fbpx

Overcoming Strict Airbnb Regulations with the Co-Hosting Business Model

Overcoming Strict Airbnb Regulations with the Co-Hosting Business Model

co-hosting business model

If you’re hosting on Airbnb, it’s important that you stay up-to-date on all the latest rules and regulations, especially since these laws vary on a city-to-city basis. 

The increase in recent legislation in cities such as Los Angeles and Jersey City reveal that stricter regulation of the short-term rental industry is coming. 

As a result, short-term rental operators must not only be aware of these changes but also be able to adapt to them. This means working with the city and community. Illegal operations will result in hefty fines and punishments.

In this article, you’ll learn about the co-hosting business model and how it allows short-term rental operators to overcome licensing limitations through local partnerships.

FREE 2019 MASTERCLASS: How to Build an Airbnb Business Without Leasing, Buying or Investing in Any Property

What is the Co-Hosting Business Model?

With more and more cities introducing stricter regulations, many individuals are only able to rent out their primary and secondary residences.

This means that the traditional master lease business model is more challenging. 

So, if you’re a property manager who operates through the traditional short-term rental business model, how can you continue scaling your business?

One solution is switching your business model from master leasing to co-hosting.

First, slow down the amount of leases you’re taking into your company. Even if there’s no law in your city limiting the number of short-term rental licenses you can have, it’s better to be safe than sorry. This is especially true since the trend appears to favor stricter regulation.

Second, identify and partner with individual property owners. Since homeowners can legally get a short-term rental license for their property, you won't have to worry about licensing limitations. This means you can just step in and run your Airbnb through that property and then split the revenue at the end of the month.

In most cases, these partnerships in a co-hosting business model involve a 50-50 gross revenue split but can be 30-70 if the property is fully furnished.

Why the Co-Hosting Business Model?

There are two main benefits to co-hosting:

  • Hedge against law changes: The co-hosting business model protects you against future regulation changes that may limit the number of properties you can rent short-term.
  • Scale your business: With co-hosting, you don’t have to cover security deposits, furnishing costs, or any other related expenses. In most cases, you can see positive cash flow within 30 days with little to no upfront investment

Finding the Right Investors and Partners

Since partnerships are crucial to a successful co-hosting model, you’re probably wondering about how you can find investors and partners. 

airbnb co-hosting business model

Two great resources to check out are Realtor.com and Craigslist. First, identify individuals who are looking to lease fully-furnished properties. Second, email them explaining what the co-hosting model is and how you can help them. Finally, set up an appointment and talk to them one-on-one to see if they’d be a good match.

You can also educate your community about the short-term rental industry by hosting local events. From this, you can build partnerships with any real estate investors, brokers, or realtors interested in the co-hosting model.

Another way to find investors and partners can be through advertising on Facebook and Google. This can get a bit pricey but is effective if you know what you’re doing.

Co-Hosting vs. Vacation Rental Management

With the co-hosting business model, the focus is on partnering with property owners. This means working with people who own multiple properties (i.e. individuals who own second homes or real estate investors). This partnership involves more than just running the Airbnb – it’s about looking at the property as if it’s your own asset. In other words, you should be able to identify ways to make the property more profitable and lower investor expenses on the home (e.g. conducting audits on electrical usage). This can also involve furnishing the property, if necessary.

Vacation rental management requires less involvement since it’s mainly about marketing, cleaning, and sending the end-of-month check. The vacation rental market is also subject to seasonality, which can impact your profitability.

Getting Involved with Your City

Beyond implementing the co-hosting business model, you can also get involved on a city level. You can voice your opinions on why short-term rentals are so important to the community.

Last year, San Diego introduced legislation that would limit Airbnb rentals to primary residences. This policy was meant to curtail investor activity in the short-term rental market. However, with over 60,000 residents voicing their opinion on the San Diego law, the city rescinded its tough Airbnb regulations and opened the floor for more debate.

This example shows that grassroots efforts work and can provide another way for property managers to combat strict regulations.

Conclusion

As cities continue imposing stricter rules regarding the short-term rental industry, you must look beyond master leasing. With the co-hosting model, you can focus on scaling your short-term rental business without having to worry about harmful regulations.

FREE 2019 MASTERCLASS: How to Build an Airbnb Business Without Leasing, Buying or Investing in Any Property

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.