
I Bought An Apartment To Rent Out On Airbnb - j0ncc
http://needwant.com/p/buying-apartment-airbnb/
======
mbreese
If anyone is interested, this looks like the link to the place:

[https://www.airbnb.com/rooms/643721](https://www.airbnb.com/rooms/643721)

Another thing to add to the "if you're thinking of doing this" list - don't
write a post about it where you and the location can be identified. This is
probably against the HOA agreement (short term leases are prohibited).

It also could be a safety issue if you aren't actually living there. Once
someone knows the apartment number, someone could see when a particular place
isn't going to be occupied and use that to their _(ahem)_ advantage.

Seriously kids - don't do this. You'll probably be breaking a bunch of
contracts and a fair number of hotel and zoning laws. Not to mention the
insurance and liability issues that aren't even remotely discussed in the
post.

~~~
bradly
I recently bought a condo in Maui to rent and those places are sent up for
this sort of thing. They even call them Condotels. Being designed for short
term rentals brings a lot of benefits like resort manages check-ins/outs for
you.

Also, there is an echo chamber in the tech community regarding AirBnB as the
standard for short term rentals. From my experience, VRBO has been much better
and provided significantly more bookings. ymmv and it could be your customer
type as a two bedroom condo in Hawaii gets a lot more families and older
bookings.

If anyone has any questions about this, my email is in my profile.

~~~
geebee
Rather than saying "don't do this", it would probably be better to say "Step
1: make sure it is legal to do this".

As you've pointed out, there are plenty of places where it is perfectly legal
to do this. My guess is that it's harder to find a profit opportunity, though,
because the more profitable use (legal use as a short term hotel) is already
priced into the unit.

I suspect that one reason airbnb is so profitable in areas where it is not
legal is that the restrictions on short term rentals suppress the sale price
of the unit. So you buy a unit that is cheaper precisely because it is illegal
to use it as a hotel, and then you profit by using it as a hotel. So in cities
with very strict zoning and tenant protection laws (like SF), I guess they're
selling the assumption of risk.

~~~
anoncowherd
> As you've pointed out, there are plenty of places where it is perfectly
> legal to do this.

.. Why the everloving fuck would this be illegal? What sense could it possibly
make? -You have some property and you're letting someone use it for a fee.

I get that this actually _might be_ illegal somewhere - I'm just trying to
highlight the fact that it would be absolutely fucking insane.

~~~
hansjorg
> What sense could it possibly make? -You have some property and you're
> letting someone use it for a fee

This is the extraordinarily naive libertarian position. Most people would not
welcome a brothel as their closest neighbor for example.

~~~
faster
Funny that you should mention that. My next door neighbor put herself through
nursing school on her back, and by renting her place to others in the same
profession when she was at school. They were far quieter and less disruptive
than the aging couple on the other side of my place.

If it had been put up for a vote, I probably would have voted 'no', but the
reality was not what I would have expected.

This of course is not relevant to the discussion, where someone bought a condo
which requires accepting the declaration, bylaws and rules and regulations of
the HOA. If those rules, which the buyer accepted, forbid short-term rentals,
then there's no excuse for doing it anyway.

------
rll
If enough people do this it will be the end of Airbnb. This is one of the
patterns the state of NY is using against Airbnb while Airbnb is arguing that
the service is intended for people occasionally renting out their primary
residence. If the state is able to prove a significant number of people used
this model Airbnb is done in NY and I fear other states will follow.

~~~
dave5104
I'm not that familiar with the Airbnb situation in NY. Why is this a "bad"
pattern that NY state has deemed to be a violation of the law?

~~~
rll
There are a number of reasons. Most states have laws regarding how temporary
rental properties (otherwise known as hotels) are zoned. You can't suddenly
turn a building zoned for residential use into a hotel without getting it re-
zoned.

Also, NY specifically worries that it will change the local housing market. If
investors buy up enough local properties and turn them into mini hotels,
locals may be priced out of these neighbourhoods and those neighbourhoods will
in turn suffer.

Plus there are the complaints from the locals. Having a neighbour rent out
their place to tourists a couple of times a year is not a big deal, but if it
happens every single week it gets annoying. You never know who is coming and
going and they aren't always all that worried about noise, garbage, etc.

And just to clarify, I think the state is right to be concerned about these
issues. But at the same time I would hate to lose the ability for someone to
put their primary residence on a site like Airbnb a couple of times a year.
This helps visitors and the residents without significantly hurting anything
else in the equation. Things only start to turn sour when enough people create
dedicated Airbnb properties as investments.

~~~
_pmf_
It's a bit sad that you have to explain this to grown up people.

~~~
atwebb
I'm not sure that residential/commercial zoning laws in US states falls under
the umbrella of general knowledge.

~~~
_pmf_
There's nothing US specific about zoning laws. They most probably preceded the
founding of your silly colony.

~~~
Symmetry
The first modern zoning was in 1916 in New York for height related reasons.
Great Britain didn't start zoning until 1947.

EDIT: I was sort of surprised that was the first zoning, when I just looked it
up. I always mentally associated zoning with 1920s progressive social
engineering.

~~~
wavefunction
HAHA, take that ole Blighty!

But really, the whole idea that AirBNB should be able to ignore established
zoning is another example of why I consider the "sharing" economy to be the
"taking" economy.

