Air BnB Management for my whole house? (vs traditional letting) UK

Hi

I currently own a 3 bedroom victorian terraced house in Bristol. It has a lounge which could be a 4th bedroom too. I own it outright, no mortgage.

I have been renting it out on a long term basis with an agent managing it for a 12% fee. This makes me about £1000 a month after they take their cut etc. But my tenants are about to move out, and I considered another option…

There are local companies who manage the property for short term lets through Air BnB. This seems to be something fairly common now. Apparently you can make twice as much this way depending on your house, the location etc. They also take 12% but they don’t make anything unless it’s rented out. So they have big incentive to get it rented too, as nobody get’s anything unless it gets rented. It seems to me these Air BnB management companies will be doing a lot more work than my agents for the same cut! My agents have to do next to nothing, where as these guys will be constantly taking bookings, meeting people, getting cleaners, managing my profile etc. Seems a much better deal

I am wondering if anyone has any real life experience with doing this or could offer any advice? The company seem very helpful and trustworthy, but I dont want to go through the hassle of setting it all up, and getting rid of my current agents unless I make a substantial amount more money!

So my questions are :

  • Would I need special insurance? I currently have landlords insurance, but not sure how that works in regards to short term lets on a constant basis

  • Would it be best to rent out each room seperately with the shared kitchen and bathroom, or the whole house?

  • Is there much of a market for people renting a whole house for short term lets? My fear is it could be empty a lot

  • Considering I would have to pay water, gas, electricty, internet bills etc., 12% to the management, is it really possible to make much more money than I am currently? I could definitely get £30-40 for each room a night based on what I have seen on Air BnB, but I have no idea how consistent this would be.

  • Am I missing any other obvious things to do with this setup, maybe tax related etc?

If anyone can give any advice, I would greatly appreciate it. I am meeting with someone from the company tomorrow to look at the house together. Of course they will tell me it’s a great idea! But I would prefer some real advice! I plan to live out of the country for long periods of time, and I’m not sure if one of these setups would make more sense.

thanks in advance

First I would look at the market in your area. Are there any other full houses that could sleep that many? Because as someone with a large family I know I would love to rent a whole house for my family rather than get 2-3 hotel rooms or hope to get 2-3 rooms in a house like yours and risk the other person(s) staying are ok.

If you set it up as a whole place, then I would use 3 bedrooms and have a nice sofa sleeper in the lounge unless you can put up an actual door that closes for privacy, then totally do 4 bedrooms.

As a whole house rental you could then easily host groups of 6-10 (if you have another sofa sleeper in the sitting room), and set your base price for 6 people with the added charge for people 7-10. At least in my area based on my research a house like yours should be booked at least half the time (which for me is a break even even with added costs of all the utilities) and other hosts on this site who offer whole houses with 2-4 bedrooms say they’re booked 60-90% of the time.

But there are also several people here who have successful houses with individual rooms rented out and shared kitchen/bathroom and common rooms. As a guest though I would not pay the same price for a room at a place like this compared to a room in the host’s actual home. And if it wasn’t very clear what I was getting and I arrived and had to share a bathroom with other travelers I would rate and review accordingly.

But let’s do some math. Based on your 30 for single rooms I would think you could easily ask 150+ for the whole house. So 150 x 15 nights (50% occupancy) = 2250
30 x 68 (75% occupancy of 3 bedrooms) = 2040

So do some research of your area. Play around with math, ask the management company, factor in cleaning fees if you do that (since they may charge you 12% of your rates but they may also charge cleaning fees that they keep to cover their costs and that doesn’t affect you but it would affect the prices the guests see/pay.

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Thanks for the reply :slight_smile:

There are a few two bedroom places in the area, going from between £70 to £120 a night. If I include the lounge I have 4 bedrooms, 3 of them a really good size, and one smaller box room that can still fit a double bed. The kitchen is quite big and can easily act as the communal space, I have a sofa in there and a dining table. There is a garden too.

From what I gather it could be listed as 4 seperate rooms, and as a full house. Then if the full house gets rented, then you can block out all the single room listings for that time. So I guess thats the best of both worlds, unless I am missing something? Of course if only one person rents a room and then you get a booking for a whole house that could be annoying.

It’s hard to imagine getting occupancy on a whole 4 bedroom house most of the time? I just can’t work out if it’s going to be any more profitable than my current £1000 (after fees) rent I am getting. It will definitely be more variable!

I am also wondering about any legal/tax type issues regarding these short term lets. Its all new to me!

