** Subletting points to know before getting started **
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Hello, and welcome to this new video from the YouTube channel I display Complet, the channel that helps you increase the turnover of your seasonal rental or your seasonal rental concierge service. This evening, we're talking about a subject that I neglect a little in the content that I produce: it's subletting. I almost said the wrong word. In fact, I am going to do the exercise of producing more content on subletting. So, if you have any questions about this, if you are under lessor, or if you would like to start subletting, don't hesitate to ask me your questions in the comments so that I can accurately answer the questions. issues that are relevant to you. So, what are we talking about this evening? We are going to talk about the different points that I think are important to know before subletting. I do not intend to be a lawyer, nor an eminent expert in the operation of subletting. That, no. On the other hand, we are more experts in the management of turnover, pricing and income. So, it is more about this that I am going to talk to you about subletting, the truly financial aspect, because that is where our expertise lies. I'm going to talk to you about all this to give you a few things that I discovered along the way with subletting, so that you have them in advance before starting, and so that you can leave with this baggage, and find out if subletting is really for you or not.
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− Hello Romain. Good evening, welcome to the live. I hope you're well.
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Now, I will share with you the few key points that I think are important to keep in mind when you start subletting. Already, subletting, for those who, really, would discover this mode of exploitation, in a few words, subletting, it is a mode of exploitation which consists of doing, in fact, seasonal rental itself -even, ultimately being the lessor and the reseller, we can say. So, concretely, what does it consist of? We will approach an owner, but without offering him to exploit his property directly, but rather by offering him to be the tenant of the apartment himself, and to go, moreover, in the authorized lease, the re exploitation of the property for commercial purposes to make seasonal rentals. On the legal part, obviously, I will stop there, because it is not at all my area of expertise, and I am not intended to give advice on that, it could potentially be erroneous. In any case, be aware that the lease contract that we will have with the owner is obviously not a classic lease, it is usually rather a derogatory commercial lease contract which will allow us to exercise, as a result, a commercial activity thereafter. There are several points of vigilance to be had on this, I really let you refer to the experts on this subject so as not to make mistakes on the legal and contractual elements which will bind you to the different parties.
Now that we've set the scene and explained a little about what subletting is, I'm going to share some important points with you. I'll start with the first, one of the most important, but which is really the most striking, in fact, in subletting; and with covid, this is a point that has been really crucial, because it could have put some sub-lessors in huge difficulty. So, when you start subletting, you absolutely must have this point in mind. The first point is that the risks are potentially enormous. Why do I say that? This is because unlike seasonal rental concierge services, when there is a slowdown in seasonal rental activity in your city, well, by being a concierge service, concierge services usually take a percentage of the sales, and if there is no sale, you gain nothing, but you lose nothing, unlike subletting, where if there is no sale, but in fact you lose money, since you have no money coming in, but at the same time you still owe the amount to the owners on the rents. The rent you owe to landlords must still be paid. So, it's really important in subletting, and I see that this is not often the case, there is not always this awareness of the risk that we take in starting the subletting of this way, because there is a risk that falls entirely on your shoulders.
Now, the positive side is that obviously, in life, it's always a bit like that, when you take enormous risks, you also have the possibility of having enormous gains. And it's true that with subletting, you also have the possibility, if it works, if you manage, as a result, to have good turnover, to have gains which will be much greater than the earnings you could obtain by being a seasonal rental concierge. So, there you have it. It is always a measure of risk. Ultimately, the gains can be very significant, but with the acceptance of a risk, which can also be very significant. Sometimes we hear that subletting is a solution for investing, in fact, without having the capacity to go into debt. It is rather to exploit assets without having the capacity to go into debt, because unlike an investment that belongs to you, you do not create assets, you create cash flow, that is to say -say that you create the monthly income that can allow you, a bit like a job or a business, to earn your daily living. So, it's more akin to starting a business than actually doing real estate without being able to go into debt. In my opinion, in any case, it's not exactly that. This is the first point, or in any case, the point at which you must be extremely vigilant: the potential risks are enormous. And the second point, the gains, therefore, can also be.
Now, there is another aspect on which you really have to be vigilant, which is that you should not estimate your price according to the rent that you have to pay at the end of the month for the owner. It is possible that in certain months, you earn less than in others. If you estimate the rental price from Travel based on the rent you owe to the landlord, the problem is that you are out of line with the market. You will have a price which will be relatively platonic, and you will have a price which will probably be, in certain periods, a little too high, in periods of low demand, and in other periods a little too high. bass. This means that you are stupidly missing out on money, when you could have increased prices and your turnover much more. So, try to get out of your mind this minimum amount that you have in mind, because you absolutely want to make the property profitable.
First do a study completely devoid of all that, and that's my second piece of advice: really have a revenue management logic. If you follow the channel, I'm displaying Complete, you will obviously be able to get as much advice as possible; All the advice related to seasonal rental is obviously applicable to you, and are all ideas and nuggets that will help you in your activity. So that's really a point that will help you, but more than ever, in fact, when we sublet, more than all the other seasonal rental companies, we don't have a responsibility, we have an imperative to do revenue management. For what ? Because precisely, we are in a situation where we take enormous risks, and when we take enormous risks, we must try to secure our positions, to try to guarantee a minimum turnover, if possible the as high as possible, obviously, to maximize our turnover, but we have this sword of Damocles over our heads, so more than ever, and more than any seasonal rental company that is, in subletting, we must make revenue management to guarantee the highest possible performance, and therefore protect yourself, as I said, from the risk of having to come out of your own pocket certain months, because the income provided by travelers is not sufficient to be able to guarantee the payment of rent and obtaining a profitable margin.