Sharing space peacefully is exactly what zoning is aimed at.

~~~
mahyarm
Zoning is still a contested topic, it has been blamed for enabling much of the
NIMBYism in America for example. Another one is creating huge traffic and
commuting situations that don't need to be there by putting business in one
zone, housing in another and forcing people to move between the two every day.
It makes such things as shopkeeper residences where the shop is on the first
floor and the family who manages it lives on the second or third floors
significantly more work.

~~~
wavefunction
My bustling city (one of those "top US cities to move to that isn't the Bay
Area or NYC") has tons of first-floor commercial, second floor residential
developments, including a fair number of "row houses" zoned commercial first
floor residential second and third floors where both the commercial space and
residential areas are owned by the same owner. There's a huge push to build
high density in this city that was formerly pretty much all low-density ten
years ago.

These are all new builds in the past 8 years.

------
tptacek
Exactly what is the difference between what this person is doing and running
an unlicensed extended-stay hotel?

~~~
tedunangst
They're disrupting an obsolete industry.

~~~
JackFr
No, travel agents were an obsolete industry.

Hotels are not obsolete, AirBnB is 'disrupting' the industry by ignoring local
laws and regulations. It may be that these regulations exist to protect an
obsolete business model but it also might not.

When your path is blocked by a fence before you tear it down, its a good idea
to understand why it was put up in the first place.

~~~
maxwell
I worked in hospitality for 5 years, and right now I'm staying at a hotel in
downtown Vegas, a few miles from the author's Airbnb place. Hotels are
obsolete. It's not the business model, short-term housing and hospitality
certainly have no risk of obsolescence ever, it's the industry.

Service sucks, rooms suck, tech really sucks. You have awkward kids in bad
suits and clip-on ties at the front desk who're trained to use Romantic
terminology over Germanic. That's at the better places.

I'm staying at the original, and seemingly one of the better, Fremont Street
places, in town for a quarterly meetup for the startup I'm at. The wifi costs
$12.99 a day, they throttled my connection the one time I used it trying to
make a viddy call, and last night I was connected to the router but nothing
was coming through. I've had similar experiences around the country, for the
past 10 years, and seen little improvement. I convinced the hospitality
company I was at, and some that I consulted with, that the wifi is as
important as the running water, but you can tell most don't feel that way.

I got in the other night around 10pm, went to a touchscreen terminal they
overpaid for, and I haven't seen a single person use over this week here, but
didn't have a confirmation because someone at the company booked it, so used a
phone sitting next to the kiosk to call a representative, who directed me
around to find a desk that I'd passed and disregarded because it was labeled
as "Tickets", then spent a good half-hour getting checked-in because of
various confusion and technical glitches and dozens and dozens of key-presses
in their property management system.

Then, there are the guests. As soon as someone stays at a hotel, they think
they're entitled to act like an asshole. It seems to usually boil down to them
feeling like they overpaid, regretting the decision, and taking it out on some
staff member. They know that the people around them are either other customers
or employees, and treat them with ambivalence because there are no
consequences or accountability. Guests can review a hotel, hotels can't review
guests.

A couple weeks ago, I stayed at an Airbnb place for the first time, outside of
Boston. We texted the host when we were coming, took the T, ending up on an
awesome light-rail car at the end that I didn't know about, walked through a
beautiful neighborhood, knocked on the door, chatted with the host for a
minute, and were shown to our room. Totally painless, which made it easy to
feel gracious and respectful of the host and his property and neighbors. Had a
great breakfast at a local place, because good places are in residential
areas. All you can find around hotels are crappy chains. You know, because of
the zoning. And that good places don't want to deal with pissed off hotel
guests.

The fence is coming down. Hotels are doomed.

~~~
rdl
I love hotels (specifically, Starwood and Inter-Continental, especially in
Asia), and spend about 50-100 nights/year in hotels.

I infrequently use VRBO to rent a house somewhere without great hotels (and
have tried AirBnB but outside SF, never worked out really well), but
otherwise, the hotel experience is basically awesome for me. There is one set
of tweaks I'd like to do (maybe to make a brand-within-a-brand for Westin or
something), where guests get a standard network config in any room once they
sign in, with MFC device in-room, VoIP phone, their own wifi settings, etc.),
but otherwise it's awesome.

Being able to basically trust an international 5-star hotel to have a certain
level of physical security and functionality (or to be able to add it) even in
a place like Myanmar or Pakistan is great.

Being able to show up at 0200 and reliably know there will be people to check
me in, that my stuff won't get stolen, that I can leave luggage and equipment,
that a meeting with ~16 people won't be a problem with short notice, that the
building meets basic fire safety, ...

The crappy hotels like Motel 6 or Super 8, sure, suck, but I avoid those.

~~~
ghaff
Yep. I haven't done much with AirBnB and its ilk but I do often try to go the
B&B route rather than the-big-chain-hotel (or even the smaller not-so-chain-
hotel) route. But, as you say, especially for business travel, a lot of the
time I just want something predictable that meets a certain standard. I don't
want to be concerned that if my plans change and I don't get in until 9 that
there won't be anyone there to let me in, etc. I frankly just don't have the
mental energy to deal with on-offs for the whole 1/3 of the year or so I
travel.

