Short term rentals
CBRE Research did an extensive study on Short Term Rentals and it's impact on traditional Hotels. Also, STR is also getting into MultiFamily space as apartment owners are experimenting by renting 5 to 10% of the units to STR's and getting their NOI maximized ! So lets get into some things in this space and also how Zovest is trying to capture this phenomenon in MF.
1) Why guests chose Short Term Rentals (STRs)
The main reasons guests chose STR vs Hotels is, the home feeling, kitchen, family setting, experience meeting new people and main factor is price.
2) Not just Airbnb
First STR doesn't mean only Airbnb. There are so many other providers like VRBO, Home Away, Flipkey, Trip Advisor and also traditional corporate housing.
3) Know the local laws
Laws are changing every year regarding the STR industry. It will be really difficult for operators of the STR if they only rely on STR income and underwrite the deals. What if the law changes against you and you will be in huge trouble with your money.
Here is the grading that's given by Airdna and Roomscore on the markets that are best and worst in running STRs. But you need to keep upkeep on how legislature is changing. Like what happened to Newark, NJ Airbnb law that the city is trying to pass. All those people who bought the properties with high prices assuming that they can make a killing in STR are really worried.
“We don’t make enough money to pay double insurance and to pay extra taxes. We don’t make that kind of money,” said Airbnb host Deborah King. “It’s going to hit us hard.”
4) Exponential Growth and eating Hotel Lunch
CBRE Research estimated STR's are eating 12% of Branded hotel lunch. This is huge. STR's grown 500% in last 7 years !
5) Types of properties
There are different types of properties that you can do STR like Entire House, Entire Apartments, Private Room, Shared Room etc. The most popular is entire house or apartments.
6) STR and MultiFamily
Doing STR in some of the units in MultiFamily is highly lucrative proposition that lot of operators are doing these days. For that
See the STR Market penetration.
Zovest is already experimenting Airbnb and STR in our Cleveland Apartment Properties and we will expand to other markets and also we will build new product and carve-out few units for STR to maximize NOI.
Please reach out to me for further questions.