Since its launch in 2008, Airbnb has accumulated over seven million home listings and more than $2.6 billion in revenue. There’s no denying that Airbnb and vacation rental sites like VRBO and HomeAway have transformed the travel industry—but they’re also changing the multifamily industry.
In fact, according to the National Multifamily Housing Council (NMHC), an estimated 65% of booked nights on Airbnb are spent in multifamily buildings. And, as vacation rental sites continue to expand, it’s expected that this number will only grow. But how do short-term multifamily rentals impact residents and property owners?
Residents
According to an NMHC survey to more than 272,000 current apartment residents, the majority of apartment renters under the age of 54 agree that short-term rentals in their apartment communities would either positively or not affect their unit. And, as renters get younger, the interest in short-term rentals increases. In fact, 49% of respondents under the age of 25 are interested in the opportunity to generate additional income by renting their apartment on Airbnb or a similar short-term rental site.
Property Owners
It’s no secret that vacation rental sites and property owners have a contentious relationship. Cited concerns of home sharing platforms in multifamily units include safety issues, liability and insurance and quality of life disruptions. In addition, there are added upfront costs, including cleaning short-term spaces to help prevent traveling pests and providing built-in amenities, such as kitchen and bathroom supplies.
Recent advancements in the industry, however, are attempting to mitigate these risks for property managers and residents alike. Benefits include:
- Tenant and Property Management Partnerships: Platforms, including Airbnb’s Friendly Buildings Program, provide a mutually beneficial partnership between residents and building owners. These third-party services allow property managers to define home sharing guidelines for participating residents, including updating lease agreements and providing regulations about short-term guests, while also receiving a portion of the generated income. Apartment residents, meanwhile, are able to host guests – pocketing additional income without breaking any lease agreements.
- Added Income During “Lease-Up”: After a high-rise multifamily project is finalized, it can often take a property manager up to 12 months to fill the building with tenants. This period, known as a “lease-up,” can be cost-prohibitive. To counteract this, start-ups such as WhyHotel sign leases with developers to take over empty units for a shortened period of time, creating temporary hotels within multifamily buildings – and then pulling out once the unit is fully leased. In fact, short-term rentals can double the income in comparison with market rentals.
- State-of-the-Art Facilities: Oftentimes, having both short-term and long-term residents provides the income—and the incentive—for property managers to develop state-of-the-art shared spaces, including gyms, pools and lobbies. Added amenities that are expected in hotels, like concierges, are now commonplace in multifamily units, with 31% of prospective renters valuing a specific amenity on their apartment search.
As short-term apartment rentals and vacation rental websites continue to increase in popularity, the multifamily industry will continue needing to adapt. While the logistics of these partnerships are still proving challenging – from lease adaptations to safety concerns – the income opportunities could be game-changing for multifamily property owners.