Recently launched Australian startup HeyTom helps time-poor investment property owners make the switch to Airbnb with on-going management part of the deal. It says the system is proving much more lucrative than traditional letting.
The company's first customer Tom, "a pretty normal Aussie guy" enjoys travelling and spending time with his mates. But with a family on the way and a full time job, Tom doesn't have the time to manage his investment property.
"We knew this and so we decided to propose something to Tom," says HeyTom co founder Luke Baker.
Baker, who comes from a background in business management and strategic investment says his vision is to combine traditional investment strategies with new and emerging platforms to create an exciting marriage of technology and tradition.
He and co-founder Joel Cacciotti, an online advertiser with startup and sharing economy expertise, suggested they manage Tom's property Airbnb style.
"Of course (Tom) was skeptical at first and had all of the usual questions. What happens if my property gets damaged? Who does all the work? (the answer to these questions can be found on our FAQ page)," Baker says.
"Once his mind was at ease he was happy to give it a go. It was a test, a trial, one that we were both confident would work, but if it didn't we weren't locked in and had an exit strategy. Thankfully it worked."
Baker claims since HeyTom took on Tom's Airbnb property in November 2015, net rent has increased 15 per cent per week.
Based in the trendy inner-city suburb of Darlinghurst in Sydney, the two-bedroom terrace went from being rented at $700 a week to an average of $815 a week today, after HeyTom's property management fee (20%) is taken out.
While the startup is currently focused on the inner city and eastern suburbs, the founders say they are open to customers elsewhere and will determine the value a property owner might get from the system on a case by case basis.
Since launch in April, HeyTom has built its portfolio to 10 properties rented out on Airbnb.
Owners can choose between a shared risk or a fixed fee model.
HeyTom takes a 20 per cent commission out of the landlords' total revenue in the shared risk model, but benefits include a share of increased profit during high peak periods. Landlords using the fixed fee model get a guaranteed monthly rental income which is 10 per cent above the market rental rate.
Both models include services such as professional cleaning, basic maintenance, listing creation and guest screening. Baker says about half of the properties HeyTom now manages use the the shared risk model while the other half prefer the fixed-fee model.
"We carefully manage your investment property through short term letting platforms. This gives you the opportunity to effortlessly increase your returns," Baker says.
"We believe we can enhance traditional investments by utilising the sharing economy. Deep down we truly believe that travel is an incredible way to experience the world through a new lens.
"We are proud to help property owners give back to the travel community whilst still enjoying higher returns on their investments."