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In today’s competitive market, multifamily building owners strive to lower expenses, increase revenue and ultimately maximize the value of their properties. Those owners who can successfully create and sustain multiple revenue streams put themselves in a position to outperform the competition and maximize that value. Leading Multifamily operators such as Virtu Investments and First Communities have incorporated highly lucrative short-term rental revenues into their buildings. More importantly, available are tools to allow owners to do so securely, compliantly and transparently. By adding short-term rentals as an amenity, owners can create new multifamily revenue streams by earning higher income from short-term rental stays, charging higher rental rates and increasing lead generation for future long-term residents.
Revenue Stream #1: Earn Income from Short-Term Rental Stays
Building owners can take a percentage of the rental proceeds. This resident-driven, short-term rental revenue stream is a direct contribution to your bottom line at little or no cost, increasing your net income and increasing the building’s value.
“The sharing economy caught a lot of people by surprise. The fact that we would have as much as a quarter of our buildings subleasing their units on short-term rental listing sites– that wasn’t something any of us were aware of.” – Blake Hayunga, COO at Virtú Investments
Revenue Stream #2: Higher Rental Revenue
The short-term rental market, especially in desirable locations, gives you added demand leverage by offering a value-add amenity that is highly desirable to Millennials and others who want to participate in the sharing economy. As your property utilizes this valuable amenity in marketing efforts – it will create differentiation in your marketing and lead generation efforts – and outperform buildings that don’t offer it. Over time, this increased demand, unique to your property, will enable you to increase rents.
Perhaps more importantly, we’ve found that new residents are often willing to take on more monthly rent in a larger or higher tier unit than they normally would when they can rent their units on short-term rental listing sites. Why? Well, these residents understand that their higher monthly rent will be offset by their revenue from short-term guests, thus enabling them to spend more.
“This most recent new tenant took a lease higher than she had originally planned, feeling safe because she could make up the difference with short-term rental income!” – Luisa S, Community Manager
Revenue Stream #3: Generate Long-Term Lease Leads
Allowing short-term rentals is a market differentiator and lead generator for long-term leases. Building owners with desirable short-term rental policies attract residents who know the value of short-term rentals and seek out properties that allow it. While expanded pet policies, resort-type amenities, and resident engagement platforms are proven lead generators, they come with additional expense. Pillow Residential allows you to offer short-term rental policies that attract residents who want to put their (your) unit to work to create revenue at little or no cost. Pillow’s research into 6 assets over a 30 days period show an average of 40 more leads per building.
A Pillow partner experienced 15% more long-term rental applications and attributed 1 in 7 resident renewals to the availability of short-term rental income. They set themselves apart from the competition resulting in a higher net operating income.
“Archer Tower advertised that it allows short-term rentals, it’s the only building in Denver doing this so it became an easy decision for me to sign a lease. It was the number one factor for me in signing a new lease.” – Brooke B, Archer Tower Resident
As a building owner, providing the option to residents to rent their units short-term will attract residents seeking additional income. As a building owner, you profit from three unique multifamily short-term rental revenue streams:
#1: Earn Revenue from Short-Term Rental Stays
Receive 10% of your resident’s short-term rental income at little or no cost to you.
#2: Higher Rental Revenue
Increase your rents by driving higher levels of demand and also attracting renters who view participating in the sharing economy as a way to help them afford higher priced units.
#3: Generate Long-Term Lease Leads
Attract short-term rental hosts as long-term residents who partner with you on short-term rental revenue. As a building owner, you experience enhanced net income, lower vacancy rates, and increased property value – a true win-win for owners and residents.
“The option for residents to use short-term rentals is definitely a big lure, so much so that at least 1 out of every 7 leases that we have signed thus far, is absolutely because of this amenity.” – Luisa S, Community Manager
Pillow is solving short-term rentals for multifamily properties, allowing building owners and property managers to have control and transparency over short-term rentals while enabling their residents to rent their units short-term on listing sites like Airbnb, Homeaway and VRBO. When someone books a short-term rental reservation with a resident, building owners are earning 10 percent of each booked reservation allowing them to invest back into their communities or help cover management expenses. Additionally, building owners receive daily and weekly short-term rental activity reports with key reservation information including dates, guests’ names and contact information. Landlords can also leverage Pillow’s Vacant Unit module to manage and monetize vacant units. With Pillow, landlords can rent out their empty units for a few nights at a time to make the most of this valuable asset. Pillow charges an 8 percent fee per completed reservation: the average property manager can make 10-30 percent more than typical market value by offering short-term rentals in addition to traditional leases. All in all, Pillow offers a one stop shop for managing short term rentals in multifamily buildings. With one service, you can offer your residents the flexibility to do the same and easily monetize your vacant units.
If you own a multifamily complex or management company and are interested in providing short-term rentals, email firstname.lastname@example.org or visit www.pillow.com.
Writer: Todd Conway is Co-Founder of Pillow | June 10, 2018Follow Us