Airbnb Property Management Denver
Airbnb Property Management Denver – Virtu Investment’s Archer Tower property in Denver partnered with Pillow Residential to allow tenants to rent their units on Airbnb, enabling a revenue-sharing agreement between the owner, Pillow Residential, and the tenant. Pillow coordinates advertising, key change and professional cleaning. Virtu offers residents a discount on the monthly lease rates in exchange for participation. Thanks to Blake Hayunga, Virtu Investments
The revenue generated by the sharing economy was $15 billion in 2014, a figure expected to grow to $335 billion by 2025, driven by the exponential growth of Uber and that $31 billion in-room gorilla — Airbnb. A 2016 survey by the National Multifamily Housing Council found that only 1 percent of apartment owners currently allow home sharing, while 42 percent admit their residents list units on Airbnb, despite leases explicitly prohibiting short-term rentals. Preliminary figures from the 2017 NMHC survey showed that the majority of renters under the age of 54 would be open to short-term rentals in their apartment communities, with 81 percent of those under 25 reacting favorably to the idea.
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Nearly half of all renters spend more than 30 percent of their income on rent, while one in four renters spend more than half of their income, according to the 2017 State of the Nation’s Housing report published by Harvard University. Given that the percentage of households with rental costs is still at an all-time high, the growing proportion of tenants seeking Airbnb to make ends meet should come as no surprise to landlords. While the country’s biggest landlords have fought a fierce battle against the short-term rental giant, it’s clear that home sharing isn’t just a trend, but rather an enduring staple of the multifamily industry.
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A 2015 Pew Research survey found that 11 percent of Americans have used a home-sharing service such as Airbnb, which is expected to grow to 27 percent by 2021. The earnings of Airbnb hosts in the US increased by 140 percent in 2016 compared to the previous year. $5.7 billion, while active listings grew 70 percent to 650,000.
Given the growing adoption of the sharing economy and the rapid disruption of traditional business models, the multifamily industry’s resistance to Airbnb’s inevitable entry into long-term rental is somewhat alarming. Obvious concerns lie within the archaic liability and regulatory framework that has guided our industry for decades. However, in the new economy, ingenuity is rewarded, and proactive landlords who can get ahead of this transformation can gain a huge competitive advantage.
The first hurdle to host adoption of Airbnb is local regulatory policies. Cities across the country have battled Airbnb in the admirable importance of preserving affordable housing. Critics argue that Airbnb is reducing rental supply and thus driving up rents, an undeniably accurate assessment in small vacation markets like Vail and Aspen. Yet the correlation drops dramatically in major metropolitan areas where Airbnb accounts for only a fraction of the total housing stock; studies have found virtually no impact on rentals in markets with a small percentage of commercial Airbnb rentals (e.g. units rented for less than 180 days per year).
Regardless of the verdict, Denver has taken one of the most progressive and socially sustainable approaches to regulating short-term rentals. Beginning in January, Denver requires landlords to obtain a license to offer short-term rentals, with the requirement that the home be the landlord’s primary residence. This effectively mitigates many of the negative externalities created by Airbnb by, in theory, eliminating absentee hosts. Airbnb bookings hit a record high in Denver in September with a compliance rate of 67 percent (and growing). Looking at revenues for the last six months, Denver will collect nearly $11 million in taxes from Airbnb hosts in 2018 — a figure that could rise as apartments are added to the short-term rental pool.
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According to a survey by the National Multifamily Housing Council, the top concerns cited by apartment landlords are related to short-term rentals, safety (80 percent), liability (74 percent) and quality of life (74 percent). However, there are platforms to allay some of these concerns. Airbnb conducts background checks on its members and offers landlord protection insurance through the Friendly Buildings program. Pillow Residential, a short-term rental compliance start-up, goes one step further by integrating five layers of liability protection.
While several condominium real estate funds have declined to partner with Airbnb in recent months, Equity Residential is piloting the Friendly Buildings program at its 554-unit Vista 99 development in San Jose, California, while Ironton is partnering with Airbnb for his 69-story Jersey City Urby deal in New Jersey. In October, Airbnb announced the logical next step in this program with a development of 324 apartments through a joint venture with Florida-based Newgard Development Group.
Virtu Investment’s Archer Tower property in Denver is an equally compelling case study. Virtu partnered with Pillow Residential to allow renters to rent their units on Airbnb, creating a revenue sharing agreement between the owner (10 percent), Pillow (10 to 20 percent) and the renter (70 to 80 percent). ) became possible. For their part, Pillow coordinates advertisements, key exchanges and professional cleaning. Virtu offers residents a discount on the monthly lease rates in exchange for participation.
Airbnb bookings hit a record high in Denver in September with a compliance rate of 67 percent (and growing). Looking at revenues for the last six months, Denver will collect nearly $11 million in taxes from Airbnb hosts in 2018 — a figure that could rise as more apartments are added to the short-term rental pool.
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According to Virtu COO Blake Hayunga, the program has been warmly received by the residents of Archer Tower. He noted a 20 percent increase in applications since inception with a 50 percent penetration rate for new leases. Hayunga sees the program as a facility that will allow residents to “money slack in the economy” where tenants can take advantage of their vacant apartments. While revenues will be reinvested in real estate, Hayunga also expects a significant improvement in earnings due to strong occupancy rates, low sales and the ability to increase rents while maintaining affordability.
On any given day, there are numerous Airbnb listings for Class A apartment units in Denver disguised as “downtown condos” with instructions from the host to avoid interacting with neighbors and management. Airbnb’s nightly rate for one of these listings in a popular high-rise apartment in Lower Downtown is $399, resulting in a host income of approximately $299 (after taking into account the 10 percent host fee and the 15 percent fee for Pillow). Assuming the tenant rents the unit 15 nights per year, her effective monthly rent drops 16 percent, from $2,291 to $1,917, resulting in an annual savings of $4,485. With savings of this magnitude, it increases competitive advantage of an Airbnb-friendly building is truly staggering.
It wasn’t that long ago that pet-friendly buildings were an anomaly in the industry. Today, 98 percent of Denver apartments allow pets to some degree, as the rewards far outweigh the inherent risks for landlords. As home sharing becomes an increasingly coveted amenity — synonymous with pet spas and yoga studios — hosts may no longer be able to resist financial incentives created by Airbnb. As the saying goes, if you can’t beat them, join them.
Note: After this article was submitted, a Nov. 5 Wall Street Journal article reported that Veritas Investments, San Francisco’s largest landlord, is partnering with Pillow Residential and Airbnb to test the Friendly Buildings program.
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