~~~
warmwaffles
If the only thing that is causing you grief is the check-in check-out process,
it is worth noting that some owners do try to streamline this process as much
as possible. I for one try to keep contact with the person down to a minimum.
Because you guys are right, I don't want to talk to anyone after 12 hours of
travel.

------
petercooper
_It’s possible to find a nice apartment in a major city for less than $50,000.
The place I found was in Las Vegas and it cost $40,000._

Wow, I had no idea things were that good/bad. Here in the UK, I deliberately
choose to live in a cheap part of the country and you'd still be talking $120k
or so for an equivalent 1 bed flat. This really illustrates to me why efforts
to turn various areas in the US into "mini Silicon Valley" areas could
actually work.. when you can have a good, secure base for a year's salary, it
surely changes your attitude to risk.

I don't think there's anywhere in the UK you could buy a house for under $100K
where you wouldn't be getting bricks through your window or dealing with gangs
of chavs on a daily basis. I wonder if this goes part of the way to explain
why Brits are far more reluctant to take risks in the entrepreneurial sense..
you gotta be on a darn good salary to have a place of your own _anywhere_ on
our isles.

~~~
jongold
I live in London. I'm looking at >$600k for my first apartment. Jon's
apartment in Vegas would be a small fraction of my deposit.

Ugh, I feel sick. And need to move.

~~~
spokenn
Aren't you guys in a bubble?

~~~
jongold
Maybe - I can't see prices ever dropping significantly though. Maybe 20%, but
they'll always be intimidatingly expensive for first-time buyers.

~~~
dougabug
Lehman Bros collapsed because their computer models excluded the possibility
of a major decline in real estate prices. Investor confidence is a contrary
indicator.

------
patio11
If you're thinking of doing this but aren't sure about the legal side of
things, consider buying a duplex or quadplex and living in one of the units
yourself. This will let you qualify for owner-occupied rates on the mortgage
and insurance, likely insulate you from a condo agreement which would forbid
renting, and means that you're the primary party who'd suffer from guest
misbehavior, which strikes me as socially optimal. Also, if you tire of Airbnb
transient relationships, duplex units are fairly easy to rent out
"traditionally."

Downside: more capitally intensive, and requires you to be OK with owning a
house.

This is (pre-Airbnb) one of the classic hacks for middle class Americans to
start real estate businesses, since you can fairly easily get sufficient cash
flow and/or equity after running a duplex for a few years to get a bank to OK
you adding other rental properties.

------
atwebb
Good, concise write up with real numbers which is nice. But the woman who is
doing all that cleaning and contact work for $200/month is the one making this
possible (so it seems) and that could quickly eat up profits (though the ROI
is great enough that there's lots of room there).

EDIT: Also, is there currently an AirBnb manager market? Similar to the
cleaner/manager he has, it would be great for people to invest remotely. Do
research, fly in to inspect potential properties, purchase and give the
cleaner/manager a nice cut? I know there are property management companies but
there seems to be some extra finesse (and possible discretion) needed here
that I haven't seen from PM companies before.

~~~
brightsize
In a couple of the Airbnb places I stayed at, which had remote owners who I
never saw, the manager was really just a minimum-wage sort of person who met
me, oriented me, and periodically came in to do some light cleaning (I was a
long-term (months) tenant). In Berlin, one of the guys had the gig as a "mini-
job", and seemed quite unhappy when I tried to do any of the housekeeping
myself - it was taking EUR out of his pocket by cutting his hours. I would
think that it would be very easy, and cheap, to find assistants like this in
the States who were not licensed PMs but were just plain folks.

~~~
camus2
and that can sue you when things go south...

------
candybar
This has to be illegal, right? I can understand renting out your vacation home
or apartment when you're not using it, but buying a home/apartment to run
essentially a mini hotel has to run afoul of zoning/licensing/regulations in
most places

~~~
philsnow
wait, what's the functional difference between those two? intent?

~~~
candybar
It's like the difference between occasional bets between friends on sports
games and being a professional bookie.

------
noname123
Hi j0ncc,

Thanks for sharing. I was wondering if you could shed light on your inventory
risk, meaning do you find that the market price for your rental and nights
reserved is highly dependent on the economy, tourist season and weather
conditions or fairly resistant to external circumstances. Furthermore, is your
product fairly fungible meaning if you have had to deal with competitive
pricing in your locale and/or have had repeat customers.

Also, I'm guessing given the relative low price of your rental income and your
buying in cash; real estate fluctuation risk is relatively low. Does your
purchase qualify as a first time home-owner tax credit?

For comparison, a $50K investment with 8% market annual return will compound
to $68K in 4 years or $92.5K in 8 years. Using cash-flow discount model,
assuming that your real estate property value stays the same and annual income
the same, you spend $50K to yield $90K ($40K in illiquid property value and
$50K in generated cash) in 8 years, making your net present value of your $50K
investment to be discounted at $21.8K. Just food for thought.

~~~
oijaf888
I don't think he would be eligible for the first time home-owner credit since
its not owner occupied.

------
wildgift
That's messed up for the neighbors. Please don't do this.

