With the incredible growth of Airbnb, and resident demand for alternative living situations, our clients have been finding new ways to manage and lease their apartment communities. While short-term rentals, or “STR’s” have been around for many years, RealtyCom has recently been working with some of our Developer-clients to find ways to provide secure and ubiquitous broadband solutions for non-traditional rentals that allow both flexibility and ease of use.
Some of our clients already operate highly successful programs aimed at corporate and student populations, but transient housing for hospitality and workforce housing are largely new concepts.
Having limited knowledge on this subject personally, but lots of interest, I asked Dennis Cogbill from the new Flexible Rentals Investment Conference (“FLEX”) for his thoughts and how the landscape for traditional leasing is changing.
Cogbill points out that implementing STR’s in existing communities can present some challenges. Lender covenants or municipality restrictions could apply (lenders traditionally have a cap of 5% of the units to be allocated to corporate/alternative housing and each municipality has different rules and re-permitting can be costly). There is also the question of what strategy an Owner-Operator should adopt. Should you build it yourself? Use a master lessor? Hotelier? Or simply partner with residents to sublease or let them do it on their own?
There are admittedly risks – if you’ve stayed at an Airbnb yourself you know the big ones – access, noise, service, amenities, perception from long-term neighboring residents, and verification of the occupant are some. While Airbnb’s response has been to ban large groups and have additional verification of occupants, most Owner-Operators will need to seek additional ways to mitigate risks – working with short-term rental hosts, but also balancing neighboring long-term resident interests. A professionally written short term rental agreement with specific rules and regulations can be a good start.
The question RealtyCom is most interested in, is how Owners will handle delivery of Television, Phone and Internet to these homes securely for both long-term residents and short-term guests. Guest expectations are that the units have the amenities and convenience a hotel would have. Some clients choose a more traditional Bulk service, or provide cellular/Wi-Fi only, and others overbuild dual networks. Each property should be evaluated independently to limit capital costs and risk to Owners.
Looking ahead to 2020 – a recent study showed that younger renters have expressed more interest in STR’s. Nationally, only 16% of respondents said they would not rent at a community that included STR’s. Nearly 60% of respondents said having the ability to rent their home could either positively impact their perception of the community or have no effect on it at all.
It is evident that STR’s are here to stay, and that as an industry, we’ll continue to find new ways to bridge the gap between “guests” and “residents.” I’d love to hear how you are solutioning for this problem, or what program(s) you’ve tried! Or maybe we’ll even put our heads together at the next FLEX Conference? https://www.flexrentals.org/