Numerous studies indicate that younger generations are not purchasing homes as quickly as their generational predecessors. Nevertheless, Summer, a relatively new startup, believes it can persuade this cohort to acquire a second property for renting on platforms like Airbnb.
Summer asserts that it employs “data and analytics” to assist its customers, whom it calls “members,” in forecasting short-term rental income and finding a rental property that suits their requirements and objectives.
Paul Kromidas, Summer’s CEO and founder, explained to TechCrunch via email, “Summer’s platform integrates AI and analytics to create our short-term rental revenue estimate, which is akin to Zestimate for short-term rental income.” Before establishing Summer, Kromidas served as a product and strategy leader at Airbnb, where he contributed to the development of Airbnb’s Luxe product. Kromidas added, “There are various risks and barriers associated with purchasing and renting out short-term rentals, and Summer aims to address this challenge.”
Summer provides three membership options: “gradual” or “immediate” ownership or bringing an existing property to the Summer platform.
Members selecting the gradual ownership path pick a property from Summer’s portfolio, share the listing with Summer for suitability, or collaborate with Summer’s acquisition team to identify a property on the market that aligns with their criteria and Summer’s business model. Summer takes care of offer submissions, handles closing paperwork, conducts home inspections and due diligence, and handles interior design and furnishing of the property.
In return, Summer collects an initial payment as low as 15% of the home price and charges a monthly membership fee. Summer members receive credits that can be used for stays at their own vacation home or any property within the Summer network.
While having to book their own property may seem unusual, Summer argues that the benefits offset this. Summer manages the property, including guest bookings, and applies both the initial payment and monthly membership fees toward the eventual purchase of the property by the owner.
If a member decides to purchase their Summer-managed property at any point within two years, 100% of the initial payment and monthly membership fee is credited toward the purchase. If they choose not to buy, after two years, they receive their initial payment back.
For members who choose to immediately buy a property with Summer, they first submit their offer to Summer. If accepted, Summer oversees the paperwork, manages home design, and arranges for an in-house property manager to secure short-term bookings.
Alternatively, homeowners who have fully purchased a second home can have Summer manage their property, list it on rental platforms, and promote it on social media.
Kromidas claims that Summer homes generate “more yield” than competitors and benefit from “co-branded national marketing” and a “fast ramp time.”
“Summer’s products are designed for those seeking to acquire a new home or gain greater utilization and liquidity from their current vacation property,” he stated. “We’ve been able to meet the market’s demands, whether it’s increased interest in buying or renting.”
Indeed, Summer offers an intriguing proposition – completely hands-off vacation property management, including guest communication and review responses – for those capable of handling the upfront costs. However, like its competitors in the short-term rental market (e.g., Pacaso, AvantStay, Kindred), the company faces challenges as various jurisdictions tighten regulations on short-term rentals.
For instance, a recent bill in Honolulu mandates a minimum 90-day booking requirement for property owners. In New York City, stricter restrictions on short-term listings are being enforced. Aspen, Colorado is proposing new taxes on rental property owners, and Chattanooga, Tennessee has paused new applications for non-owner-occupied units.
Rental platforms like Summer have also been criticized for depleting housing supply and driving up prices. However, these obstacles do not seem to deter investors.
Summer recently announced that it raised $18 million in a funding round led by backers such as QED and Viola Group, in addition to securing a $50 million debt facility from Setpoint Capital. The proceeds bring Summer’s total equity raised to approximately $30 million and will be utilized for platform R&D, expansion into new markets, and branding initiatives, according to Kromidas.
Summer is not the only short-term rental company raising capital. In an analysis, Crunchbase discovered that between July 2021 and April 2022, 17 rental-related U.S. companies collectively raised $1.3 billion from VC firms.
Kromidas declined to disclose the number of customers Summer has or provide a hint of the startup’s annual recurring revenue.