~~~
adrianpike
I don't want to come across as being facetious, but why? At least in my
building, there's a large percentage of neighbors who I don't know at all -
whether they were renting via Airbnb or owners of their condo, it doesn't make
a huge difference to me.

~~~
gaius
Because people don't behave in a hotel as they do at home - they're on holiday
after all, so they might come back late drunk, they might want to party, they
might make a mess in the hallway. Different people, every night. An unlike an
owner, they could be anyone, or bring anyone with them. Basically, you are
externalizing all the downside onto your neighbours, while pocketing the
upside. It is no surprise that AirBnB started in America.

~~~
icelancer
Downvoted for the unnecessary nationalistic swipe.

~~~
gaius
I could be American myself, for all you know.

~~~
justin
But, you probably aren't, as you went to college in the UK. So please refrain
from your crass generalizations about countries.

~~~
gaius
That doesn't mean anything these days. UK universities are filled with
students from all over the world.

------
shawnee_
_Find a great property manager / cleaner -- Without one of these doing this
remotely would be impossible. I managed to find a great local cleaner on
craigslist. She charges a flat fee of $200 per month which covers unlimited
cleanings._

And she's probably illegal . . . But even if she's not illegal, how can this
"property manager" live with himself, taking advantage of people who don't
"know" enough (whether of the language or minimum wage laws) to understand
that they are being taken advantage of? I was born in Vegas and have seen what
that city has become -- if there's one thing in abundance there it's under-
the-radar immigrants.

This post represents everything that is wrong with the property management and
rental industry:

 _White man want easy money. White man charge high rents. White man hire nice,
busy ladies who no speak English to do hard work cleaning. White man hire
nice, fast men who no speak English to do hard work painting and carpet
replacing. White man take profit for himself and give teeny bit to people who
no speak English because they no understand how hard it is to make easy
money._

His cleaning lady is even laundering towels and sheets for $200 per month? How
nice of her.

 _I have about 3 or 4 sets of sheets and towels. This way the cleaner doesn’t
need to wash everything in the 3 hours between guest check in and check out.
They can simply take all the dirty sheets and towels home, wash them, then
next time they swing by the apartment have a clean set of everything ready to
drop off._

~~~
Shinkei
It's even more abusive because the listing says, "$35 cleaning fee." If he
rents it to 6 different people, he has already recouped his costs and the rest
will be profit.

Edit: I don't think I communicated my meaning well here. Bottom line is,
Hilton doesn't charge me to clean the room--it's a cost of doing business and
is rolled into the cost of the room. The practice of adding on a 'cleaning
fee' reeks of profit grabbing... similar to an airline charging for checked
bags, except that this is a fee that is a requisite for staying in the room.

~~~
lxmorj
Seriously? It's abusive because he makes a profit and doesn't do all the work
himself?? Watch out, all of business, ever!!

~~~
Shinkei
It's abusive because he is passing the cost of cleaning the place to the
user... which in fairness should then be variable based on its usage. 1 OCD
person gets charged the same fee as multiple slobs that brought their pets and
smoked in the apartment. That 'fee' should be rolled into the rental cost/cost
of doing business. He is using it to augment his profit.

~~~
icebraining
_It 's abusive because he is passing the cost of cleaning the place to the
user..._

All costs of a business are passed to the consumer. Where do you think the
money a business makes comes from? Sure, if there's a cost increase, a
business can decide to lower the profit margin to avoid increasing the price,
but the costs are still being passed on.

 _which in fairness should then be variable based on its usage_

Why? When did it become wrong to charge flat fee for a service? The cleaning
lady is also charging a flat per hour fee even though it's cheaper for her to
do a single 3-hour job instead of 3 1-hour ones, is she being unfair too?

Nobody who offers a service can or should be required to charge proportionally
to the costs. It's irrational to demand that.

 _That 'fee' should be rolled into the rental cost/cost of doing business._

I suggest he eliminates the cleaning fee and raises the prices by $35/visit.
Apparently the morality of a fee depend on whether it's itemized.

 _He is using it to augment his profit_

The nerve.

------
bluedino
Just buy houses in Flint or some other lowly rust-belt city. Buy the property
for $5,000, fix it up a little (wait to see why) and then find a renter for
$700/month. If you're lucky they'll be section 8 so you don't really even have
to worry about them skipping out on the rent.

Worst case you spend a few months evicting them and then spend a couple grand
fixing it up after the house is completely trashed from piles of trash and
holes in the walls and urine and feces in the floors. Then the next family
moves in and the cycle repeats.

~~~
genwin
There's an article online about a guy who did this for dozens of properties in
Detroit. It didn't work out so well because rent is more like $400 a month.
The typical fix cost on a $5K property is $20K because of tax payments in
arrears and liens and so forth.

------
ChuckMcM
Thanks for this, I wondered what the details might be like.

I don't suppose you've had the County come after you for occupancy tax yet
have you? While in general there are a _lot_ of hotel rooms in Vegas
(something like over 140,000) the hotels are a pretty strong political block
and have been a thorn in the side of some folks who went the VRBO route.

~~~
a8da6b0c91d
Hotel stays in Vegas are also very cheap. I'm rather surprised he gets a price
that lets this work.

~~~
genwin
Yes, $90 is more than I usually pay in Vegas for a quite nice place.

------
venutip
Stuff like this makes me sad. When I first used Airbnb three years ago, it was
easy to find a real person letting out their room or apartment to make some
extra money. Nowadays, it's very difficult to tell who is a real person and
who is just like this guy: an absentee landlord for a place they've never
lived in. It's an abuse of the system, and it's people like this who are going
to get Airbnb shut down. Blame them when it happens.

