Do I Need A Property Manager To Let Out My Airbnb In London?
Do I Need A Property Manager To Let Out My Airbnb In London?
In this article, we are going to discuss :
Are you a landlord who is thinking of renting your property out through an Airbnb management company? How much do you know about this type of letting service and have you considered if it’s really for you?
The property management sector in London was forever changed by the introduction of Airbnb. In no time at all, traditional letting agents and property managers began to take on management for a growing list of Airbnb properties in London. There is no shortage of Airbnb agents and property managers for Airbnb properties in London but, is the service really worth using?
Once upon a time, Flex Living started out using a very similar model to many Airbnb management companies. We are now in a unique position, where we are both fully aware of all the benefits of the Airbnb system and, all of its weaknesses to offer a fantastic alternative to Airbnb Management in London.
From high commissions and fees to myths about paying better rent. We are going to discuss the commonly identified problems with the Airbnb Management system that are unavoidable for landlords looking to rent their properties out using this service.
If you’re interested in learning about alternatives to Airbnb management at this point, perhaps you might be interested to learn more about corporate letting as an alternative way of letting your property?
The Problems With Airbnb Management
Properties Rented Through Airbnb Have High Wear & Tear
It comes as no surprise, that with such a constant supply of guests coming and going, many Airbnb properties have considerably high maintenance costs and issues with wear and tear. The idea of letting out a property through Airbnb sounds great but, if you’re looking after a property which is constantly hosting people that don’t see the space as their own home, things will tend to get broken and need replacing more frequently.
It’s hard to deal with issues like this on public platforms such as Airbnb, as there is a high tendency for negative feedback and review bombing, which leads to many landlords not claiming for damages through the platform despite being legally entitled to do so!
Issues With Noise & Neighbours
Don’t get us wrong, most people’s neighbours are lovely. However, issues with noise and disagreements over things which can seem trivial do happen. Having a fallout either with your neighbours or, with a guest leaving negative and public reviews about your neighbours, can only damage your attempts to rent the property out in the future.
Guests that check-in very late or check-out very early without trying to be quiet. Placing rubbish in the wrong bins, leaving doors unlocked, parking in the wrong spaces. The biggest issue by far is concerning noise, especially parties, which despite Airbnb’s attempts to ban, still happen! It’s very easy for tensions to rise, especially when your neighbours have no idea who, exactly, is staying in your property (and sometimes, who shouldn’t be!).
A constant stream of strangers coming into a property next door is often a catalyst for all kinds of issues and the Airbnb model of letting offers very few solutions to them.
One of the most significant issues with Airbnb is the lack of vetting and transparency when it comes to who, exactly, is renting your property. An individual landlord has limited ability to vet potential tenants at the best of times but when using a property management company or Airbnb, they have no say in who stays at their own property.
Even property management companies letting through Airbnb can have issues with vetting guests. Sometimes, they aren’t very thorough with background checks at all, even if they do have additional resources to check and vet guests!
It’s sad to say but, we live in an age where fake profiles and reviews are incredibly common, which makes it difficult to trust certain profiles making bookings. From the photo-less, blank profile with implausibly good reviews at every one of their stays, to the person who has managed to stay in plenty of properties and still has no reviews from a host at all!
The trouble is that anyone can book an Airbnb with or without reviews. It’s impossible to cancel a booking once it has been made (as a host) without being penalised for it (with a £75 fine at the least) and if your account is issued with multiple strikes against the account, it may be permanently deleted!
This essentially forces owners to allow people to stay once they have booked even if they know they are trouble! Whilst that last point might sound cynical, the lack of vetting by Airbnb or companies managing properties on the platform, is a serious problem for landlords and cannot afford to be ignored. Although you can set an Airbnb status to “enquire only”, this will only result in less bookings at the property and really, isn’t worth attempting.
High Running Costs
The cost of using Airbnb management companies to let out a property is disappointingly high. On top of a hefty management fee for all bookings, a significant portion of the rent from a property is also lost in fees and running costs, greatly reducing the profitability of the model for landlords.
When they do decide to deal with maintenance issues, Airbnb management companies have notoriously high fees associated with property maintenance, often employing expensive third-party contractors to resolve maintenance problems. Many contractors will also charge from the first callout which can rack up a significant bill from the start!
For example; an apartment in Liverpool Street with a traditional housing market rent of £2,500 per month, is rented out through an Airbnb property management company. The average nightly rental for the property is £250 per night with an average occupancy level of 75% per month.
|Location||Liverpool Street, London|
|Market Rent||£2,500 per month|
|Average Airbnb Nightly Rental||£250 per night|
|Average Occupancy (for month)||75% (average across London for the year)|
The following monthly costs apply and are deducted from the total income for the property:
|Airbnb Fees *||£1,012.5 per month|
|Property Management Fees*||£1,012.5 per month|
|Monthly Cleaning||£882 per month|
|Maintenance & Repairs||£100 per month|
|Utilities & Council Tax||£407.25 per month|
|Total Costs Per Month||£3,414.25|
|Profits Per Month||£2,210.75|
*All applicable costs inclusive of VAT
As you can see, whilst the earnings potential of an Airbnb let for this property, is more than double (£5,625) the expected rent for the property on a standard rental agreement (£2,500), the costs of doing so are considerably higher (£3,414.25). The actual running costs and management fees see the profits from renting out the property (£2,210.75) fall below the average £2,500 monthly rent the landlord could be earning on a traditional letting agreement. If you were to self-manage, the profits would be significantly better but, this is a full-time occupation and very time consuming!
