How Short-Term Rentals Diversify Revenue
- Feb 06, 2019
Multifamily developers and owners are constantly searching for ways to expand their incomes, and sometimes look to short-term rentals. This could cause headaches, but not if you have someone else do it for you. An emerging trend in multifamily is immediately offloading vacant units to a company that markets them as short-term rentals for business travelers or tourists who want authentic living experiences.
For instance, furnished-apartment provider blueground leases multiple units before they hit the market, with the aim to continue leasing them for many years. Another way to minimize the time an apartment sits empty is using online marketplaces such as Airbnb or CouchSurfing.
By using innovative short-term rental models, multifamily owners and developers can boost their net operating income, eliminate vacancy losses and improve their cash flow. They can opt to lease individual units, parts of the community or the whole property, further enhancing their revenue.
The latest method of achieving full occupancy and steady cash-flow is flex accommodation firms. Once a vacant unit is identified, the company furnishes it and rents it out. Whether people are traveling for business or for leisure, multifamily players can take advantage and enter the hospitality industry.
Laramar Group, Equity Residential, Trammell Crow and Greystar are just a few of the companies that are making use of short-term apartment rental firms such as Stay Alfred, which has roughly 1.5 million square feet under management in more than 28 downtown neighborhoods.
“With the flood of new development in downtown cores across the U.S., multifamily owners are constantly looking for new ways to assure the stability of their properties. We saw a unique opportunity to reduce the vacancy burden for owners and increase NOI by filling properties partially, or in some cases, fully, with short-term rental units,” Jordan Allen, CEO & founder of Stay Alfred, told Multi-Housing News. “For new upscale developments, our service is especially valuable during the initial marketing period, when owners are seeking a solid foundation of occupied apartments during what has become a hyper-competitive lease-up phase.”
Developer Giarratana Development collaborated with Stay Alfred for 505, Tennessee’s tallest residential skyscraper. Stay Alfred provided on site support to the building’s guests and residents 24/7 and began operating the Nashville high-rise prior to the completion of construction, managing to lease 51 percent of the units within two weeks of opening. Moreover, the NOI boost facilitated long-term refinance 18+ months prior to anticipated schedule.