------
mmagin
Does Lockitron work for someone who happens to not have mobile phone service
where the rental is? As convenient as it is, it seems like short-duration
travelers to a country don't always bother with having a working mobile phone
where they're going. If so, I'd hope it's obvious in the listing.

~~~
toomuchtodo
You need a working mobile phone with service, but it doesn't need to be a
smartphone.

[https://lockitron.com/help/mobile#smsaccess](https://lockitron.com/help/mobile#smsaccess)

EDIT: Included more detail about needing a working mobile phone with service,
due to ahlatimer.

~~~
smallegan
His question was does it work without having service. In other words offline
mode. I think the answer is that no it does not.

~~~
toomuchtodo
I thought I answered that, while also providing additional information. I
apologize if that seemed rude in any way.

~~~
ahlatimer
You did not. The OP was asking if you had a phone in the equivalent of
"airplane mode" or just no service where you are, would Lockitron work? You
have a mobile phone, which meets your criteria, but Lockitron would not work
with SMS access, since you can't send an SMS. Would it work for smart phones?
I have no idea. The page you linked to didn't say one way or the other (or if
it did, I didn't see it).

------
rubyrescue
That's roughly a 25% annual return. nice. We're renting out our place in
Buenos Aires. We're clearing 10% return and I use it when I go back there to
meet with the team. Stays about 80% -90% full, great location. Guests love it.
My wife (who doesn't work full time) manages it remotely. It's been a very
positive experience and my takeaways are similar to the writer's. It's not
passive income, but it's steady...

~~~
conanbatt
Would like to know more about this as an Argentinian!

Airbnb prices are so steep in buenos aires, how does it make sense for
tourists? Even Zonaprops has way cheaper places for weeks and such.

In argentina Airbnb is not going to get regulation issues ever..

Would you mind if i gave you my email? Plus we might know each other already.

~~~
rubyrescue
Sure my email is in my profile... it's $110 US/night but 4 can stay. Cheaper
than a hotel and separate bedrooms. So compared to a hotel, way cheaper. Also,
safer than zonaprop or BYT where you have to show up w/$700 cash for a week
PLUS $700 deposit. Then they argue w/you about the deposit, etc...

------
samspenc
$200 monthly for a local cleaner who does unlimited cleans AND handles the
bookings/inquiries??? That's quite a steal!

~~~
wildgift
she's probably getting ripped off in this deal.

~~~
lxmorj
She probably signed away her right to stop working for him, and is now stuck
working $2 per hour! It can't be that she's a free person able to choose to
work for a given rate. She must be a victim!

------
andr3w321
Could someone explain to my ignorant self why zoning a property as hotel and
paying hotel tax is necessary? What is it for and why was it created?

It seems like a lot of these new startups are the same old business model but
skirt costly taxes and regulation (Uber for taxis, Airbnb for hotels, Bitcoin
for money transfers)

~~~
chadwickthebold
I believe hotels are regulated and inspected? Not all taxes and regulations
are invalid on principle.. Regulations on hotels, car services, and money
transfers are usually sold on being in the best interest of the people -
protecting their health, safety, and preventing them from being scammed.

~~~
aetherson
That is the theory. However, these sorts of local business regulations are the
kinds of things that I think you should be particularly skeptical of. A few
points:

1\. It's hard to imagine that there's a ton of democratic oversight over hotel
regulation. Prior to AirBnB, did anyone EVER, in your life, suggest to you
that you should be concerned about the specifics of hotel regulation in your
town?

2\. These are local laws. Smaller government components, like city, county,
and state, are probably more vulnerable to being captured by medium or large
businesses than the federal government is, due to less sophistication and
professionalism of the politicians (especially) and bureaucrats (less so).

3\. A big hotel has a lot of incentive to try to corrupt local regulation to
quash competitors and shore up their business. It directly affects their
bottom line.

4\. These regulations have accreted over time, leading to complex regulations
that have lots of loopholes and potentially anachronistic components to them.

------
jeffandersen
Was there anything specific when applying for insurance? Did you need to
disclose it was being rented out or anything (I'm assuming if you had to this
would affect premiums)?

~~~
crbnw00ts
You must be kidding! This is "disruption" we're talking about, after all. That
means all precautions, regulations, contingencies, licensing, and everything
else are _out the window_ , full stop. What are you, some kind of last-century
luddite who hates progress? What do you want, for the bad old pre-startup ways
to contaminate things and spoil the party? "Insurance" is for non-
entrepreneurial losers, and no one cases about them, because they're not
really people anyway!

Just do a textual search for "insurance" in the article. Zero results found.
Yep, it's "disruption" all right! Full speed ahead!

~~~
woofyman
The only way to buy insurance would be to lie and commit fraud. Home owners
associations also require insurance.

~~~
HeyLaughingBoy
Why would he need to lie? Landlord insurance is trivial to get and IIRC (it's
been a few years) cheaper than regular homeowner's insurance.

~~~
woofyman
You can't buy insurance for an illegal activity.

------
whyenot

        Average monthly revenue: $1,634
        Rough monthly profit: $1,134 (after cleaning, bills and other expenses)
    

subtract $200 for the monthly maid service, $196 for Las Vegas' 12% hotel tax.