When you consider also that in a standard letting agreement, your tenants would be covering the cost of utilities, council tax and cleaning the property themselves and these would not be costs you would normally incur from renting out your property, it further highlights just how impractical the system is! Especially when you consider you’re paying 30% of your potential profits to other people for letting the property out!
Even if you’re renting out a high-quality property consistently for an amazing rental income each month, the high cost in fees and the need to maintain the property, quickly slash whatever profits you hope to make by more than 60%. It seems like an awful lot of money to lose each month for someone else to manage your property!
It’s not uncommon for Airbnb management companies to offer you a longer contract for lower management fees. But don’t be fooled and try not to get locked in with a long-term contract like this – many Airbnb landlords are leaving simply because the fees and hassle are proving inefficient and unfruitful for them and their property!
But don’t just take our word for it, try out this helpful online tool for calculating the potential rent per month from letting out your property as an Airbnb and do the numbers yourself!
Easily Prone To Crisis
The pandemic was, of course, a very difficult period for everyone. The housing and rental sector experienced mixed fortunes in some areas, with plenty of properties being left vacant throughout the two years that Covid-19 heavily restricted our lives. However, it doesn’t always take a natural disaster or a global pandemic to throw a property into crisis whilst using Airbnb.
A burst water pipe, a faulty boiler or even a broken window, can all contribute to a property being temporarily delisted on Airbnb whilst the issues are fixed. But this leads to the property earning absolutely no rental income until the issue is fixed, which when you factor into the already high management fees and poor profit margin under the Airbnb system, can easily lead to properties being run on Airbnb at a loss.
This was by far, one of the biggest issues we had with using a system like Airbnb, as there was just no way to avoid losses whilst we tried to keep both our clients and landlords happy. There just isn’t enough flexibility in the Airbnb model to make it a profitable enterprise in the long term.
It’s worth noting that we still value Airbnb as a platform for longer-term stays and indeed, we use Airbnb in instances where one of our clients has a suitable request for long-term housing. However, we no longer work with the company on a night-by-night basis, due to the problems we’ve listed above.
But, are you any better off renting the property out through a traditional estate agent? We say no, as their fees and generally speaking, lack of involvement in running the property, still leave you open to voids, extended periods without rental income and also – taking up more of your precious time to manage the property for no extra profit.
Is there a better way for the hybrid model that can be beneficial to both the landlord and the company they use to manage their property? We believe there is and would now like to take the time to discuss how our approach differs and in our opinion, offers a better alternative to Airbnb management.
The Flex Living Model:
Landlords want and deserve a property management service that meets all of their needs and offers consistent rent each month of the year. After years of working in this sector, there is a fine-tuned approach to ensure that landlords are offered the best possible deal for renting out their property. The Flex Living model offers flexibility, fairness and fantastic service in ways that property management companies and even Airbnb, can’t compete with.
In fact, through the removal of painful fees and annoying property costs, the Flex Living model actually offers up to a 20% increase to the average annual rental income for our landlords. You can take a look below at some of the finer details and service guarantees offered to landlords which makes the Flex Living model – a far better option than using an Airbnb manager.
Flex Living Offers:
- Guaranteed Rent: Rent paid to landlords every month of their contract with them, in advance and, in full. That’s whether or not the property is occupied, empty or even undergoing repairs and provides a permanent, 0% voids guarantee as part of the service, saving landlords up to 6% on their average rental income each year.
- Zero Management Fees: A fee-free policy at Flex Living. There are no fees for letting your property and no hidden costs or figures. This saves landlords up to 10% (+ VAT) of their rental income each year on average.
- Fantastic & Reliable Tenants: Each tenant at all properties is supplied by corporate partners as one of their employees. They are all incredibly hard-working, professional and verified individuals, who are here to treat any property like they would their own home. Not cause problems for the neighbours or damage to anyone’s property.
- Professional Property Maintenance: Including a 24/7 dedicated maintenance team to tackle any issues with a property. Dealing with most issues instantly and, free of charge, without waiting for landlords to fix things themselves. For anything that’s too big for the team to handle or requires specialist help, landlords will always be contacted and informed first before any work is carried out. Most of the issues we deal with our succesfully resolved on the first call out.
- Reliable Property Management: A professional and fair service, dealing with all clients and landlords promptly, professionally and, on a personal level. Flex Living know what the pains of running a rental property are and that’s why the team is here to help you maximise what you can get out of yours, as easily as possible.
- Free Property Upscaling: An expert team of designers will step in and lift your property to the standards of Flex Living’s corporate partners for their employees. Unlike Airbnb property managers (who expect you to have the property fully set up before advertising), we do the redecorating for you at our own cost. Whether it’s a new colour on all the walls, revamping the furniture or, adding some character to the place. Anything the team do, is for free and anything added to the property is yours to keep, forever, as a gift from Flex Living!
Become A Flex Living Landlord Today
Flex Living don’t think landlords should be forced to accept lower profits and more headaches from Airbnb management companies. This is exactly why Flex Living wants to offer landlords a better, fairer and more sustainable way of renting out their property which is free of the headaches brought about by other, less reliable letting systems.
If you have any more questions about the letting model (like how we offer guaranteed rent), want to make an enquiry about using an alternative to property managers for Airbnb or, wish to contact us about finding expert property management in London with Flex Living – get in touch and speak to one of our fantastic team members today.