Airbnb and RealPage partner to make housing more affordable while fattening the pockets of renters and apartment owners
There is an old debate as to whether it is cheaper to buy or rent housing. Since Airbnb launched in 2008, homeowners have had the benefit of sharing their homes for an additional source of income, certainly tipping the balance from profitability towards home ownership.
But, now tenants can join in the riches.
Airbnb and the provider of real estate software and analysis Real page, announced an exclusive roommate solution that makes it easier for residents to share their space and earn money, while giving homeowners the option to get a share.
The solution, called Migo, essentially offers the technology to make life easier for the resident and owner, integrating with service providers to improve how Airbnb works in apartments. It could also convert some of the residents who were already bypassing the system to sublet or share their units without permission.
While many of us may have benefited from renting a convenient rental location downtown on Airbnb, local regulations or owner policies often prohibit home sharing. Migo is changing all of this by implementing permissions and transparencies and streamlining the process online. The value proposition of technology is to enable residents to live more flexibly and affordably.
How? ‘Or’ What? Migo gives the example of a tenant in Miami who is a flight attendant. While away for work, they can share their apartment, which they rent for $ 1,965 per month. They share the house six days a month at an average of $ 150 per night. By using Migo’s self-service model, they get the most revenue from the reservation. In twelve months, they made a total of $ 8,100 in shared accommodation, thus offsetting the rent by 34%.
In addition, the owner takes a share. Following this example, the owner earns $ 1,836 from the house sharing activity.
Hosts on Airbnb, or residents, have also found the extra income to be of great support during the pandemic. Jesse Stein, Global Head of Real Estate at Airbnb, points to one of the company’s recent surveys which shows that 30% of its hosts have suffered cuts in wages or working hours linked to the pandemic and more than 10 % lost their jobs or were made redundant.
Advantage for owners
First, as the example above shows, the owner receives a share of the income from each house-sharing transaction.
However, as Christine Serlin reports for Multifamily Executive, owners have had to overcome the fear of sharing the home, as well as the fear of allowing pets. Which is not difficult to do when you look at the numbers. Between March 2020 and March 2021, new Airbnb hosts cumulated with a single ad earned more than $ 1.2 billion on Airbnb. That’s a lot of money that homeowners can now access.
For each night booked, property groups receive a percentage of that booking, so this is additional net operating income.
Todd Butler, who is vice president of home sharing at RealPage, said property managers who offer home sharing as a convenience will see higher stabilized occupancy rates, faster leases, lower cost per lead for tenants and increased prospect traffic. In addition, it can be an additional incentive for real estate investors.
With Migo as a factor for investors and developers, home sharing as a tenant amenity will be particularly desirable in urban areas with high pedestrian potential and, of course, regulations allowing home sharing.
“There are a lot of fundamentals that make roommating in apartments viable; this product is not for all communities, ”said Butler. “It’s generally better for an asset less than 10 years old with the right intelligent access control. And, if this is the right demographic – 24 to 35 year olds – then having 40% of the building as active participants in house sharing is no exaggeration.
Using these criteria and the estimated earning potential calculator on the Migo website, a property in Philadelphia with 174 units rented an average of 4 days per month, the roommate would bring in $ 46,479 per year, or $ 267 per unit per year. .
Migo predicts the sweet spot for users will be between 24 and 35, has most likely used Airbnb before, and are young professionals with no family. These tenants can share their home while they travel for work or work remotely, to monetize the time the space is not in use, and then use that income to offset rent or other housing expenses.
The risk to the property manager is mitigated as Migo works with Airbnb to perform an identity check, requiring an uploaded ID which is then subjected to various criminal and background checks. Potential customers will only see Migo properties if their identity is verified, otherwise they will only see traditional Airbnb results.
If anything should happen, property damage, Airbnb reservations include $ 1 million in damage protection and liability coverage.
In addition to colocation insurance, the technology platform offers access control, criminal filtering and noise monitoring. In addition, for the customer, it offers room cleaning, automatic pricing, reservation assistance and baggage management.
Inspiring new development
The Migo team is excited to see how this new product helps influence how and where communities are developed, as income from housing sharing can now be factored into financial modeling, which can move a project forward that may not have been attractive before.
“Because Migo has such a significant income opportunity that can easily be modeled for homeowners, adding Migo into a financial projection could lead developers and homeowners to build a property that otherwise might not have. not hit a certain threshold of return on investment – thus potentially allowing for more housing stock, ”Butler said.
He does not foresee that this new technology will have a negative impact on the building stock. Migo centers its offering on sharing housing among residents, which means that residents share the units they live in, as opposed to the main rental of furnished units, which would in effect take away from the housing stock.
Residents pay the landlord’s market rent and sign a 12-month lease just as they would in any other community. Airbnb charges the same host service fee as for any Airbnb reservation, which can be as low as 3%. There are no other fees that Airbnb collects from residents, guests, or owners.
Stein shares that the pandemic has caused a change in the way people live, work and travel – they are less attached and more flexible, so they go to more places than before and stay longer.
The recently released Airbnb Travel & Life report analyzes Airbnb booking data and consumer research and shows that there has been a transition in travel. Travelers who traveled at the same times and to the same places now live anywhere, anytime, for different lengths of time.
Stein says they are also seeing people starting to return to cities for longer periods of time.
“The top three long-term travel destinations on Airbnb are all cities,” said Stein. “As of April 30, 2021, in New York, 62% of summer nights booked in the city are for long-term stays, and in Seattle and Los Angeles, long-term stays are 40% and 43% respectively this summer. . “
The urban trend should be a good start for Migo. Additionally, Butler points out that with more people working remotely now, tenants can travel more and not risk losing so much money on rent. This could dramatically increase listings on the site, with nearly 50 million rental units in the United States alone.