Airbnb is an online marketplace that connects people who want to rent out their homes with people who are looking for short-term and holiday accommodation in a local’s neighborhood.
The traditional rental market has been reigning supreme for decades. But when you take into account the multifamily construction boom and the fact that the Airbnb short-term lease market is eating a good chunk of the traditional market, one thing becomes clear. The demand for expertise managing Airbnb properties is rising, and with it, a niche that property managers are best placed to fill.
Here’s what you need to know to get started.
The Airbnb phenomenon
Despite the impacts of COVID-19, the short-term rental market expects to see a major increase in the number of properties and users in the very near future.
The Airbnb phenomenon has shown us that there are a lot of rewards to be reaped from this type of short-term lease, both for homeowners who find they can easily earn some extra cash and world travelers who love all the freedom this type of lease affords them.
So what does this mean for property managers?
For property managers who want to include this type of management service to their portfolio, there will most likely be an adjustment period at first, as with any new venture.
After all, there are quite a few differences between these property management services and traditional long term rentals – like regulations or tenant turnover. This is naturally one of the biggest reasons why a large number of landlords and managers aren’t overly enthusiastic at the proposition of getting into bed with Airbnb.
However, while there will be a number of new hurdles for property managers to overcome, there are also a lot of new, potentially lucrative opportunities that will present themselves because of the benefits of the Airbnb short-term rental model.
For example, the user reviews on Airbnb’s site give people a bit more insight into the good and the bad of each particular property so that they’re a bit more informed before they commit to renting out a property – and when it comes to long-term leasing, there are no customer testimonial systems of that magnitude.
This level of transparency can lead to a larger turnover of potential renters for highly-rated properties because they can see that previous tenants had a positive experience.
Another great benefit is how easily a client can find lodging near a location that is a place of interest to them. Instead of looking through countless offers and trying to find them on a map, potential renters can simply browse through a readymade list of properties that are close to their desired location.
This means that they are likely to be interested in the property even before coming to check it out, simply because of the location, which makes signing them as tenants that much easier.
A shorter stay – for a longer bill
The best example of an opportunity disguised as a problem would have to be switching from long-term to short-term rent leases and the opportunity for dynamic pricing that it provides.
The major advantage of long-term leasing is, of course, the fact that you have a steady rent amount coming in regularly. What skeptical landlords and property managers usually overlook though, is the fact that you can charge much higher rates for a short-term lease because there is less security than with long-term leases. Meaning, that one week of profit from a short-term lease can be potentially as lucrative as a whole month’s profit from a long-term lease.
What are the tradeoffs?
One of the more noticeable disadvantages of having a short-term lease property is that you will constantly need to be marketing and responding to inquiries before you’re able to find the next potential renters. Granted, this is possibly the biggest nuisance of short-term rentals – they require a lot of groundwork. However, this is exactly why landlords would feel even more inclined to collaborate with property managers that offer these services.
How can property managers work with Airbnb?
Let’s look at some positive signals that suggest property managers can easily incorporate this type of management service into their offer.
Short-term rental agreements
While Airbnb is slowly but surely expanding its reach, plenty of cities are slowly starting to clarify the laws and regulations when it comes to short-term rent agreements – LA is one such example.
This has led to many landlords and property managers getting over a lot of their insecurities about the prospect of managing these properties, and being a little more open to the possibility that short-term rent arrangements might be something they could potentially be interested in. Airbnb is not making it a secret that it’s here to encourage them, with programs such as the “Friendly Buildings” program introduced in September 2016.
A lot of cities have also started constructing buildings that are specifically advertised as Airbnb-friendly. This ensures that the residents of these buildings are open to the idea of occasionally sharing their apartments with short-term guests.
Of course, the residents will not be left empty-handed and will themselves be in a position to sublet their units to Airbnb guests and potentially get a substantial sum of the rental income. This policy of being upfront with both parties when it comes to what exactly they should expect from an Airbnb unit sharing venture ensures that both the residents of the apartment and the visiting guests receive substantial benefits.
The ‘Friendly Buildings’ Program
While we’re on this topic, there’s also Airbnb’s own ‘Friendly Buildings’ program.
But how does it work?
‘Friendly Buildings’ provides a cut of the profits from Airbnb-ers to the people that are letting their building be used to host an Airbnb. The program targets landlords, property managers, and, of course, homeowner associations.
This program is critical for creating hosting rules that apply to all residents equally, and in updating leases and other agreements in order to allow the residents to host. It also helps residents and homeowner associations each share a portion of the income.
In essence, ‘Friendly Buildings’ is designed in such a way that the property owners will receive the biggest possible profit from a unit while setting their own terms when it comes to what a temporary tenant is and isn’t allowed to do.
These terms can range from not allowing a particular sort of pet on the premises, to setting their own blackout dates.
This program also allows access to utilities like useful dashboards that allow you to keep track of the number of days that a certain resident is allowed to lease their property per month or year.
To tenants, this program allows access to additional funds that they can earn simply by not being home for a set period of time, which will probably help significantly when it comes to paying the monthly rent for said home.
Airbnb management automation
In the past, a lot of property managers have been hampered by the amount of legwork short-term lease requires, only to be turned around on the idea as soon as they were introduced to some of the tools that can make the entire process as simple as a two-piece jigsaw puzzle.
Yes, the bigger tenant turnover means that there would need to be someone on-site more often than with traditional rentals. Yes, you need to be marketing all the time, and staying on top of inquiries.
But nowadays, there are software tools designed to make the life of a property manager way easier by automating huge chunks of the managing process.
Take property management software like our own Console Cloud, for example. Considering the site you’re reading this on, we know you weren’t expecting to hear any different, but there really are quite a few advantages to using Console Cloud or another similar tool for managing your Airbnb rental property.
First of all, any property manager worth their salt can learn to do it in a few days, tops, and the benefits one can reap from automating the inspection reminders or the report sending to owners are plenty.
The site has an intuitive layout (well, not to brag, but it’s ours) that makes navigation through the different menus and features remarkably easy, and there’s a huge knowledge base to dig into.
Possibly the biggest advantage that Console Cloud can give any Airbnb property manager is to allow them to get through their work as quickly and efficiently as possible. Almost every property management or payment-related process is simple and a quick click of a button away from being checked off the list of daily tasks.
Automation tools like this can help property managers to:
- Keep track of every assigned key
- Group all their documents into a single file for every property,
- Make custom emails for cleaning staff, contractors, and so on so that they can organize their schedules much more easily,
- Manage the entire team.
Overall, this type of software can streamline almost every aspect of your property management routine.
Over and out!
At the end of the day, short-term lease won’t be for everyone and a lot of property managers will want no part in the Airbnb market. However, those that see no problem in making the transition will give themselves a prime spot in a very lucrative part of the real estate industry that will only grow even larger as time goes on.