by Andrew Bate, co-founder and CEO of Safely.com
According to Spencer Rascoff, former Zillow Group CEO and co-founder of Pacaso, people’s relationships with their homes — especially their second homes — is shifting in our COVID-19 world. After all, why not relocate for an additional few weeks of the year to a secondary home in a beautiful location if you’re not leaving your “home office" anytime soon?
Rascoff and his co-founder raised $17 million in seed funding and $250 million in debt financing to help us purchase a share of these second homes.
People have owned second homes for decades — with an even longer history in many European countries — but there is more innovation to be done. There are an estimated 30 million second homes across the U.S. and Europe that are only occupied four to six weeks per year. These are properties that have never even seen a listing on Airbnb, Vrbo or Booking.
The number one obstacle for second home owners reluctant to rent out their properties is the fear and ambivalence around the idea of letting an “internet” stranger stay in their property and sleep in their bed.
It’s one thing to outsource the management of an investment property purchased for rental, but it's a completely different story when renting the home we plan on making memories in with our own families. Owners are far more nervous and hesitant when it’s more personal, and almost all short-term rentals are owned by real people and families.
Consider this analogy: brakes are not meant to make a car go slower. They exist so that a car can go faster. The same is true for trust and safety solutions. Risk and uncertainty are the two “pain points” that keep homeowners from joining the short-term rental market and handing their keys over. However, when a property manager reduces this risk, homeowners are happier to become customers and also to stay as customers.
One way that a property manager can add “brakes” to quell owners’ anxieties is by offering better guest screening. By this, I mean screening backed by technology and data and not based on gut instinct and social media “sleuthing.”
Traditionally, experienced property managers facing nervous new owners anxious about handing over their homes might counter with something along the lines of; “Don’t worry. We’ve been at this job for years and you can trust us. We collect a damage deposit so you’ll be just fine.” However, this really isn’t enough anymore. We are seeing new types of homeowners entering the market. These entrants expect more sophisticated management of their homes and better protection of their assets.
Converting a reluctant owner into a customer is made easier when the property manager can assert that every single guest is screened to the very best of his or her knowledge. Based on data that is verified, the keys (or these days, more likely the lock code) are not being handed over to an unwanted guest. Guest screening also makes for better conversations with neighbors and can resolve issues that the public might have about not wanting “just anybody” in the community.
The other big question that hangs over an owner reluctant to rent is, “What happens when something goes wrong?” Things always go wrong...eventually. Accidents happen and repairs need to be paid for. Many property managers charge owners for damage, and that just isn’t very appealing. With short-term rental-focused insurance products, not only is it the guest that pays for the coverage (creating an ancillary revenue stream), but owners can also sleep better knowing there is a separate pool of money — not coming from their profits — that can be quickly accessed and used to make repairs, if necessary.
An increase in appetite for second home ownership is proven. For property managers to capitalize on this rise and convert second home owners, they need to be able to demonstrate cast-iron responsibility for the property assets. Manager/owner partnerships are built on trust, and trust can be earned through excellent guest screening and short-term rental-tailored insurance. Get this right and owner acquisition will not only rise, but relationships will strengthen.
About Andrew Bate
Andrew is the co-founder and CEO of Safely.com, which makes short-term home rentals safe through analytics and insurance. Safely has covered over $36 billion of homeowner liability since launching in 2015.