HOA fees, utilities, cable, and everything else is only $104 per month?
Something doesn't add up here. (But I'm a botanist, not an accountant, so I
may not understand something)

~~~
mcpherrinm
I'm not familiar with AirBnB but I'd guess there's no hotel tax being paid?

Assuming a $300 for utilities + HOA fees sounds believable

~~~
whyenot
I just had a look at his listing on AirBNB and he charges a $35 cleaning fee.
That also shifts the numbers into the more believable range.

------
skizm
This guy's twitter handle is @jon. Color me jealous.

Smart idea though. I've heard of some people who do this in NYC on a larger
scale and all of them have reported raking in the cash and even hiring
managers so their income is pretty much entirely passive (they just deal with
the manager(s)). Seems like a pretty sweet gig if you have the capital.

------
dougabug
As a condo owner and resident, the last thing I want is to find myself living
in a boarding house. My personal belongings, safety, privacy, the quality of
the grounds, and the value of my property all seem to me to be threatened by
AirBnB's take down of local regulations, taxes, and HOA covenants. As an
individual, my rights are eclipsed by disproportionate corporate power. What
are the realistic prospects for Class Action Lawsuits against AirBnB and other
scofflaws ala the States vs Big Tobacco?

------
jbarham
If anyone's interested in creating HDR photos for real estate, check out my
startup TurboHDR ([https://www.turbohdr.com](https://www.turbohdr.com)) which
is a service to generate HDR photos in the cloud.

Strictly speaking it uses "exposure fusion" which isn't true HDR but the end
result is similar to a tone-mapped HDR image and is generally more realistic
with fewer artifacts.

FWIW it's written in Go and hosted on Google App Engine.

------
akennberg
How are you promoting Lockitron when they are still not shipping?
[http://blog.lockitron.com/](http://blog.lockitron.com/)

~~~
eru
So the whole post is suspect?

~~~
spokenn
That's what I'm thinking.

------
malthaus
Getting the cleaner to manage 'guest relations' for this cheap is probably a
great deal not easy to replicate.

Handling them poorly could quickly result in bad reviews.

On the other hand, those kind of profits are really just short term until the
market catches up. People are not stupid to not take easy profit and / or
governments will crack down with regulation and taxes.

------
kirpekar
I wonder what the monthly rent is there. It might just be a better idea to
skip abnb and rent out the place over a 12 month lease.

------
whyenot
I wonder what the neighbors think.

~~~
woofyman
When the HOA finds out he's breaking the terms that he agreed to when
purchasing the condo, they'll fine him per offense. Then get a lean on the
apartment.

~~~
JonFish85
Nitpick: lien.

But yes, if I'm a neighbor there and I find out this is going on, I get angry.

~~~
woofyman
I wonder is the HOA would have the legal authority to change the locks ?

~~~
damoncali
In many cases, the HOA can do all kinds of stuff- like fix your house and bill
you for it. If you don't pay up, they slap you with a lien.

------
jkaljundi
I wonder could you buy a car and rent a guy and then rent them out on Uber?

~~~
iends
This is already being done, there are stories about a driver starting with his
own car and building up a fleet of drivers/vehicles.

------
macspoofing
Stuff like that is what's going to kill AirBnB. Sooner or later they will have
to crack down on this, because if they don't the municipality will, and if
they won't (and they will), HOAs will.

------
callmeed
Shouldn't he be paying tax? I believe hotel/bed tax in Las Vegas is 12%. On
$19,613, that's $2,353.

------
jimt67
So you have roughly, a 27% ROI for your first year -- which seems good. Have
you accounted for: Income tax? Property tax? Insurance costs? Legal risks:
(i.e., you potentially in violation of law)? Liability risks: (i.e., something
happens to a tenant)? Property damage risks (may be included in cleanup
costs)? Labor costs (i.e., your time)? Property value
appreciation/depreciation (could be a positive)? After that is all taken into
account, I wonder if you end up netting more from a passive investment.

------
NOVAlawyer
Under the Las Vegas Code of Ordinances (assuming the condo is in the city),
the issue is going to be whether the guy is considered an "operator" of "an
establishment that rents or holds out for rent guestrooms on a daily or less-
than-weekly basis." In that case, he needs a license and needs to pay taxes.
See:
[http://library.municode.com/HTML/14787/level2/TIT6BUTALIRE_C...](http://library.municode.com/HTML/14787/level2/TIT6BUTALIRE_CH6.46HOMORO.html#TOPTITLE)

Beyond that, all that really matters is the "Covenants, Conditions, and
Restrictions" (CCRs) document that is recorded in the land records when the
condo was created and any other local and state regs governing renting of
rooms.

The Rules and Regulations statement about short term leases is easily
overcome. Just create an operating company that you lease the condo to under a
long-term lease - run all the money through the operating company, pay the
rent to the owner, and distribute net income. The only "lease" will be the
long-term lease to the operating company. Again, there may be local regs about
this (or the state's Landlord-Tenant statute:
[https://www.leg.state.nv.us/NRS/NRS-118A.html#NRS118ASec180](https://www.leg.state.nv.us/NRS/NRS-118A.html#NRS118ASec180)),
but the "prohibition" under the Rules and Regs is easy to deal with. Again,
what matters are the CCRs that are recorded in the land records. If they allow
it, my bet would be that this guy's scheme is fine.

Plus, I'd also bet that he talked with an attorney about this. If he didn't,
he's a damned fool.

------
wbeckler
It sounds like travelers to Vegas, the hotel capitol of the US, are savvy
enough to check airbnb. And VRBO it seems as well. This is a big pain for
searchers. Hipmunk shows each of these, but not very well as they only have a
handful of the 1000s of listings from Airbnb. We've tried to help with this at
[http://AllTheRooms.com](http://AllTheRooms.com) by aggregating everything we
can find.

------
rytis
_I live in constant fear of getting a bad review._

I wonder when is someone going to come up with an idea how to fix this. As far
as I can tell there's not a lot a supplier on airbnb/ebay/etc can do about
them. It's all too consumer centric... My subjective opinion is that most bad
reviews are unwarranted, left by customers that have unrealistic demands.