I appreciate the help

It would be a lot to manage as it could be 5 separate listings (1 whole house, 4 bedrooms), but I guess that would be what you’re paying the management company for? I wouldn’t have any on Instant Book in that scenario. And if a 2 bedroom is going for up to 120, then there should be no issue listing yours as a 150 base with higher rents on weekends and busy season. For me, as you’re already used to using a management company and so it wouldn’t cost you any more time/energy, you just need to decide if it’s worth the up front money for furnishing it and having a variable income coming in instead of fixed.

I’m planning to convert our 2 bedroom LTR into an Air property next year when our current tenant’s lease is up as I plan to do it all myself and even if I’m only booked 50% of the time I know that even with increased costs I’ll be making more money. And if the market changes I was thinking of selling the house anyway and it will then be all staged and ready to list for sale. So for you you just have to rate your comfort level with the whole idea.

I would maybe contact your insurance company to ask them if your current landlord policy is sufficient for STR or if you need to update it. And Air may collect the taxes for you in your area.

Hi

I live in Bristol so can help.

Renting a home on Airbnb is not like renting out a house share, there are higher expectations around the quality of the accommodation. I wouldn’t recommend renting as a four bed but as 2 doubles and a single with a high quality sofa-bed for larger groups.

There has been a huge surge in shared and whole lettings in the city so this gives guests much more choice and less bookings to go around.

12% sounds incredibly low for a a Airbnb host management company to manage a letting, particularly if they only charge if they let out a property. Surely there must be cleaning fees in addition?

What do they include in this fee?

For example do they have approved suppliers and will organise for a shower or boiler to be fixed? Do they meet and greet guests and do a check out?

I would advise against letting individual rooms if you aren’t directly managing the property. If you do who will be responsible for keeping communal areas clean, You would also have to have cleaners go in when you have guests staying as they will be staying over different time periods. Other hosts have reported problems with noisy or messy guests upsetting other guests in shared accommodation.

Which part of Bristol will you be in. In most parts you would struggle to get 30-40 a night if you are expecting people to share with others, rather than with a host.

Before you meet this company do some market research. Look at what others are charging for similar properties in your part of Bristol. How much of the time are they full (check their calendar as an indication - although some may just be them blocking it out rather than actual bookings). What are they charging? What discounts do they offer.

Put yourself a spreadsheet together with accommodation details, what they charge, their availability etc

You will need insurance for short term lets, CCTV for security etc

Your accountant will be able to advise you on your tax affairs.

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Hi guys

Thanks for all the advice, you bring up many things I had not thought of.

Helsi it does seem that multiple rooms could be a bit of a nightmare with cleaners etc. and possible disturbances. Something to think about. My main worry is will I be able to rent a 3/4 bedroom place out much. I live in St Werburghs, Warminster road, so its a few streets back from the road with shops and food etc. But it’s a 2 minute walk, and its incredibly quiet as its a cul de sac, so people might like that.

Yes the company says 12% and they add the cleaning fees on for the people booking to pay. I know they manage everything and can fix things etc just like my current agents. I am not sure if they meet and greet or if its a lock box situation.

Currently the place is only part furnished, no beds etc. So it would cost me a few thousand at least to get it to be Air BnB ready, maybe more as the kitchen is the only room that lets it down a bit!

Helsi, from your experience, do you think a place in that area of bristol could make me substantially more than my current long term let that is about £1000 clear a month. Because to be honest if its only going to be a smallish amount then I think the hassle right now wont be worth it for me.

Then again, if I could make double or nearly that, it would be more worth while. I will not be in the country for fairly long periods of time too

Thanks again for the help, really appreciate it

Hi @delmonta

I’m afraid I don’t know. I let out a room in a shared house and its in BS5 not a whole place in St Werbg’s. And I don’t know your set up and ongoing costs. That’s why I suggested you do some research on Airbnb for similar properties in your area and surrounding areas, to see what they charge, quality of the accommodation, how often they look like they are booked etc.

Once you have done your research and estimated how many days you are likely to let the place for - take into account your fixed and variable costs and then you can make a judgement call.

In my view the check in and check out is one of the most important parts of the process. If the company you are looking to use doesn’t offer this. I would advise against using them.

How will you know if the property is being cleaned properly, how will you spot anything that needs fixing, how is the laundry being handled, how will you know how many people are checking in and out and any damage - if no-one is there.

I believe the going rate for a full service management support is about 25%. But I do it myself with the help of a cleaner so am not sure.

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HI Helsi

Thanks, I will ask the lady tomorrow when I meet. There seem to be only two main management companies in Bristol fro Air bnb. The first one on google results did not answer two days running! The other one is the one I am dealing with.

I had not seen the going rate being 25% when I was looking, but then again I didn’t find much about it to be honest.

