Apartment property management firm Rivergate KW Residential (RKW) has used a variety of strategies when it comes to making short-term rentals work for their communities in an effort to respond to the growing demand.
During a recent lease-up of a 184-unit midrise community in Miami, the firm rented 10 apartment homes to a company that would use these units specifically for short-term rentals, including overnight rentals.
It was a chance for them to immediately sign 10 new leases for a 12-story lease-up community and experiment with the trendy method of filling vacancies through what is being called the “sharing” economy.
“We want to make short-term rentals work,” RKW President Marcie Williams says. “This is a business model that is not going away.”
Initially, the 12-month experiment did not play out the way RKW and Williams had hoped. There were challenges for the onsite management team such as the need for additional staff to effectively manage the large numbers of residents who were moving in and out, dissatisfaction from existing residents about guest noise and behavior and an excess of wear and tear on the property.
Here’s What Happened
Some apartment communities (see “Airbnb Sublets,” pg. 35, October 2016 units Magazine) are charging Airbnb hosts or individuals seeking to leverage the home-sharing Airbnb model a hefty premium on rent. This enables the community’s owner or its management company a chance to earn additional rent while reducing its liability and day-to-day maintenance burden, instead transferring that to the short-term listings’ hosts.
In RKW’s situation, the management firm was approached by a company that wanted to lease a set of apartments with the sole purpose of renting them on Airbnb. This independent company was willing to pay local taxes and perform the apartments’ turns during each resident transition, such as changing the sheets and using the in-unit facilities, for example.
The firm placed all 10 apartments on one floor. Rivergate KW’s intention was to centralize the short-term residents to make operations more efficient and less difficult or distracting for other full-time residents, Williams says.
Results from that decision proved more challenging than anticipated when the high volume of resident traffic on the floor resulted in a lot of noticeable scuffmarks on the flooring and dings and scratches on various surfaces in the hallway and inside the apartment homes.
“The hallways on that floor were noticeably damaged from the daily moving in and moving out,” Williams says.
Rivergate did not hire additional staff to tend to these unique short-term leases, creating workload challenges for maintenance work-order workflows, Williams says. RKW was responsible for maintaining the apartments and performed routine tasks such as changing air filters, but the higher volume of residents resulted in more work-orders than was typical.
Additionally, many of the short-term residents did not follow basic rules in regard to common areas and in-unit appliances, such as proper use of the garbage disposal, the bathroom or outdoor grill areas, Williams says.
“Because they were only residing in the community for two or three days, we didn’t have enough time to identify problems or violations caused by these short-term residents. The company facilitating the short-term rentals did not consistently communicate with them regarding the community policies,” she says.
“Their stay with the community was so short that by the time we could identify an issue, they had already moved out. The long-term residents were soured by the experience and it got to the point where they would blame the short-term residents no matter what it was that bothered them.”
Looking back at the rollout experience, Williams says her company learned a lot.
“As a company, we value innovation and challenge ourselves to embrace disruptors like Airbnb,” she says. “It’s making waves across the multifamily housing industry specifically because it offers a short-term rental solution that wasn’t available before.”
Let’s Try It This Way
RKW faced the challenge head-on and recently took a new approach to managing short-term rentals. The company started a new initiative at another community in Miami.
In September, RKW began a second attempt at operating short-term rentals at one of its communities--a seven-story mid-rise, also in Miami. Here, RKW will commit to another 10 apartment homes to be available for short-term rental. The benefit in this scenario is that the community has a full-time concierge to give greater scrutiny to the short-term residents’ management and to handle comments or complaints from long-term residents who might have been affected by their short-term guests. Williams says that she believes that this time by spreading the apartments used for short-term rentals throughout the building it will make any potential negative conditions less noticeable.
In either short-term management situation that RKW has explored, Williams does not know how profitable either short-term rental operator was or will be or how often the apartment homes were or would be occupied.
She also says that the short-term rental arrangement was exclusive to the independent company that signed the lease and that RKW is not considering offering the same to any existing or future residents.
“We recognize the growing popularity of companies and individual residents wanting to take advantage of this relatively new income stream; however we want to be sensitive to the long term renters who value their neighbors and community.