Short-term rental market faces consolidation as start-ups and small landlords offload properties

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Venture-funded companies and mom and pop businesses in the short-term rental market are offloading properties after the coronavirus dramatically curtailed travel.

Facing uncertainty as to when the vacation market would resume, and with looming mortgage, utilities and maintenance payments, Prehm and her husband decided to put the property up for sale. The home was sold within a week, along with the furniture Prehm used to house guests. Though the sale was quick, Prehm and her husband lost money on the sale.

Ideally, they will sell the property to someone who is interested in doing short-term rentals, Carp said, then apply the money to their own home. "It hit me that this was going to be a massive problem for the other operators with a different business model who had leased their inventory," Kropf said. "I knew that was going to create a lot of problems and test their balance sheet."

Prior to the coronavirus, Vector Travel managed hundreds of units, Kropf said. Vector Travel expanded its portfolio by 10% in May, and Kropf predicts the company will double if not triple its portfolio in 2020. FrontDesk has been around since 2017, and it leases or manages approximately 500 units across 28 markets, said Jesse DePinto, co-founder of FrontDesk. The majority of those units are on master leases, but the rest are revenue share units. All new units that FrontDesk acquires are under revenue share agreements, DePinto said.

That focus on operational profitability and its timely funding round has allowed FrontDesk to expand its portfolio. This month, the company acquired 18 units in Pittsburgh that had previously been a part of Stay Alfred's portfolio, DePinto said. It acquired an additional four units in St. Petersburg, Florida, from a property management company.

 

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