Websites like Airbnb and VRBO have taken the hospitality industry by storm, making it easier than ever for owners to rent out their homes to their guests.
According to AirDNA, a website that tracks data from several short-term rental services, there are approximately 13,188 active listings in Pinellas County.
Now anyone with a spare bedroom or vacation home can become a makeshift hotel manager and earn a second income in the process. But is short-term rental right for you?
Allen Cohen is the CEO of Coastal hosts, a property management service for owners of short-term rentals in Pinellas County. He explains how he got started renting on Airbnb and what factors hosts should consider before taking the plunge.
What prompted you to start this business?
My wife Carol and I built an addition to our house so that my mother and her mother could have a place close to us to occupy as we got older. We built a 1,000 square foot apartment behind our garage and each of them lived there at some point.
After they both died, we sat with this empty space in our house and wondered, what are we going to do with it? Someone suggested putting it on Airbnb. So we did it and lo and behold, it took off.
I retired in 2019, but have about 25 years of property management experience in the multifamily market. After I retired, my wife got a little fed up with me being home all the time. She said, ‘You have to do something. Why not just grow the Airbnb business and manage properties for people who live remotely? “We started four years ago and have been adding two properties a month since.
How much has the short-term rental industry grown since you started?
Over the past two years, there has been an exponential explosion in the number of Airbnb properties available for rent. Demand has increased, but not nearly enough to keep up with the growth in the number of units.
What makes a good short-term rental?
There are many people who buy properties at random because they think they are going to make a fortune. And that’s just not the case.
The #1 thing, as with all real estate, is location, location, location. Properties located by the sea or in city centers have been able to maintain and sometimes increase their nightly rates even as competition has intensified.
Another thing to be very careful about are local laws and restrictions on short term rentals. There are different rules in different jurisdictions. For example, places like Indian Rocks Beach are quite open, while Redington Beach, just to the south, has some restrictions. If you buy property in Redington Beach, you could find yourself in a legal battle.
For landlords, what are the advantages of doing short-term rentals instead of a traditional year-round lease?
The amount of revenue generated from a short-term rental is probably two to three times that of a long-term rental. Let’s say that in a prime location, you charge $1,500 to $2,000 per month. In the short-term rental market, that same unit could probably fetch between $150 and $180 a night.
Track trends affecting the local economy
Subscribe to our free Business by the Bay newsletter
We’ll break down the latest business and consumer news and information you need to know every Wednesday.
You are all registered!
Want more of our free weekly newsletters in your inbox? Let’s start.
Explore all your options
What are some of the unique challenges that come with managing short-term rentals?
With the traditional rental model, once you’ve signed a lease, you don’t really get involved unless there’s a maintenance issue or something like that. Most of the burden falls on the person whose rental the property is.
With short-term rentals, it’s a little different. It’s more like hotel management. You are going to have three, four or five terms of sales per month. You must be prepared to provide cleaning and sanitation. You should have several sets of sheets and other supplies.
When people rent a home, they also want to feel welcome there. We try to give them that experience by offering a bottle of wine and snacks. Our managers meet with them and educate them about the property and provide concierge service at the dining and entertainment venues.
This is in addition to the maintenance issues that arise from time to time. So broken air conditioners and water heaters.
What are the most common mistakes people make when starting out with short-term rentals?
A lot of people start out self-managing and find they don’t have the time. It’s a lot of work, especially on top of a full-time job. It’s not just about booking and opening the door. There are schedules to manage, cleaning, maintenance, marketing.
You may also experience issues with parties and other disruptions. It is important to find quality guests. If you don’t advertise the unit correctly or have the wrong price, you may attract the wrong kind of people. That’s especially important here in Florida, which is a popular spring break destination.
What impact do you think short-term rentals have on the local real estate market?
The laws of economics do not change. Supply and demand determine value and raise prices. So if you have more people wanting to buy properties to use as short-term rentals, property prices are going to go up.
But when someone makes an investment in a neighborhood, it can also drive up home values.
Comments are closed.