Short-term rental apartments in large cities are in constant demand, clearly exceeding supply, experts say the real estate market. In recent years, the market for “quick” rental housing has changed, but there is still plenty of room for beginners.
Placement Service: Market Segments
Inside, the business for short-term rental apartments is divided into two segments. There are "private owners" working with inexpensive apartments and not providing customers with any additional services, and there are large real estate agencies serving elite multi-room service apartments.
Both options are in demand from consumers, but to start their own business, the first is much simpler, since it requires less investment and hassle, but at high risks.
For individuals, the work in the segment of expensive “service apartments” is not very interesting, it requires significant resources and injections, and most importantly, it does not immediately begin to bring good income. As a rule, large agencies do this, for which it is, first of all, part of the image, because they provide a full range of services, including short-term rentals.
Starting a business in the segment of low-cost apartments from a legal point of view is quite simple. To do this, it is necessary to register an individual entrepreneur, indicating in the column “direction of work” - “real estate transactions”, the data was reported to the tax and police.
Investments in this market segment pay off quite quickly. In Moscow, this period is literally three months, during which time it is possible to return the money spent on rent, repair and arrangement of apartments. And then the profit begins, which goes to business development, improvement of conditions in other apartments. The main source of clients is real estate agencies with which the private owner has a contract, as well as a website on the Internet. Unlike large agencies, advertising costs account for only a fraction of the cost.
Accommodation Service: Who Generates Demand
Who forms the demand for short-term rent? The question does not have a clear answer - it all depends on the level of apartments offered, the service provided and other factors. It can be tourists or businessmen who arrived to stay. Or working in the city under a short-term contract, passing through the city in transit (sometimes renting an apartment for half a day, if you just need to wait for the evening flight), and local residents who need to spend leisure time or an important business meeting in neutral territory. A quiet apartment without frills is requested by both applicants and correspondence students who have come to take exams. Well, then the demand is segmented depending on the type of customers, the number of visitors, their financial situation, requirements.
Today, large three-four-room apartments for several days, which are booked by tourists who come to St. Petersburg with a large company or the whole family, are popular with customers of large agencies. Many foreigners during their stay in Moscow want to rent an apartment so that it is located in the center, with a good repair, but at the same time cheaper than a hotel.
Private traders have different clients. Private owners do not care how the client spends time in a rented apartment. By the way, some real estate companies deliberately avoid working in the short-term rental sector, believing that the offer of an apartment for an hour or a night is exclusively part of the business of providing intimate services with which they in no way want to associate.
Accommodation Service: Lease Agreement
To conclude or not to conclude a short-term lease agreement with a client - this issue is decided in each case individually. Many experts working in this field are sure that this is necessary, because such a contract of the commission increases the degree of confidence of the guests and provides financial statements to those who come on a business trip. In addition, it is also good to be able to register guests with the passport and visa department, which can be especially important for foreigners.
Clients of apartments of a lower price segment in this sense are much less demanding. Sometimes tenants are asked to conclude an agreement with them (if they are on a business trip), but more often they themselves refuse it. This, indeed, is very troublesome, and it does not make sense if the client rents an apartment for a day or two.
Accommodation Service: Pros and Cons
For any clients, renting an apartment is much more profitable than booking a hotel room. Firstly, it is a saving that can reach 40-50% in the case of expensive apartments, and much more - with cheap ones. In addition, the increased demand for such services in Moscow is caused by a lack of rooms in three-star, and sometimes four, and five-star hotels. Secondly, an important factor is the familiar home comfort, which is impossible to get in a hotel. An additional convenience is the ability to invite guests compared to a hotel room.
Cons: lack of additional services - inability to order food at any time of the day or night, require an iron and ironing board. In addition, no one can guarantee the high quality of services.
But, according to private traders, all who managed to use the services of short-term rental apartments, as a rule, are inclined to this option, preferring it to hotel service.
Placement Service: Risks
Of course, everyone who decides to try their hand at the short-term rental market should be aware of the many risks.
First of all, among the main risks are major and minor breakdowns by the tenant of equipment or furniture, theft using duplicate keys, a flood, fire and the discontent of neighbors. All these issues must be decided by the lessor. But landlords, especially experienced ones, have their own tricks in return, ways of protection.
Some landlords, for example, put code locks on the doors of all apartments, and the code is constantly changing, so the previous tenant, even if there is a duplicate key, will not be able to get into the apartment. As for the thieves who hunt robbery of rented apartments, landlords fight with them all together - if a person has stolen something at least once, his last name is put on the black list and distributed among market players — participants and real estate agencies. Moreover, everyone willingly shares information, they understand that it is in their interests.
Many agencies work exclusively with trusted corporate clients who will not allow themselves to steal or break something, and in case of major damage to equipment or furniture they will be able to compensate for losses. For minor damage (broken dishes, etc.), customers usually do not require compensation.
Private traders usually screen customers in a personal meeting, relying on intuition and personal experience. Often refuse young clients who are noisier or do not differ in cleanliness, as well as those who immediately cause suspicion.
In general, the problems with the organization of this business, if you look, are not so complicated. Yes, there are costs. Nevertheless, this direction of services is quite promising for start-up companies. Yes, and this business is where to develop. One of the likely scenarios is to buy a whole house with the prospect of renting apartments of different levels and price categories in it. Money invested in this way will have to be beaten off for several years. But then the business will bring a stable and considerable profit.
Accommodation Service: Regional Situation
In the regions, the market segment for serviced apartments and short-term leases is developed, but at the same time, this business is very unorganized and for the most part is in the “shadow”. Often, participants in the short-term rental market act as intermediaries — this is what their entire business consists of.
However, there is a demand for the service. If the city is a resort, then the backbone of customers is mainly visitors, tourists. Usually in such years there is a special place, a “piglet” where intermediaries and “grandmothers” walk with signs of rental proposals. But the service as such in such apartments is actually not enough. Well, if there is a landline telephone and basic furniture, it is already considered an apartment "with all amenities." Well, if there is also home appliances in the form of a washing machine or microwave, then this is already VIP!
Regional real estate agencies, like their metropolitan colleagues, shy away from short-term leases. They prefer to engage in long-term rental less profitable, but reliable.
Based on an article by Anton Belykh,
published in the business magazine
* The article is more than 8 years old. May contain outdated data