Not all properties are suitable for short-term rental – only those with certain features. This was explained by Francesco Zorgno, CEO of Clean BnB, who spoke during the immonext 2018 real estate conference about the advantages and the problems of less than 30-day rentals compared with long-term rentals. He also explained how these rentals can be an engine for the buying and selling market.
"Clean BnB,” said Zorgno, “is responsible for the management of short-term rental apartments. Short rents are anything under 30 days. I would like to demystify some aspects of short-term rentals.
“Short rents are not necessarily advantageous. They are convenient in some cases but in most cases they are not; they are convenient if there are a number of circumstances that are related both to the condition of the property, the location of the property and the availability that the owner wants to have to that property. There may be a greater profit than long-term rentals, but not massive.”
Zorgno then explained: "We work with properties that would be empty without us – who is the main competitor of Clean BnB or any property manager? It is the long rent, which is simpler, more convenient and cheaper. Objectively, our service has a cost which is added to the costs of public utilities and condominium fees that are borne by the owner. To justify our presence there must be a good differential. Today, out of 100 opportunities we see, 15 or 20 are adequate – it depends a little on the cities.”
What are the advantages of short-term rentals?
Zorgno explained that the economic advantage is possible if the property is welcoming, if it lends itself to stays of just a few days and can accommodate a nucleus of two/four/six people, and not only tourists.
"The flow of tourists is certainly important, but not the majority. There are business trips, trips for study purposes, family trips. Then there is another aspect which is the service that is added to the property. The level of service offered to short-term renters is sometimes worth more than the way the property is done up.”
Why do people choose short-term lets?
The Managing Director of Clean BnB said: "There are factors which are not financial and which are worth more to many owners than economic ones. For example, there is zero risk of defaulting; a property manager maintains the property, even occasional large-scale maintenance normally borne by the owner is taken care of by the manager; there is availability for the owner to use the property themselves; it is not a lifetime commitment and the property is available for the duration of a management contract which is generally 12 months. This is especially true for buying and selling: if today is not a good time to sell, because it is a good time to buy, this may change in a year's time, with the property earning an income for 12 months and being ready to sell when the market is favourable. Non-economic factors count for a lot.”
Where is the opportunity in relation with buying and selling?
"Any real estate agency" Zorgno explained, "has in its property portfolio those which buy and sell well, those that are good to rent in the long term, but it also has 10 or 15 properties that are blocked. For this segment, a very small part of the portfolio, short-term rental can be an alternative option and not necessarily better than buying and selling or long-term renting."
He added: "Short-term renting is playing that role that long-term renting could never have: a short-term rental property, which has a contract that has no particular risk and can be cut short at any time, has an objective value for the property market. Short-term rental is no longer a disadvantage, but an advantage for buying and selling.”
Zorgno elaborated: "First in Milan, but now also in other cities such as Rome, Turin and Florence, we are seeing a significant number of requests for properties to be used for short-term rental.”
And he concluded by saying: "In the world of short lets, there is a differentiation between a medium-high, beautiful, well-maintained, well-managed class of properties, no matter whether they are new or renovated, but certainly more welcoming, marketable and at a better price. This range, which is sold at more or less the same price as nights in a hotel, is becoming increasingly important and the one that tends to remain on the market.
“That is why we have to think seriously about short-term rentals as a way to feed the buying and selling opportunities, as a great opportunity not only for property owners, but also for the professionals of the real estate sector. It is a novelty in the market where we must work in a new, structured way."