it can take a property manager up to 12 months to fill a new high-rise multifamily project with long-term tenants. Listing vacant units on Airbnb can generate revenue in the interim.
Third, short-term rentals can help communities in high-cost markets gain a competitive edge. By allowing the use of platforms like Airbnb, apartment or condo complexes can attract residents looking to earn extra income through home sharing.
Lastly, property managers who prioritize technology will have the greatest success joining the sharing economy. In 2018, Airbnb announced plans to create APIs that would enable property managers and multifamily operators to integrate with the Airbnb platform directly. The right technology partner can help you leverage this capability to increase efficiencies, manage any uptick in tenant communication and maintenance caused by short-term rentals, and streamline your long-term and short-term tenants in one platform.
Of course, property managers interested in joining the sharing economy should do so carefully. Multifamily Executive recommends reviewing your area’s short-term rental laws and fully complying with all regulations, analyzing any liability and insurance issues that may arise, and carefully drafting tenant contracts to limit your liability and ensure any additional rental fees are paid.
Multifamily owners and developers are faced with constant operational and leasing challenges, and navigating short-term rentals can feel like one more hassle to manage. However, with the right stipulations in place, a revenue-focused approach, and smart technology partners who streamline the process, multifamily property managers can capitalize — and profit from — this growing trend.