Landlord Products / Services
Have you heard the word? Apparently long-term tenancies are cool ‘n all, but the real money-maker is a potent cocktail of short, mid and long term lets. Also known as “flexible letting”.
That’s exactly what the property management companies like City Relay offer their landlords – a fully managed, sit-back-and-relax, flexible letting solution – which they claim results in higher occupancy rates and higher returns.
Sounds fab. But is this shit legit? Well, going by the fact that City Relay have managed 10,000+ properties in London alone it’s clear they’re not completely useless!
If you’ve found yourself intrigued by City Relay’s proposition (or any other short-let/Airbnb management services), and subsequently you’re sniffing around the web to determine whether or not their approach is a good fit for you and your property, you’ve come to the right place. Hopefully, I’ll be able to shed some light on the following:
- How property management companies like City Relay work (and ultimately generate higher yields for landlords);
- How much more money landlords can earn with flexible tenancy terms compared to traditional long-term tenancies (offered by traditional high-street letting agents).
Full disclaimer: this isn’t a sponsored post (I don’t partake in shameless sponsored content schemes); nothing in this blog post has been tainted or influenced by financial incentives or sexual exploits [unfortunately]. City Relay doesn’t even know I’m writing this – they’ve been given no prior warning. I am a free man with no allegiance; I am as faithful as a sewer rat! However, yes, City Relay is an affiliate partner of mine, which is why I’m using their “flexible letting” service as an example to highlight how and why it all works. But as always, my primary objective is to share valuable information; I don’t give two hoots if you use City Relay or any other company which offers flexible and short-let management services.
I do personally believe City Relay are the best in the game, but I am also aware of other great companies in the space that are also worth exploring (and perhaps even a better fit for you), which is why I’ve put together another blog post, containing links to other highly-rated Airbnb/short-let management companies that offer very similar services and aren’t affiliate partners of mine.
We good? Cool. Let’s resume with the regular schedule…
Overview of City Relay’s Property Management service
| Service | Rating | Services | Coverage | Price from | |
|---|---|---|---|---|---|
City Relay | Rating TrustPilot Reviews | Services
| Coverage
| Price from 12%+VAT | Visit Website for offer Arrange a callback |
Please note, I try my best to keep the information of each service up-to-date, but you should read the T&C's from their website for the most up-to-date and accurate information.
How City Relay and Flexible Letting Works
I’ve already written a girthy blog post on Short-let/Airbnb management companies which will, for sure, bore your socks off, so I won’t retrace my steps. But for the sake of making this blog post complete – in case you’re jumping in feet first without any real context – please allow me to provide you with a general overview of Short-let/Airbnb management companies like City Relay. (For those of you already in the loop, you may want to skip this section altogether.)
You might be asking yourself, why does he keep referring to them [City Relay] as a “Short-Let/Airbnb Management Company”?
It’s a fair question.
While they can occupy a property [under their management] with a blend of short, mid and long-term tenancies, the bulk of the occupancies will be short-let/Airbnb tenancies. Secondly, it’s the management of short-term tenancies that differ them from traditional high-street letting agents (who only manage long-term tenancies).
So now you might be wondering, well, why not just do away with long-term tenancies all together, and only focus on short-let to maximise returns?
Another fair question. You’re on a roll!
Shorter stays achieve a much higher nightly rate, but longer-term bookings guarantee income over winter and spring, when demand for short-lets slows a little. That’s why flexible letting gives you the best of both worlds: high occupancy and high yields.
Once a company like City Relay takes over the management of a property, they will manage a revolving door of short, medium and long term guests/occupants, which could include:
- Holiday bookings of just a few nights.
- Longer visits of 2-3 weeks.
- Corporate reservations of several weeks or months.
- Longer-term tenancies of multiple months.
The bookings are sourced through various holiday rental marketplaces like Airbnb & Booking.com (for short-term tenancies) and property portals like Rightmove & Zoopla (for the longer-term tenancies). The level of management received by the landlord can range product by product and company by company, but they all generally provide the following services:
- Marketing and guest acquisition i.e. management of all advertising on holiday and short-let marketplaces like Airbnb and Booking.com to fulfil guest bookings;
- Management of reservations, and guest check-ins, which includes meeting and greeting;
- Professional housekeeping services;
- Repairs & maintenance management;
- Buying and repairing broken items;
- Regular pricing review to maximise returns;
- Optional cost-effective in-house interior design makeovers, which drag gloomy properties up from the pits of hell, to help maximise returns.
Essentially, think fully-managed letting agent with a healthy dose of hotel concierge and housekeeping services. However, it must be noted, this model only works for landlords with properties in tourist hotspots and popular metropolitan locations. As you can imagine, there isn’t much of a demand for a “hotel concierge” experience in a mid-terraced property in Scunthorpe. And that’s precisely why City Relay, for example, only manage properties in London, but other short-let management companies do go further afield.
