RISMedia's Real Estate Magazine

DEC 2018

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1057163

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Page 141 of 158

RISMedia's REAL ESTATE December 2018 137 windows on the second floor, which will offer a stunning view of Lexington's skyline. Further, the roof makes the structure look like a futuristic race car in a 3D view. Almost everyone grew up with Legos, so the use of them is so intuitive. MP: Tell us about your foray into the Airbnb market. BE: A year or so ago, a REALTOR® told us we might want to look into Airbnb. We were building affordable, rental and luxury townhomes, with which we could serve multiple segments of the Airbnb market. We put one of our properties up on the site, and within the first 24 hours, we completely booked a 12-plex—12 one-bed - room apartments. Within a week, we had 60 dates booked, and we could never have imagined all the use-case scenarios. Right away, someone booked for all of October, Novem - ber and December while they were renovating their home. We had a traveling nurse book dates for six months in advance. Corporations are using them purely as a place to bring clients for entertaining—as a third corporate space. We have an Airbnb that's being rented to six guys who work for a FinTech start-up. They con - gregate here at random intervals; one is in Cincinnati, one is in Chattanooga and one in Louisiana. None of them live here, but they come and go as needed. MP: What implications does the Airbnb model have for the rental market? BE: I love this question. I think the 12-month lease will go away 10 years from now, as there will continue to be more specialty situations. The duration of median stay will extend. We're at a tipping point where we're all using something like Airbnb, whether it's Uber/Lyft/Turo —everything makes sense to go to that peer-to-peer platform. Also, the shortage of time for everyone is becoming more acute, and the days of filling out clunky paperwork are ending. Everything needs to be seam - less. There will be a further aggregation of the labor economy and the housing economy, and those will start to work in parallel. MP: How does your connection to the bourbon business tie into your real estate business? BE: The frontier of our tourism economy is experi - ences. Half of the Airbnb guests are coming here for bourbon. I understand what the bourbon consumer, tourist and traveler wants. We're listening and doing fo - cus groups, and the applications are all hyperlocal. Our most successful Airbnb unit is simply called "Bourbon, Bourbon, Bourbon!" Look at the big-box hotels. All the trends are toward delivering a local theme. No one says, "I want to stay in some agnostic hotel and eat at a restaurant in a strip mall." People want to stay at a hip place and go to a hipster coffee joint or a funky burger place. Localism is driving consumer preference, and there's a mas - sive opportunity for disruptors to find authentic ways to do that. Airbnb is such an efficient marketplace for expressing creativity, and the best operators are able to infuse the localism with good service. MP: So what advice would you give real estate profes - sionals wanting to tap into the Airbnb movement? BE: Understand what your area is known for. It's the age-old adage, "play to your strengths." For us, it's also University of Kentucky athletics, the equestrian industry and Keeneland, and lastly, medical tourism. Lexington has excellent hospitals, and people come from all over Kentucky for healthcare reasons. You also have to find people that understand hos - pitality and service. You have to be ready to answer questions within 5-10 minutes, even if the question is, "Do you have any Q-Tips?"; and messaging through the Airbnb app is critical. Responsiveness 24/7 is a must. You also need to build to scale. I started with one unit and that went great, so I added another unit and grew from there and needed additional scales, like three subcontractors to do the cleanings, or "turns," as they're known amongst Airbnb operators. We used to manage 5-6 units; now we're managing 68 of our own Airbnb units across five geographic locations, and we manage another 115 Airbnb units for other people, as well. MP: Can you give us some numbers, for the analytical readers out there? BE: We had 80 percent occupancy in the third quarter. That was an all-time high for us, and we won't do that every quarter. But it's averaged 67 percent for the trail - ing 12 calendar months. In the beginning, when I was modeling the likely revenue scenarios, I never imagined occupancy numbers over 50 percent. MP: What should someone do if they're thinking seri - ously about converting a unit, or buying a unit, for the short-term rental market? BE: For the average person reading this thinking, "I don't have time to change sheets or answer questions at all hours of the night," I would say the following: Get in the game soon. There are best-in-class management companies emerging in this space at the local and national level. Rent out a spare bedroom, or your lake house or beach condo. Get a professional photogra - pher with experience in vacation rentals or other stag- ing applications; they can optimize the light and really help you to promote what makes your property unique. It's all about authenticity. RE For more information, please visit www.instagram.com/cot5r.

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