It is evident from several studies that younger generations are not purchasing homes at the same rate as their predecessors. However, a relatively Vacation Homes new company called Summer believes it might persuade this generation to buy a second home to rent out on websites like Airbnb.
Summer, an online rental company founded by a group of ex-Airbnb employees, says it uses “data and analytics” to assist clients, or “members,” in predicting short-term rental income and locating a rental home that meets their objectives.
Summer provides three options for becoming a member: “gradual” or “immediate” ownership, or connecting an already-owned property to the Summer platform.
Members who choose the progressive ownership path can work with Summer’s acquisition team to discover a property on the market that fits their requirements and fits with Summer’s business model, or they can select a property from Summer’s inventory. Together with interior design and outfitting the house, Summer also handles the process of submitting offers, managing the paperwork associated with the closure, conducting home inspections, and doing due diligence.
In return, Summer charges a monthly membership fee and requests an upfront payment equal to 20% of the purchase price of the house. Summer members can use any vacation home in the Summer network or their own at no cost to their membership fee.
It may seem strange to have to reserve a stay in one’s own house. Summer counters that the benefits are more than makeup for it. In addition to managing the property and scheduling rental visitors, Summer contributes the down payment and ongoing payments to the owner’s ultimate acquisition of the property.
If a member chooses to acquire their partially owned, Summer-managed property at any time throughout two years, they will receive a credit for 100% of the initial investment and 50% of the membership fee. According to Summer, if customers decide not to purchase, they will receive their initial payment back after two years.
Vacation Homes [Source of Image: Techcrunch.com]
Members who want to buy a property with Summer right away make their bid to Summer first. If approved, Summer manages the completion of the paperwork, takes care of the design of the house (as well as any necessary construction), and sets up a property manager to schedule short-term rentals.
Alternatively, homeowners who have fully invested in a second home can hire Summer to manage it, promoting it on social media and offering it on rental websites.
According to Kromidas, summer houses have “fast ramp time,” “co-branded national marketing,” and “more yield” than their rivals. I guess the pun was meant.
He stated, “Those looking to buy a new home or get more utilization and liquidity out of a current vacation home should consider Summer’s products.” “We can satisfy the market, regardless of the rise in demand for purchases or rentals.”
For those who can afford the upfront fees, Summer does present an alluring offer: fully hands-off vacation home management, including guest messaging and review response. However, along with its rivals in the short-term rental space (see Pacaso, AvantStay, Kindred, etc.), the business has difficulties as different governments impose restrictions on short-term rentals.
A recent bill mandating that property owners reserve their rental units for a minimum of ninety days was signed by Honolulu Mayor Rick Blangiardi. In other places, New York City has started imposing more stringent regulations on short-term rentals. New taxes on owners of rental properties are being proposed by Aspen, Colorado. Furthermore, Chattanooga, Tennessee has stopped accepting new applications for non-owner-occupied apartments.
Rental marketplaces like Summer are also criticized for consuming the supply of available housing and raising prices. However, investors don’t seem to be deterred by the challenges.
Today, Summer reported that it has raised $18 million in a funding round headed by investors QED and Viola Group, with additional funding provided by Setpoint Capital for $50 million. The funds, which elevate Summer’s total equity raised to almost $30 million, will go toward platform R&D, market expansion, and branding initiatives, according to Kromidas.
There are other short-term rental companies soliciting money besides Summer. According to an analysis by Crunchbase, 17 American companies involved in rentals raised a total of $1.3 billion from venture capital firms between July 2021 and April 2022.
Kromidas refused to disclose Summer’s customer count or even provide an estimate of the startup’s yearly recurring revenue.