~~~
steveisaac
TripAdvisor and others came up with a good solution a while ago - they let the
property owner write a reply to a bad review, and post the reply right
underneath the bad review.

~~~
pmiller2
That's the same thing eBay does. You know what? I never look at them on eBay.
All I ever look at is the percent of positive reviews.

~~~
itsybitsycoder
Being able to post a reply is a solution to a one-off or occasional bad review
having an unfairly negative impact. If a large percentage of the reviews are
bad, the best solution is probably to solve whatever problems are causing the
bad reviews.

------
kayoone
isnt he missing income taxes? In germany you would have to pay up to 42%
income tax on the profits, depending what other earnings you have.. Still an
okay return though.

~~~
kayoone
adding to this: if hed use the profits to pay off the loan on the apartment,
he probably wouldnt need to pay income taxes.

------
yannisp
Hmm I don't see any mention of equity here but only profit. If you're able to
cover the cost of mortgage + HOA/property tax + expenses of running the place
then the equity is the profit. Assuming the price of the place is the same in,
say, 10 years. Then you've built up 10 years worth of equity buy having
someone else pay your mortgage...

Of course if this place was bought cash, you could have done the same thing in
reverse. Take that money and loan it to an individual to buy a house. The only
difference is there's no extra profit to be made but also no added risk of not
finding clients, repairs, etc. (unless someone wrecks the place and it becomes
worthless)

~~~
jack-r-abbit
I could be wrong but I got the impression he bought it outright and not with a
mortgage. But even so, if his mortgage was a traditional 30/yr fixed loan, his
monthly payment would ridiculously low. And then he is free to massively over-
pay his mortgage payment each month... which is going to pay it off in about
the same 4 years he mentions in his write-up.

------
TeeWEE
This is illegal in the netherlands.

[http://nos.nl/op3/artikel/562868-airbnb-mag-alleen-nog-
met-t...](http://nos.nl/op3/artikel/562868-airbnb-mag-alleen-nog-met-
toestemming-van-de-vve.html)

------
southphillyman
I think this is pretty common already.... I used ABnb twice last week and both
hosts were doing this....one of them currently lives in Nigeria actually. I
googled one of the condo's I was staying in and the rent was around $1300 a
month, I then looked at the calendar for unit and realized the rent would be
paid with about a week and 1/2 of bookings which was present. It's a nice
hustle. I'm thinking about doing it though I live in the NE and a comparable
unit would run me $2000+ a month I think. I need to do some research but this
posting gave me some more ideas

------
j-m-o
I really like the mention of Lockitron, the whole 'keyless entry' idea really
is going to be the future of AirBnB rentals.

I have several customers who are AirBnB hosts who use my service, Ringo [1],
which lets their guests into the units via the apartment buzzer. That combined
with Lockitron, and you never need to worry about key transfer again. You can
effectively live on a different continent than your AirBnB property.

[1] [https://www.tryringo.com](https://www.tryringo.com)

------
pasbesoin
Having had more than my share of asshole neighbors, I'd be very worried about
their representation in such a constantly churning population.

And I would have little sympathy in compelling the local authorities to
enforce any and all laws and regulations that would put a stop to the
resulting disruption.

I see far too many instances, today, of people thinking of and acting on "me,
me, me", while ignoring those around them whom they are screwing over.

------
pallian
Thanks for posting this. I've been debating getting one of these micro homes
([http://www.indiegogo.com/projects/nomad-micro-home-easily-
as...](http://www.indiegogo.com/projects/nomad-micro-home-easily-assembled-
under-30k)) and setting it up in Whistler to do exactly the same thing as you
are... Airbnb it year round.

~~~
johnmurch
I love these design/idea. I wonder if you could setup micro-condo living or
"ski bum" living by buy a few of these and small parts of land. I could also
see something like this being ideal for a small beach house getaway as you
won't be out $XXX,XXX or even MM if it gets taken by a hurricane or storm.

------
bayesianhorse
Sounds risky. Four years is a long time. The price of the property can fall
sharply, cities might decide they don't want "commercial" one-room hotels, and
finally a renter might wreck the place or sue you for something.

Yeah, I know, reputation system, rare chance, but rare chances is the kind of
thing you often don't want happening to 60K investment!

~~~
jannotti
Four years is a ridiculously quick time to recover the entire cost of an
apartment, and that limits the risk a lot. For example, if this gets stopped
somehow in the next year or so, he would only lose out if property prices also
fell more that 25-40% in that same year or so. The chances of both happening
at once seems very, very small to me.

