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Expensive renovations, building code changes, and vacancy loss are some of the biggest concerns among multifamily building owners. As any developer knows, renovations and navigating local ordinances come with the territory. However, vacancy loss doesn’t have to. If you take the time to develop a solid plan to integrate a short-term rental strategy for your vacant multifamily units, you’ll be a step closer to maximizing your profits. Using short-term rentals at strategic times during a unit’s life cycle can ensure that you keep your vacancy loss to a minimum. Managing your predictable vacancies, making the most of your unexpected vacancies, and helping your tenants rent out their units when they’re away from home are three simple ways to reduce vacancies and increase profits.
Depending on the type of building you have and its location, you may cater to a number of professions and lifestyles that create predictable vacancies. Traveling nurses and consultants are just two jobs among many that can require temporary relocation and month-to-month leases at a multifamily building. Typically with corporate housing, if you have a traveling nurse renting a unit from November through March and another lease beginning in May, you miss out on April’s rent. However, if you utilize short-term rentals, you can rent out the unit for a portion of April and still earn rental income. Airbnb rental revenues are higher on average than traditional monthly rents, and it will have a significant impact on total net operating income! To make sure you have the necessary time allotted for turnover, simply black out the dates on your Airbnb calendar.
If you provide university housing, implementing a short-term rental management plan can help you recoup months of otherwise lost profits. Once students finish out the school year, use the summer months to tap into a new revenue stream with short-term rentals. More guests stay in vacation homes in the summer than any other time of year, so rather than letting your units sit vacant, take advantage of the high booking rates the season offers.
With the supply of new construction multifamily units increasing just slightly faster than demand, vacancy rates nationwide are expected to increase. Freddie Mac is forecasting that by the end of 2018, vacancy rates could rise to 5.3 percent, putting the market back in line with the historical average. If your building’s vacant rate is increasing, consider making use of those units as short-term rentals. You can inexpensively and temporarily furnish your units with rental services, like Cort, while you search for and screen potential long-term tenants.
Alternately, some multifamily buildings have seen great success by designating a couple of their units as strictly short-term rentals. If you have a unit with extra-special features, like a penthouse apartment with a gorgeous view and fantastic balconies, it’ll be all the more attractive to a short-term renter. If you decide on designated short-term rentals, it may be worth it to permanently furnish your units with a focus on great interior design and all the comforts of home.
At first, you may wonder, what’s the point in helping your tenants rent out their units as short-term rentals when they’re away? After all, they aren’t technically vacant. But, more and more, potential tenants are looking for multifamily buildings that allow them to safely and easily rent out their units while they’re out of town. With 43 percent of apartment firm leaders indicating that their residents already list their homes on short-term rental platforms, providing short-term rentals for your tenants is a great value-added amenity that will draw new tenants and reduce turnover, which will save you money in marketing, tenant screening, and repairs. In addition to saving money, this approach can also make you money if you utilize a service like Pillow. Each time your resident has a completed booking, you’ll receive 10% of their earnings.
By 2020, Airbnb is set to be worth $31 billion. On any given night, more than 2 million people are staying in Airbnb units. Multifamily buildings are especially popular, as short-term rental clients appreciate the amenities, safety, and security that comes with a trusted complex. By using the tips we’ve shared here and implementing Pillow’s Vacant Unit module, you can improve your short-term rental management for vacant multifamily units and see your building’s profits increase.
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 Airbnb. 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 email@example.com or visit www.pillow.com.