Underlying Summer’s proprietary underwriting analysis is data from AirDNA, and it leverages VRBO, Airbnb and Booking.com to promote availability in its clients’ homes
Helping people buy a vacation house has been the mission of several new companies over the past couple of years.
There’s the leader in co-ownership, Pacaso. Ember is hot on their tail. A company called Here focuses on public second-home ownership with an investment pitch, and AvantStay leans toward the large-group vacation home rental business and working with agents to find them.
Summer, the newest player in the field, and recent Inman New Kid on the Block, blends multiple modern home buying approaches.
It buys the home on behalf of clients to own individually, requiring a 10 percent deposit and monthly subscription fees.
The monthly fee is applied towards ownership, similar to Divvy, and buyers can use their home for at least 60 days per year, whenever they choose. When not there, Summer takes care of renting and managing the property.
If it’s still a match after three years of leasing, owners can apply their initial deposit and 50 percent of their to-date subscription fees to become outright legal owners. Summer can still be used to manage it as a rental if desired, or the relationship can end there.
Should the buyer not want to continue with the house, Summer will refund the 10 percent deposit.
Clients of summer can use each other’s homes, too, during allotted rental periods.
Homes that Summer acquires need to meet their algorithm’s requirements for profitability. However, it would be rare for a buyer to seek a home in a market that wouldn’t work. Especially these days. Summer handles interior design, too if it’s needed.
Underlying Summer’s proprietary underwriting analysis is data from AirDNA, and it leverages VRBO, Airbnb and Booking.com to promote availability in its clients’ homes.
After the ownership transition, Summer credits the owner for the number of days they choose to use their home each year. That number can change along the way. That credit can then be applied to using other homes in Summer’s network.
And, the owner gets paid when the home is rented, minus Summer’s market-rate management fee.
The company has stated its focus is on the “entry-level” second home family. They’re not distinctly after the eight-figure market, instead its goal is to help those who can manage the ongoing financial commitment but need help getting through the door.
Granted, since they foot the bill for the home, of course it helps to shop the lower end of the market. But for now, the message resonates.
Think: homes in the Catskills, not the Alps. Homes near Joshua Tree, not Palm Springs.
It’s clear to anyone with even a partially functioning market barometer that vacation homes are trending.
From remote workers wanting places to crash in between #vanlife stays to Wall Street sharks wanting to close their collective maw around another surging real estate asset class, there is no shortage of entrepreneurs and money emerging to support short stays in cool places.
In a spring, 2022 report by AirDNA, it was reported that “All but just a handful of top 50 short-term rental markets have fully recovered demand back to 2019 levels.”
A more recent August report by the data company stated that Airbnb recorded its most profitable second quarter on record, booking 103.7 million nights.
“In terms of growth, quarterly nights booked were up 25 percent year over year and 24 percent versus the same pre-pandemic period in 2019,” AirDNA said of the STR market leader.
Airbnb’s numbers track with what the travel industry as a whole is seeing.
The US Travel Association, a non-profit travel trade group, said in its July statement that “travel spending surpassed 2019 levels for the third consecutive month and hit a new pandemic high of $105 billion in June 2022.”
When spending is up in an industry vertical, it only makes sense that other industries will call on it, in the same way venture capital and technological innovation continue to reach into lending and single-family rentals.
Summer may be late to the backyard BBQ, but the dish it brought to share is garnering a line. The company was developed with “pre-seed” money acquired after CEO and co-founder Paul Kromidas briefly pitched the team behind Casper Mattress.
They’ve since raised $13.4 million in seed round financing from fintech backer QED and Lightspeed Venture Partners, a multi-billion VC firm whose portfolio includes Snap (makers of SnapChat), Epic Games, GrubHub, meditation app Calm, home gadget maker, Nest , and a number of acquired and publicly traded upstarts. Also participating in the round was 1Sharpe Ventures.
Despite the leveling of the residential market and higher mortgage rates, there are a number of other real estate categories that aren’t hearing the noise. There is venture capital that needs to be deployed, renters that need apartments and summer homes that need sand on their tiles.
Email Craig Rowe