Allen and Carol Cohen started Coastal Hosts property management after renting out part of their own house on Airbnb.
Websites like Airbnb and VRBO have taken the hospitality industry by storm, making it easier than ever for property owners to rent out their homes to guests.
According to AirDNA, a website that tracks data across several short-term rental services, there are roughly 13,188 active listings across Pinellas County.
Now anyone with a spare room or a vacation home can become a makeshift hotel manager and earn a second income in the process. But is the short-term rental business right for you?
Allen Cohen is the CEO of Coastal Homes, a boutique property management service for short-term rental owners in Pinellas County. He discusses how he got started renting on Airbnb and what factors hosts should consider before taking the plunge.
What inspired you to start this business?
My wife, Carol, and I built an addition to our house so my mother and her mother could have a place close to us to occupy as they got older. We built a 1,000-square-foot apartment behind our garage and each of them lived there at one point.
After both of them passed away, we were sitting with this empty space in our house and wondering, what are we going to do with it? Somebody suggested we put it on Airbnb. So we did and lo and behold, it took off.
I retired in 2019 but I have about 25 years of experience in property management in the multifamily marketplace. After I retired, my wife got a little sick of me being home all the time. She said, ‘You’ve got to do something. Why don’t we just expand the Airbnb business and manage properties for people who live remotely?’ We started four years ago and we’ve been adding two properties a month ever since.
How much has the short-term rental industry grown since you first got started?
In the last two years, there’s been an exponential explosion in the number of Airbnb properties available for rent. The demand has grown but nowhere near enough to keep up with the growth of the number of units.
What makes a good short-term rental?
There are a lot of people just out there randomly buying properties because they think they’re going to make a bloody fortune. And that’s just not the case.
The No. 1 thing as with any piece of real estate is location, location, location. Properties that are beachfront or in downtown areas have been able to maintain and sometimes grow their nightly rates even as the competition has grown.
Another thing you have to be really careful about are the local laws and restrictions on short-term rentals. There are different rules in different jurisdictions. For example, places like Indian Rocks Beach are pretty wide open, whereas Redington Beach just south of there has some restrictions. If you buy a property in Redington Beach, you could find yourself in a legal battle.
For property owners, what are some of the advantages of doing short-term rentals instead of a traditional yearlong lease?
The amount of revenue that will come in for a short-term rental is probably two to three times as much as with a long-term rental. Let’s say in a prime location you charge $1,500 to $2,000 a month. In the short-term rental market, that same unit could probably get $150 to $180 a night.
What are some of the unique challenges that come with managing short-term rentals?
With the traditional rental model, once you sign a lease you don’t really get involved unless there’s a maintenance issue or something of that sort. Most of the onus is on the person who’s renting the property.
With short-term rentals, it’s quite a bit different. It’s more like hotel management. You’re going to have three, four or five terms of turnover a month. You have to be prepared to provide cleaning and sanitation. You have to have several sets of linens and other supplies.
When people rent a home they also want to feel like they’re welcome there. We try to give them that experience by putting out a bottle of wine and snacks. We have our managers meet them and brief them on the property and provide concierge service on places to eat and entertainment.
That’s all in addition to the maintenance issues that happen from time to time. So the broken air conditioners and hot water heaters.
What are some of the most common mistakes people make when they start doing short-term rentals?
Many people start out self-managing and realize they don’t have the time. It’s a lot of work, especially on top of a full-time job. It’s not just booking and opening the door. There’s schedules to manage, cleanings, maintenance, marketing.
You can also run into issues with parties and other disturbances. It’s important to find quality guests. If you don’t advertise the unit properly or have the right pricing, you may run the risk of attracting the wrong kind of people. That’s especially important here in Florida, which is a popular destination for spring break.
What impact do you think short-term rentals have on the local real estate market?
The laws of economics don’t change. Supply and demand determine value and increasing prices. So if you have more people wanting to buy properties to use as short-term rentals, real estate prices are going to rise.
But when someone makes an investment in a neighborhood, it can cause home values to rise, too.
Contact Rebecca Liebson at rliebson@tampabay.com.