The thing that I would beware about here is the experience of the management services. There are so many people leaping onto the Airbnb bandwagon without knowing anything about Airbnb hosting. It’s a specialist thing.

I would want to know about their experience in the hospitality industry, their experience with STRs and - in particular - how they deal with 2 am emergencies. Do they charge you extra if a guest calls at 6 am because the toilet is stopped up? Do they charge extra for blood stained sheets? Do the they deal with Airbnb resolution if there is damage?

Are they experienced in house tours? Do their messages to potential guests sell well? Are they marketers?

An Airbnb host has to be a tech expert, a PR specialist, a hospitality expert, a great accountant, a mediator … I really wonder if management companies can perform all these functions.

:slight_smile:

3 Likes

We are super hosts and Airbnb a 4 bedroom house with option of converting a second lounge into an additional room. To to quickly attempt an answer to your question:

  1. one way to check the market is carry out airbnb searches in your area for the type of groups you’re thinking of. What are they charging? How booked are they? How many are they?
    Carry out multiple searches projecting out many different periods of the years - the business can be seasonal.
    Look at their calendars

  2. To determine viability, I find that one of the most important issues is occupancy. Are people typically booked oa few days in a month, two weeks etc?
    I woukd say if you’re working with a pricing that requires 2 weeks in a month of booking just to break even, it’s not worth it. There are times you may have way less bookings than that!

  3. What will it cost to adequately furnish the place an d what woukd it require to recoup that keeping in mind the higher monthly overheads associated with short term rental, and need to repair damages.

  4. finally, the best way to gauge the market is just to jump right in, but this unfortunately would require you to incur all the upfront associated costs, which I guess you woukd not want to incur for a short term experiment.

In our area, I have found that
a) rarely do people ever need the 5th room, let alone the 6th!
b) because of new entrants in our market that came in after we started and can now host the numbers we can, we have had to cut prices significantly to be come competitive, and thus we have had to change our projections significantly, and knowing that, we probably may not have made some of the bedding/ furnishing decisions we made to accommodate very large numbers that are hardly ever there. If we were somewhere around Disneyland where there are many large groups, it would be a different story!

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You can also look at co-hosting. See if there are some local hosts in St Werburgh’s that would be willing to co-host (look it up on Airbnb Help Centre. Look for long terms hosts with great consistent reviews.

This means you give them access to your listing and they do the day to day management of the property, organise cleaning and bedding, help with supplier call out when things go wrong.

Thanks again for all the replies

The company seem good just from speaking to them on teh phone and their website. They say they have had over 50 years of hotel and rental properties in Bristol. The place is called Air three sixty bristol. Not sure if anyone knows it?

I obviously need to look on air bnb a bit more. I have to leave soon to meet the woman from the company and we will look around my house. After that I think they will review it and decide what would be the best way to rent it and for how much. So I guess then things will become more clear.

I feel a bit of a pressure as my current tenants are moving out in a few weeks, so the clock is ticking!!

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I found a 3 bedroom place which is way slicker than mine, renting for £130 in a bit of a less desirable area. But it is only booked a few nights each month.

Then I found a 2 bedroom place in the same area, same kind of house, but every night is booked out? Surely thats not possible?

If I were you I would prefer to rent out the rooms of the house separately. You might have them in one account or even make several listings. In terms of revenue, it should be more profitable. And the occupancy rate should be definitely higher. The demand for a room is usually higher than for a whole house.

HI

That is what I was thinking, but others have noted reasons why it might also be less easy. If only one person books a room and nobody else then it’s not going to make much. In a way it’s a bit like a private room hostel then, which maybe isn’t that desirable for a lot of people.

Hopefully the lady from the company will have some ideas in a couple of hours

It’s a good idea to get a recommendation from a professional. If I got you right this is a Property Management company. It would be nice to know what this lady would advise.

I’ve never heard of them, but I am not looking for this type of service. Ask them for Airbnb hosts with similar properties that you can talk to as referees if you want to go ahead and use them.

Personally if I was letting out a property I would prefer to work with a local experienced host to co-host (mentioned in my earlier post).

Hi @Katty

What experience do you have of letting out individual rooms in a property?

How did you manage issues around cleaning, problems between tenants etc.?

Well the lady was unable to make out meeting today which was a shame. So I will find out more next week.

Helsi, when you talk about co-hosts, what cut do they usually take? And do they do everything or just welcome the guests, and you manage everything else?

Thanks

Hello @delmonta

I don’t know how much they charge as I manage my own hosting.

My understanding is that like management companies they offer a variety of support services.

Having a look at Airbnb Help Centre for information on how it works.