Short Term Rentals 3-5 units?Outside Management. Is it worth it?

Question

Hey guys I currently have 30 units locally in South Bay, Los Angeles County, Long Beach etc.  1-2 bedroom units.

I was wondering if anyone who has several rental units has converted to air BnB short term rentals. If so how has their experience gone?

There's some local and not local companies that do the management - Take calls, set up AirBnB accounts, host etc, and charge 10-20% of the rental income

How has your experiences gone?  How much more have you been able to do?  How much more could I get after expenses on short term vacation rentals?  for instance if I receive $1600/mo for a 1br/1bth how much more could I possibly get.

Note these are in pretty good metro areas, C+ to B+ within a couple miles of the beach.

I plan to not be super involved and outsource a good amount.  I already have a team for construction and some property management, but was wondering about outsourcing for vacation rentals.

Nathan Gesner · Answer

Do your research and count ALL the costs. You will pay a higher management fee. You will pay lodging taxes, possibly city, county, and state. You are responsible for utilities. You have to furnish the units. Do you have to replace consumables like toilet paper and coffee. Depending on your Market, you may have high vacancy rates during certain times of the year.

A lot of people claim to make two, three, or four times the amount with a vacation rental but that's typically before they consider the expenses. It could be a real money maker but you have to go in with your eyes open and honest accounting..

Donald Stevens · Answer

Hi! this topic is one of my favorites due to my enormous passion for the area. It will take a lot of time to type everything therefore I'll first start by saying that you may call or contact me anytime as my mentors in this area (vacation rentals) are highly experienced. But I'll leave you with these things first:

1. Check legislation regarding vacation rentals in your area, this is very important!

2. Keep in mind the goal is to set your occupancy rate and KNOW YOUR NUMBERS! (How else would you hit them??)

3. Design, Location, and Marketing are huge factors

4. Remember short-term vacation rental pricing and marketing structure is typically centered around the hospitality industry (think hotel rates, etc.)

5. Having local management is worth it and helpful if you are not located in the area...remember business is driven by quality and reviews!!! therefore management aspect is very important. ( vacation rental aspect)

Rick Versace · Answer

Great area to have some long term properties in! If you are still buying down here check out Pompano Beach, great area up and coming. Message me if you want me to put you in contact with my property manager down here.

As for the Airbnb day rates, they can drop off as much as 50% from peak of season to summer down here. That being said, still great cash flow even after all of the abnormal expenses that come with Airbnb.

Good luck! Let me know how it goes!!

Rick Versace · Answer

Hey Will - we are based in South Florid (Boca Raton, Delray Beach area) and we are seeing some success with converting long term rentals to Airbnb short term rentals due to probably the same factors as you - close proximity to the beach, A/B neighborhoods, etc.

We were hesitant to use one of these high cost Airbnb management companies as well, as they really dig into your cash flow. What we have opted to do instead - is utilize a relationship with a local real estate broker who also has his CAM License. We pay him 7% on gross revenue from Airbnb/Homeaway and he is responsible for managing the listings, contacting the tenants, arranging cleanings and stocking the property etc. It has been a great way for him to make some extra cash, and get an education on Airbnb investing that he can hopefully put to work on his own properties in the future.

I will add a disclaimer and say that we have a prior relationship with this broker and trust him and the work he has done over the years. I wouldn't suggest just finding any random broker to try to do this for you. That being said, if you have someone you know and trust, that has some form of property management background - it might not heard to float the idea to them. Airbnb expenses can add up quickly, and to essentially cut your management fees in half can make it a lot more appealing.

Hope this helps!

Will F. · Answer

Any locals in the Long Beach, Orange County or Los Angeles county area have time and want to help me set up  this AirBNB system on a few of my units?

I am committed to testing the short term model this week through the summer, as I've just dropped about $5k on supplies/set up for it, hahahaha (all a write off)

I'm just testing the short erm/ corporate rental/ vacation rental model on a few units. out of about 30 that I manage in this area.

I'm setting up beds, furniture etc this week and hopefully will have some rentals open this week.

I'm attempting to do corporate (mid term 1-12 month furnished rentals) as well as testing the Air BnB concept.

If any locals who do Air BNB on asmall or large scale want to help for service, Or if a local newbie wants to meet up and help me move furniture, clean and set up these units let me know.  PM  etc I can give you some investor advice.  I've been doing passive and active REI for almost 20 years now....mainly multifamily

Donald Stevens · Answer

Additional info: some of my partners in the business are seeing 3-4x more on the overall property versus their regular rentals. Trust there are tons of things I didn't touch on so please don't take my response as comprehensive. And for the $1600/month question...think monthly operating expense vs occupancy rate and pricing.

Account Closed · Answer

Vacation Rental Managers charge 50%.  AvenueWest not only has 20 years of corporate accounts that pay higher rental rates, they process all the credit cards, background checks, cleaning, property management and offer 24 hour hospitality response for guest needs.

Account Closed · Answer

If you are going to market them as a Corporate Rental there are guidelines that can help you connect with the right customer.  CHBO / Corporate Housing by Owner has a CHBO Complete checklist that you can get for free when you register all the information is in the resource library.  You can also check with CHPA / The Corporate Housing Providers Association.  I work with AvenueWest Managed Corporate Housing and we do property management for 30%, and we connect your property with our corporate accounts that we have developed over 20 years.  We currently have 13 local offices but nothing currently in your area.

Will F. · Answer

Yes I've had my eye on Pompano for about 5 years.

I haven't pulled trigger because I had other investments eating up my capital though.  I might be purchasing a 7 unit in north fort lauderdale in the next month or two

I feel like the STR

Yeah SEFlorida is verrry seasonal.  Much more so than so California which is always Spring weather!

Will F. · Answer

Hey Rick, I have some multifamily properties in Fort Lauderdale and Hollywood FL I might want to get in touch with your contact.

What increase in gross rents do you typically receive % wise from summer vs winter seasons?  I know SE Florida is seasonal anyways

Being that your Broker contact is new at it,

I think partnering locally with a PM is a great idea, I just don't know of any in Long Beach.  I've spoken to a few local cleaning agencies who migth be willing to do turnovers, but I'd be responsible for taking calls, which I'm not really interested in.

(One other  reason I'm thinking of AirBnB also is because I do house flips and often they need permits or other delay that take a weeks to pass and in that month I'd like to offset holding costs. )

Short Term Rentals 3-5 units?Outside Management. Is it worth it?

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