Almost daily we’re asked if we’re willing to lease our units for the purpose of subletting the property to others on short term rental (“STR”) basis via airbnb, vrbo, etc.
The short answer is “Yes“. But the longer answer is “It’s complicated“
First it’s important to understand we have a very wide range of units for lease. Over 1500. Not all of them are the unit type that will work, or in the area that will work. We have high end downtown lofts, hip and funky Montrose studios and 1 beds, single family homes inside and outside the loop, patio homes, and very affordable basic workforce housing. And, assuming I didn’t leave any out, everything in-between.
While all of what we have fills some niche demand for long term rental, only some of our properties fill the demands of a short term traveler (or would make financial sense to lease for short term renter traffic)
So let’s say you see a property of ours you think is in a location that will work, and is a unit type that will work. You want to lease it for $x, and hope to average $x+y%, and watch the money flood in. So what’s next? Can you sign that lease and move forward?
Here is where the “it’s complicated” comes to play. If we have a, say, 20 unit building, we’re very hesitant to lease a single unit to someone that might want to do STR. We don’t feel it’s fair to our long term tenants and not worth the additional risk to us vs. placing a traditional long term single resident.
That said, we currently have about 50 units that are leased from us, by partners, for them to sublet as short term rentals. So what units WILL do lease for this purpose? The short answer is we will lease ‘groups’ of units. Those units will need to be somewhat split off from our existing tenant base. That can mean different things for different properties. Let’s use a real world example: We have a 10 unit in Montrose that’s made up of a 6 unit building and a 4 unit building. We had someone that wanted to do STR, so we gave them the 6 unit building to do it with (they could have easily taken the 4 instead, but that’s how it worked out). Another example: Downtown we have a 32 unit that’s made up of two 16-unit buildings, each with two 8-unit halfs. We had a partner lease a group of 8 (and later they took the other 1/2 of that building so lease 16)
There are a few obvious catches to this for someone that’s in this business. The first and most obvious being that there is an additional capital required to take down a group of properties vs. the one (though I don’t see a way to be profitable in the STR game with just a few sprinkled about units. The key to that business, like many others, is scale). The second is that we tend to not have a lot of empty units. So using one of those examples above, we might have only had 1 or 2 empty units in that 6 unit building. So this partner committed to the whole group (meaning, he was committed to leasing the others when they came up), but only had to (or ‘got to‘, depending on how you look at it) take additional units units as they became available. So when units in that ‘block’ come up, they’ll lease them based on terms previously discussed. An upside to our partner is this allows them to pace their capital expenditure a bit as they build up their backlog of bookings and reviews.
Okay, so now let’s say you’ve found area you want, and are willing to commit to taking down a group. What properties are available and what is the minimum and maximum you can take? While we haven’t made an exhaustive list, we welcome a potential STR partner to look at what we have, and suggest what they’d be willing to take on. We have a few 1-4 unit buildings where someone could take the whole property. We have a 32 unit where 20 units face into a courtyard and 10 units face out to the street. Perhaps all the ‘street’ facing units could be taken down. We have a 56 unit in midtown made up of 2x 20 unit and 1x 16 unit buildings. Perhaps ones of those could be secured, etc.
So if you see something you’d like to discuss leasing, send us an email to firstname.lastname@example.org But note that if you’re just looking to rent a single unit in a building that you saw for lease online, it’s very likely we’re not going to be interested.