------
mariusz331
We're building a service called Airenvy (airenvy.com) that caters to short
term renting on services like airbnb. We could have been tremendously helpful
to the author had we been in the Vegas area. We are growing rapidly in SF and
our property owners love all the money we're making them! On average we
increase income by 30%!

------
mceoin
Haha - Nice dude!

I scraped AirBnB last year to compare it to local prices with the same intent
last year to automate. Totally do-able and profitable. Local tenant & housing
laws are the most important thing to keep track of IMO. You can outsource the
Q/A with guests.

------
apierre
I wish I could do the same in London. But in that price range, I can only rent
out a closet.

------
smallegan
How do you go about insuring this? As a second home or as a rental property?

------
realworldview
HackerNews? Is this like saying I sell things on eBay, because it's the new
world economy? I would be more interested to hear about the tax situation than
furniture delivery times.

------
jayferd
"I'm buying up this incredibly valuable resource to lease it to people who
only need it temporarily so I can turn a profit! Cool, right?"

~~~
lxmorj
Quick, pick a business where that isn't the way things work!

Guy: 'I run a Valvoline' Douche: 'OH! So you BUY UP all the mechanics and then
CHARGE PEOPLE to access them?!' Guy: 'Uh, yes. This makes me, the customers
and the mechanics better off, dipshit.'

------
pouzy
50k for an appartment in LV ? That sounds way cheaper than I expected.
Impressively cheaper. Would you consider making it your full income at that
pace ?

------
sn0v
I wonder how he deals with unruly guests.

~~~
naterator
More specifically: What if they completely trash the place? How remote is he,
and could he travel to do the repairs on sudden notice? Could legal wrangling
over the damage make it no longer worthwhile? What about future guests who are
displaced by a damaged and unlivable apartment? What would you do if your
neighbor became fed up with unruly guests and tried to do something about it
(legal or otherwise)?

------
argumentum
AirBnB + Lockitron = major win, always surprised AirBnB hasn't offered a
package like getaround does.

------
mathattack
I think this is great. Vegas is the perfect spot. It was overbuilt, there is
lots of extra supply, and lots of tourists. Great they made it happen.

I would think there are two dangers:

1) It can take a lot of time, and time is money. If you make 200K/year, your
time is worth ~100/hour. Spending 100 hours on this takes away a 10K profit.

2) You are the on the hook for big surprises: Theft, something breaks, etc.

But again, great for the OP!

~~~
nilkn
> If you make 200K/year, your time is worth ~100/hour. Spending 100 hours on
> this takes away a 10K profit.

Stuff like this doesn't make much sense if you're salaried. People like to
break down salaries by the hour, but it's just not true. You can put in all
the overtime you want and not see an extra penny of profit, at least not
directly. You'll only benefit from it if you actually get a promotion or raise
as a direct result of the extra work.

If you're contracting, though, and actually charge by the hour, then this
calculation makes sense.

Also, this is tangential, but $200k is hardly an even remotely typical salary
for a developer in the US.

~~~
mathattack
Ok - 100k and it's 50 an hour. You could be freelancing with that time. Unless
you get enjoyment out of rebuilding homes and customer service. In that case,
knock yourself out and do 2 more. Or plow the earnings into a housing empire
and do it full time.

------
jwblackwell
Wow $40,000 for an apartment that provides ROI in one year. if only you could
do that in London...

------
anishkothari
very interesting post, it's always great to read about other sources of
income. I wonder if renting on airbnb is more lucrative than renting in
general.

~~~
Avenger42
Depends on how quickly you can re-rent. If you sign a long lease, the landlord
typically offers something lower than "market rate" in exchange for lower risk
and less time un-rented.

One thing he doesn't say is what percentage of the time the room was rented;
he only says that it wasn't always making him money because he and his friends
occasionally stayed there.

~~~
anishkothari
That's true about re-renting. I'm guessing he chose AirBnB over traditional
renting so that he could stay at the place once in a while too.

------
acuozzo
I still don't "get" Airbnb. How can anyone be comfortable letting a complete
stranger into their home?

I'd freak out if someone were to start fiddling with my electronics, perusing
my Laserdisc collection, etc.

~~~
gotrecruit
i think the idea is that you do not keep valuables or expensive things in the
apartment when there are guests there. either that, or perhaps you also live
in there at the same time and only rent out a room or a couch, thus mitigating
some of the risks as well.

------
pooky666
I think this article was just an ad for Lockitron.

------
wtvanhest
Why did you choose to do this remotely?

~~~
iends
He probably lives in an area that is less touristy.

~~~
kdot
He lives in SF-- high property values

------
arb99
A house for 40,000 usd? Thats cheap...

------
alttab
Its called a timeshare.

------
ye
So what happens when

1) Your apartment gets trashed. They break your walls, pour cement down your
drain, break the furniture, etc?

2) Tenants refuse to move out. I'm sure there are all kinds of laws protecting
them, and it's very hard to kick them out even if they aren't paying.

3) Somebody gets injured on your property (slips in the bathroom and breaks an
arm), and sues you for a shitload of money.

Also, you forgot amortization in your calculations. Things will wear and tear.

------
guiliop
Too bad it's illegal.

