Welcome to the finale of our 4-part series on maximizing your profits with monthly furnished rentals. We introduced the series with the goal of helping landlords maximize their profits. In the series thus far, we discussed about the importance of pricing your furnished rental. We also covered the financial cost of furnishing a property, and we showed how leasing your property monthly can recover these costs. Additionally, we compared the revenues generated from monthly and nightly rentals, and we explored how HomeSuite can help landlords make the most of their monthly furnished rentals.
Hello once again to our 4-part series on maximizing your profits with monthly furnished rentals. We introduced the series with the goal of helping landlords maximize their profits. We also explained what furnished rentals are and the different types of monthly rentals the average tenant can run into. In yesterday’s article, we discussed about the importance of pricing monthly rentals. Additionally, we tackled the financial cost of furnishing a property, and we revealed how leasing your property as a monthly furnished rental can recover these costs. You can access Part 1 of our series here and Part 2 of our series here.
Welcome back to our four-part series on maximizing profits with monthly furnished rentals. Yesterday, we talked about the rise of demand for rentals and how furnished properties help reduce vacancy. We also previewed what this series will cover over the next few days and why this series can help landlords maximize profits. Click here to read Part 1.
Demand for urban rentals has risen. By December 2015, over 180,000 apartment units were completed in the US. During that same year, vacancy rates climbed to 4.4% from 2014’s 4.3%. A 0.1% increase in vacancy might not seem like a significant difference. However, this trend hints at the challenges landlords face as they try to make their properties profitable. If landlords don’t target the right tenants or price their properties well, they risk owning empty units.
The phrase ‘furnished rentals’ used to bring to mind dingy couches, lumpy beds, and the very dullest of kitchen knives. However, that’s no longer the case. Today, the sharing economy and the internet have revolutionized the rental market. As a result, furnished rentals these days can feel like home, and it's easy for a newcomer landlord or property manager to furnish his or her first rental.
The short-term rental market is growing, and we know landlords always look for convenient ways to generate income. That’s why HomeSuite helps landlords foster a more direct connection with their tenants. Having the ability to set your own price is invaluable, but it requires research to use that knowledge effectively. It also requires keeping your property in good shape. So what can you do to ensure your furnished property has the best rental value possible?
In today's on-demand economy, Airbnb established itself as a popular platform for short-term travelers. Their platform provided hosts an opportunity to give their properties visibility to these travelers. However, this will soon change.
Maximize Revenue, Minimize Vacancy
When it comes to furnished rentals, vacancy is the biggest challenge preventing you from increasing revenue. That’s why HomeSuite has developed flexible pricing tools to create a win/win situation that helps minimize vacancy related downsides.
The key to reducing vacancy loss is optimizing pricing for flexible lengths of stay. Not only does this cause less wear and tear on the unit, it also unlocks the highest potential payout of annual revenue. The chart below illustrates the correlation between lengths of stay allowed and annual revenue. As rental providers allow for a wider range of length of stay, the annual revenue potential of their unit increases. Shorter stays can be accommodated with higher monthly rents, while longer stays can be garnered with lower monthly rents.
The next chart illustrates that as the flexibility of allowing for longer lengths of stay increases, the overall risk of vacancy decreases. Therefore, the optimal pricing strategy includes a lower monthly rent for 12 month stays and higher monthly rent as length of stay decreases.