A New Beginning Between Multifamily and Airbnb? May 02, 2017 The multifamily industry and Airbnb haven’t always seen eye to eye. To consumers, Airbnb is a win—it allows travelers to rent apartments in the same way they would rent out hotel rooms, typically for a much lower price. For property owners, it can be problematic when tenants list their units on Airbnb without the owners’ approval. This has created tension between multifamily property owners and Airbnb, especially in major cities. However, things are starting to shift. In this post, we’ll look at the relationship between multifamily and Airbnb today, and where it could stand tomorrow. The Problem with Airbnb On the surface, Airbnb sounds like a convenient way for multifamily property owners to make money from vacant units. However, what initially seems like an advantageous money-making opportunity can quickly devolve into an insurance nightmare. You can and will be held liable for the actions of the property’s short-term residents, even if you have nothing to do with an Airbnb transaction (for example, if your tenants are renting out their units). If a short-term resident is injured anywhere on the building’s premises (including the pool, gym or similar facilities), the property owner is vulnerable to lawsuits. In addition to legal liability, there’s also the issue of vandalism and other property damage. If a short-term resident leaves a unit looking like a tornado has passed through, the unit’s long-term resident won’t be responsible for paying repair fees. Instead, that burden will fall on the property owner’s shoulders. With all of this in mind, it’s not difficult to see why many multifamily property owners are hesitant to trust Airbnb. A Fresh Start? In the fall of 2016, Airbnb responded to the concerns of residents, investors and owners by officially debuting the Airbnb Friendly Buildings Program. Here’s how it works: multifamily property owners in jurisdictions where short-term rentals are legal can apply to the program. If accepted, they set the specific terms under which long-term residents can rent out their units to short-term residents. Then, if long-term residents want to list their units on Airbnb, they simply sign up for their building’s program through Airbnb. In addition to adding a much-needed layer of security and accountability, the Airbnb Friendly Buildings Program also rewards building owners with a percentage of their long-term residents’ profits. Under the program, owners can not only maintain control over the safety of their buildings and residents, but can also benefit financially from doing so. The Industry’s Reaction So, how do multifamily building owners feel about the new program? The National Multifamily Housing Council (NMHC) conducted a survey in September 2016 that answered that question. Of the 79 firms that participated in the survey, 33 percent stated that they would be open to a partnership program with short-term rental sites such as Airbnb, while 42 percent said they would not (the remaining 25 percent were unsure). Considering that more than 1 million apartments are represented by the 33 percent of firms that are open to partnership, this could indicate a significant shift in the dynamics of the multifamily industry. Keep in mind, however, that a mere 1 percent of firms said they currently permitted their long-term residents to list units on short-term rental sites. In light of the issues we’ve already discussed, their reasons weren’t surprising: 80 percent of respondents cited safety as their primary concern, while 74 percent cited insurance and liability, and another 74 percent cited neighborhood impact and quality of life. What’s Next for Multifamily and Airbnb? There’s a significant gap between the 1 percent of NMHC survey respondents who said they currently allowed short-term rentals and the 33 percent who said they would be open to partnership with short-term rental sites. However, that gap could gradually close over time. Since short-term residents tend to prefer nicely furnished apartments, it’s difficult for building owners to list vacant units on short-term rental sites. However, Airbnb’s Friendly Buildings Program is making it safer and more profitable for property owners to allow long-term residents to rent out their own units. If there’s less risk and more of a financial incentive, owners may be more willing to try a partnership with short-term rental sites in the future. Go Recent Post Customer Spotlight: South Oxford Management Introduction to Rentlytics 11 Multifamily Industry Trends to Look Out for in 2018 Subscribe Tell us your email address and we'll add you to the list. Subscribe If you are human, leave this field blank.