So, first point: the potential risks are enormous, but so can the gains. Second point: do not estimate the price intended for travelers based on the rent you owe to the landlord, because this will put you in a completely out-of-market pricing position which will not help you maximize your financial performance. It is essential, it is a responsibility on your part to really secure your positions by carrying out revenue management to guarantee you the best performance, and a reduction in the risk that you take by carrying out this activity.
And then a final point, these are slightly more operational advantages, we will say, but which have financial implications. The first thing is that if you ever hesitate between subletting and concierge service, there is another point which can be important, and which I encourage you to consider nonetheless in your time management, which is a point that has weight in the arbitration is that when we sublet, we do not have to manage the landlord relationship at all, that is to say that from the moment the owner gives us the keys to the apartment, we are a tenant, and obviously, when it is extremely well regulated legally, we are entitled to carry out our activity without being much more accountable than that to the owner, except for the fact of pay him monthly rent. In this case, that means that as an operator, we will say, you do not have, in your schedule, an imponderable and incompressible time to devote to the owner relationship. This is the case with concierge services, and it is something that is extremely time-consuming. Firstly, because it is extremely important, obviously the owner relationship, but also because with the development of concierge services, we have more and more owners, and therefore, more and more situations, questions to deal with, and on which to be present with the owners on a daily basis. This is an aspect that takes a lot of time, and which you skip, you free yourself, in fact, by subletting. So, on that, it's really important to tell you that in all points, to make your decision to sublet or not, the fact of not having the management of the owner relationship can be an important point if you are short of time and if you are subletting in addition to your employee activity, your business, etc.
The last point, and this, for me, was, I think, one of the biggest surprises about subletting, and I find that it is not mentioned at all. Among all the people who talk about subletting, it's a point that is really, I wouldn't say "hidden", because that would imply a desire not to say everything, but it's really a point that doesn't is not said much, and I was a little taken aback when doing the calculations, it is that you still need initial capital for subletting. We are often told that this will allow us to invest without the possibility of purchasing, but this is not at all investing from scratch. So that the profitability is there, afterward, obviously it depends on the cities, perhaps in certain cities, we can rent furnished accommodation, and it remains profitable, even a little bit, but it remains profitable, but in a in a number of cities, for it to be interesting, you have to rent empty, furnish the apartment yourself, and after that, use it as a short-term rental. In these cases, it is an activity that requires starting capital which is really important. You can't do without starting capital, and that's really a point to keep in mind, that is to say that you have advantages and disadvantages. So, on this last point, the advantage is that you do not have time to devote to the owner relationship. The disadvantage is that it is not a business that starts from scratch, unlike concierge services which you can actually start from scratch, without any start-up capital. Subletting is an activity that requires start-up capital. We can't do it without having a few hundred or a few thousand euros to start.
―Hello. Thank you very much, thank you. How are you ? I hope you're well. It's a pleasure.
Don't hesitate to also watch our colleague's YouTube channel, automaticbnb, it's right there. Don't hesitate, go see her, she has lots of videos on how to do a certain number of things for your seasonal rental. So. These are clearly explained, commented, and very concrete videos, so don't hesitate to go watch his videos.
− Good evening to you. Welcome.
− Good evening, welcome.
Nicolas is under rental, so don't hesitate if you have any questions. Don't hesitate to ask him. Nicolas, he is also part of our seasonal rental price maximization of turnover group, so do not hesitate to join us there so that we can answer all your questions. He has eighteen professionally sublet apartments, it's true.
Look, I don't know if you have any questions about that. As I told you, I'm going to try to do more content related to subletting, because I think it's a subject that is really a subject of interest or concern for many of us. Already, in seasonal rentals, we don't talk much about revenue management, and we try to fill this gap with I'm showing Complete, but in subletting, it's even worse. There are many things, as I told you, which are as true in seasonal rental as in subletting, so do not hesitate to take an interest in all the content that is present online on seasonal rental, but there can be small specificities, small differentiating elements like all the elements shared with you this evening. I'm going to do a little recap, and then I'll stop there.
So, the first is the enormous financial risks that you take, but the other side of the coin is that there can also be enormous gains. The second point is that you should not estimate your price based on the amount you are going to owe the owners at the end of the month, because that will disconnect you from the realities of the market. On the other hand, go for a revenue management logic. It is more important than anyone when you do seasonal rental to be able to manage your risk. The last point is that you don't have a landlord relationship to manage, and that really saves a lot of time, so it's a point in favor of subletting, compared to concierge services. . But unlike seasonal rental concierge services, it may be necessary to have initial capital to get started. So there, this would be more of an unfavorable point for subletting, and favorable for concierge services.
So. I hope this video was able to help you get started, or at least choose the mode of activity you have.
− Yoran said to me: “Hello. So, is the subletting done in your own name? Isn't this done with the concierge? »
Some concierge services sublet. Well, I'm not going to get into those kinds of questions, because in fact, I could totally say stupid things. So, I prefer not to say stupid things, and instead say that I don't know. What I currently see is that we have concierge services, so people who have a concierge company which has both sublet properties and seasonal rental properties. It exists. Now, I don't know personally whether the sublease was signed in my own name or in the name of the company. I think companies can sign the sublease. I'm not sure, check with legally competent people, that is to say not me. Really, it's important. Listen, I wish you a great rest of the day. I'll see you tomorrow for the next video. Take care of yourself.