Short-term rentals started to approach the multifamily industry several years ago, but this year have taken the industry by storm. Every conference now features panel discussions on the state of short-term rentals, and new flexible housing vendors continue to enter the marketplace; it is clear short-term rentals are not going anywhere.
Now that flexible housing has become a mainstay in multifamily, it is time to get creative! Apart from generating additional revenue for your communities, here are five ways to capitalize on short-term rentals:
1. Offer “Try Before You Buy”
Even though the demand for short-term rentals is increasing, onsite teams need to continue attracting and retaining long-term residents. One way to do this is by utilizing your short-term rentals as a way for prospective residents to “try before they buy”. When you are working with a potential new resident, suggest they rent out your vacant furnished apartment for the weekend and see for themselves why your residents love living in your community. In addition, if someone is traveling to your area from out of town to tour several communities, let them know they can book one of your short-term rental apartments instead of staying at a hotel.
Try before you buy is really a win-win; you generate additional revenue for your community from these stays, and you set yourself apart from the competition by letting prospective residents test out your community and see what it is really like to live there. The Multifamily Solutions team has seen short-term guests turn into long-term residents.
Pro Tip: Include a list of local tips and recommendations in the apartment so potential residents can explore the area they are planning to call home.
2. Become Short-Term Rental Friendly
Continuing with the theme of giving your community a competitive advantage to attract and retain long-term residents, multifamily professionals should advertise their communities as short-term rental friendly. By allowing residents to offer short-term rentals in their own apartments, they can tap into an additional source of income they might not have living somewhere else. If they are aware that you are the only short-term rental friendly community nearby, they have a reason to re-sign their lease.
As short-term rentals continue to gain popularity, residents are going to expect resident-sharing as an additional amenity, just like they expect in-unit washer/dryers. Our team is already starting to see this. A resident at one of our communities, who was getting ready to relocate, reached out to know which other communities the Expedia Group Multifamily Solutions team worked with so that she could move into a building that would allow her to continue to offer short-term rentals.
Making your community short-term rental friendly is another way to appeal to long-term residents, and don’t worry, our team will bring the safety and control to make sure your community remains a great place to live.
3. Optimize Your Community’s Financial Performance
The demand for short-term rentals increased 81% between 2012 and 2017 and has continued to grow ever since (1). What many multifamily professionals are starting to realize is the demand for short-term rentals is there and travelers are willing to pay. If you have an urban-core community or a community located near a big event, such as a large music festival or championship game, you have the potential to make above and beyond an entire month’s rent in a few nights. For example, one community averaged nightly rates between $400 and $1100 for the South by Southwest music festival in Austin, TX (2). Another community was able to generate $535 a night for college football games in Tallahassee, FL (3).
As vacancy continues to climb and rents start to plateau, short-term rentals are the key to optimizing your community’s financial performance.
4. Utilize Hard-to-Lease Apartments
Every community has that apartment that you just cannot lease. Either it has an untraditional floor plan, an unappealing view, or bad location. Instead of having your team try everything in the book to rent it, turn it into a short-term rental! Short-term guests do not care if the apartment faces a brick wall or if they have to walk through the closet to get to the bathroom. As long as the apartment has a comfortable bed and additional living essentials, your short-term guests are likely to have a great experience.
Utilizing hard-to-rent apartments for short-term rentals is a great way to get your leasing team to focus their energy on the other apartments in your community and to reduce vacancy loss on an apartment that would otherwise be empty. You won’t have to offer a month rent-free again!
5. Generate More 5-Star Reviews
With the plethora of information available to today’s consumer, customer reviews often play a critical role in purchase decisions. Multifamily professionals have a difficult time getting their long-term residents to write reviews on their experience living in the community. Reviews are far more common with short-term travelers, as the short-term rental marketplaces have a mutual review system in place (i.e. the guest reviews their stay in the short-term rental, and the host reviews their experience with the guest). The average short-term rental review is 4.4/5 stars.*
With more guests staying at a community in short-term rentals, onsite teams can encourage short-term guests to share their feedback on other customer review sites, such as Yelp and Apartmentratings.com, in addition to the feedback they leave on the short-term rental marketplace where they booked the apartment. These reviews can then be used in marketing materials you share with potential new residents, and your team can use them to learn how they can improve their resident-experience.
As you develop your short-term rental strategy, consider the variety of ways short-term rentals can optimize the overall performance of your multifamily communities. Short-term rentals are here to stay, so get creative!
By: Nikki Knoepfle | September 25, 2019