How much rental income can you get from short-let tenancies?
*shrugs shoulders*
I dunno.
It depends on the property.
Most short-let management companies will provide means of getting a rental valuation from their website, just like any other regular letting agent.
For example, City Relay allows you to complete a valuation form and arrange a call-back for a phone consultation.
A real case study – how much MORE money a short-let management company made this landlord!
I’m sharing this somewhat ghastly success story so you get a taste of what’s possible.
One of my friends – a rather privileged friend that grew up with all the advantages of a nobleman – managed to corner me into a discussion about how he’s using a short-let management company to manage his swanky “second-home” in a lavish part of central London. He was overwhelmingly eager to share his experience and crunch his numbers with me.
Yup, I also just vomited in my mouth. How the other half live, aye?
(Update: I’ve retracted the name of the management company my friend used because they no longer provide short-let management services (LOL, I am absolutely serious!), but I still firmly believe the case study is still useful because it provides a valid insight into what active short-let management companies can do for landlords.)
For the sake of ease, I’m going to refer to my friend as Basil going forward, even though he probably wouldn’t even mind if I used his real name. But for some profoundly spiritual reason, Basil feels right, and I’m not one to question my intuition. Plus, he actually kinda’ looks like a Basil. It’s all worked out for the best, really.
Basil it is.
The Property (so you have some context)
Basement apartment near Oxford Circus. Two bedrooms, two bathrooms, sleeps four.
Yes, it’s fabulous! *flicks hair*
Projections & Proposition
During the initial consultation with the management company – before Basil signed his life away – he was given an idea of how much he could expect to achieve with the property in its hand-over condition. But he was also pitched to opt into their “interior design” service, to help further increase his earnings (beyond introducing flexible letting approach).
Most short-let management companies offer some form of “makeover” service to help with optimization. In fact, some will likely insist on a good scrub and face-lift before they’re willing to take it on, especially if the property in question is a diamond in the rough.
Basil ended up using their makeover service to do the following:
- Revamp the property with a clean, modern and stylish aesthetic (pictures below!).
This actually set Basil back a juicy £6k, but apparently it was essential to maximise the potential income!
- Add a sofa-bed in the living room to increase sleeping capacity to 6 persons.
- Installed a state of the art electronic thermostat for heating, automatic wardrobe lights and an Apple TV.
The results of the interior design and decor service…
Pretty sweet!
The financials (how much extra rent was generated with a short-term management company)
| Long term tenancy 2016 (with local high street agent) | Short/Flexible term tenancies 2018 (with short-let management company) | |
|---|---|---|
| Income (before costs) | ||
| Weekly earnings | £850 | £1520 (averaged over year) |
| Monthly earnings | £3,683.33 | £6,585 (averaged over year) |
| Annual earnings | £44,200 | £79,018.9 |
| Costs | ||
| Agent Tenant Finder Fees | £5834.40 (11% + VAT (Foxtons)) | £0 |
| Agency Management Fees | £2,121.60 (4%+ VAT (ABC Estates)) | £9786.19 (12% + VAT) |
| Council Tax | £0 (paid by tenant) | £1100 per annum |
| Utilities | £0 (paid by tenant) | £2100 per annum |
| Netflix | £0 | £72 per annum |
| Repairs & Maintenance | £1,000 approx | £2,985 (taken out of earnings before payment) |
| One-off upfront furnishing/design | None (unfurnished) | £6,300 |
| Total Costs | £8,956 | £22,343 |
| Profit (after costs) | ||
| Weekly earnings | £850 | £1520 (averaged over year) |
| Monthly earnings | £3,683.33 | £6,585 (averaged over year) |
| Annual earnings | £35,244 | £62,975.90 £56,677 (after one-off furnishing cost) |
From May – September 2018, the management company delivered 90+% occupancy, with an average daily rate of £274 a month in gross earnings on average, balancing occupancy and pricings to achieve maximum revenue.
In a 12 month period between September 2017 and August 2018, Basil achieved an average gross income of £6,585 a month.
The management company, to date, has achieved +60% increase in earnings compared to what Basil was previously earning from a long-term tenancy, managed by his local high-street letting agent.
Needless to say, this is just one case study with a very happy ending, so make of it what you will. I hope, if anything, it draws out the processes involved with short-let management services and why many landlords [with properties in hotspots] have ditched traditional long term tenancies for short.
If you want to find out how much rent City Relay can generate you, you can complete their valuation form or arrange a call-back for a phone consultation. Alternatively, as mentioned, there are plenty of other short-let management companies to choose from.
Over to you…
What’s your story? Are you currently in the market for a short-let management company like City Relay, to maximise your rental income?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
