Specialist firms spring up to offer high-end homes for short term stays
Thanks to the hypersonic growth of Airbnb and the sharing economy, having a spare room can be more profitable than having a roommate. Multiply that spare room into a spare villa or a second home in Paris and you’re sitting on a genuine gold mine.
There’s just one problem. Renting your home through Airbnb requires a certain amount of on-the-ground presence: someone to exchange keys or to call in a housekeeper after guest stays. You’re still on the hook for plumbing repairs, digging out the driveway, or responding to inquiries via email. In some locales, taxes must be collected as well — if it’s even legal to do short-term rentals.
Sure, there are management companies to help you navigate all those headaches. But to leverage the sharing economy as a means of paying off your second mortgage, employ one of these standouts, which can take care of all the work and maintain your property for you. They promise to promote your property among a curated set of high-end homes, look after legality concerns, staff contractors and repairmen, offer renovation and decor help, and even furnish an empty home if you’re looking at it only as an investment.
Here, we break them down, depending on your ultimate goals.
* So you want to buy a house in Los Angeles’s gentrifying Highland Park neighbourhood, let it gain value for a few years, and then sell it to a C-list celebrity? Talk to Sonder.
The new service, which went live on September 21, lists only second homes and investment properties, which it furnishes, photographs, and manages as rentals. “Our goal is to create the best guest experience in the world, while also generating more income off of a given piece of real estate,” said Francis Davidson, Sonder co-founder and CEO. “The conjunction has the potential to be a very large business.”
So far, Sonder is renting out a total of 500 properties in six markets: Montreal, Boston, Chicago, Vancouver, San Diego, and Los Angeles. By the end of the year, it plans to add Miami, Toronto, New York, and San Francisco — unlocking a portfolio of destinations that may be more attractive to investors than the initial set. In 2017, the goal is to expand internationally; while Davidson wouldn’t lay out exact plans, he said he’s inspired by how much “movement” there is among New York, Paris, and London.
For investors, Sonder has a few key distinctions: Aside from managing rental properties and working directly with travellers to ensure a smooth guest experience, it also ensures that each rental property is correctly zoned for peer-to-peer rental according to local municipal laws. It also will lease a property for a full year, rather than on a rental-by-rental basis, so that owners aren’t worrying about variable income.
“We’re a great tenant,” said Davidson. “We clean the place to five-star-hotel standards every week and pay our rent on time, always interacting in a professional manner.”
Once Davidson can scale his business a bit, his goal is to create an end-to-end service for real estate junkies. “Eventually, we’ll be offering to identify an investment property, close on it, block it off for any dates [that you want to enjoy it for yourself], and manage it as an income generator, otherwise.”
* Since 2010, ThirdHome has sold 7,000 second homeowners with its luxe spin on home swapping; compared to competitors such as Knok or Kid & Coe’s Exchange, it has a more global and upscale portfolio. Homes on the site range in value from $500,000 to $50 million, and owners earn “keys” according to the value of their home and how often it’s put up for rent.
Then those “keys” can be exchanged for stays at other homes in the portfolio, which range in location from Kenya and Colorado to the Hamptons and Rome. All it takes to join? Having a (nice) second home, and a $2,500 initiation fee.
“Second homes have historically not been the greatest financial investment,” said ThirdHome CEO Wade Shealy. “But a lot of people tell me that they keep their second homes just to keep their memberships [with ThirdHome].”
For such clients as Michael and Pat Magdol, a pair of retired investment bankers, ThirdHome isn’t a way to pay off the mortgage on their vacation home in Casa do Campo, Dominican Republic. It’s a golden ticket to extravagant vacation homes elsewhere around the globe.
After spending $35,000 for a weeklong safari at Cottar’s 1920s Safari Camp, in the Masai Mara of Kenya, the Magdols realised they might leverage their vacation home to decrease the price of such bucket list trips. A return trip sent them to the same safari lodge — where they stayed in the owner’s cottage, a ThirdHome listing, for nothing more than a ThirdHome service fee, which ranges from $395 to $995 per weeklong booking, according to property value.
By the couple’s back-of-the-envelope calculations, their travels with ThirdHome have saved them $200,000 in hotel costs — though they’re often staying at homes that are associated with five-star resorts.
The only caveat? ThirdHome doesn’t independently manage its listings; the bulk of its efforts are on running the back end. “Many of our homes come in from partnerships that are already managed, like Four Seasons or Ritz-Carlton Residences,” said Shealy. “And half tend to have on-site managers that manage their homes.”
If homeowners fall into neither camp, it’s worth hiring a third-party to organise housekeeping and upkeep between guests.
* For years, Julie Atkinson and her husband Dick had dreamed of buying an apartment in Paris. The city was “their special place”; their daughters studied French in school, they loved to spend family summers there, and one day, the apartment could be more than just an occasional pied-à-terre. But finding an apartment in the City of Light that met their American standards was a tall order, so the San Francisco-based Atkinsons were ready to give up after a few years of failed searches.
Then they turned to a company that they had become familiar with over the course of many family vacations: Paris Perfect. The owner of the luxe apartment rental company — which offers only listings with air conditioning, elevators, and postcard-worthy views — had become something of a friend after many repeated stays and offered up a Rolodex of local connections.
“Guests would stay with us and then read stories on our blog about how we found the apartments and renovated them,” said Madelyn Byrne Willems, who founded Paris Perfect. “So organically, they started telling us they wanted to buy an apartment just like the ones they’d stayed in.”
Now, she and a team of real estate agents and contractors will help them materialise their dreams.
Willems has offered real estate services for only two years, but already she says she’s helped to purchase and remodel about 60 apartments for owners; all are now part of Paris Perfect’s rental portfolio and the company’s tightly knit owner community.
“Of the apartments we’ve helped purchase and remodel, probably two-thirds or three-quarters were guests of ours previously. But now it’s becoming more of a fifty-fifty split, as people keep finding the articles we write about navigating the real estate scams in Paris and whatnot,” Willems said.