Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12% monthly churn rate .
It seems to me like this is the economics problem of a return on capital (Airbnb) vs. return on labor (Uber, etc.) playing out in the on-demand space.
By contrast, Uber has to fight to win each city, and most of its users will use Uber for the most part within that city. Adding more drivers to Tokyo does not have a meaningful impact on the resident of New York.
Consider: I am probably 0% likely to book an Airbnb in my own city. Almost all of my Airbnb’s will be somewhere else, so I only really care about remote stock.
By contrast, something like 90%+ of my Uber rides are going to be local. In many of the places I might travel to, I don’t need Uber at all (the location is rural/suburban, the public transit system is cheap and effective, cabs are widely available, etc).
Especially internationally. If I’m in a country that doesn’t speak my language but they have uber, you better believe I’m ubering left and right.
Any source on that? I know some municipalities regulate rentals now, but to say that the vast majority of them operate illegally is a bold claim to make with no data presented.
Speaking strictly for NYC (the town I live + Airbnb host in), I think the more relevant metric is- what percent of Airbnb's revenue comes from the illegal kind of rental (i.e. rentals of the entire unit for more than 90 days of the year) vs the legal kind (whole-unit rentals totaling less than 90 days per year, as well as shared-unit rentals of any length)? According to Gothamist, 75% of its NYC revenue came from whole-unit rentals. How much of that was legal is anyone's guess, but this is one reason why Airbnb was fighting tooth and nail to stop the recent city council legislation.
NB- Another reason is that, once the city collects hosting data, it will likely use its housing inspection mandate to shut down most if not all Airbnb rentals in the city (not just illegal ones) at the behest of the local hotel employee's union. But that's me speculating, so take it with a grain of salt.
Keep in mind that Airbnb made $140 million in NYC in 2018, had $2.5 billion in 2017, and over $1B in revenue in Q3 of 2018 alone. So the percentage of revenue it contributes is likely between 4-4.5%. If this went away overnight, the company would probably be fine as long as the damage ended there. But there's no guarantee of that, since other cities are considering similar legislation and are looking to see what the outcome of the above battle will be.
In the end, NYC will probably succeed in approving a permit system similar to San Francisco's, which will be enough to get the city the information it needs to shut down any Airbnb host it wishes.
The multiple dwelling law does not allow any whole units to be rented for less than 30 days. There’s no exception for less than 90 days in a year total.
From the MDL:
A ‘class A’ multiple dwelling is a multiple dwelling that is occupied for permanent residence purposes… ‘Permanent residence purposes’ shall consist of occupancy of a dwelling unit by the same natural person or family for thirty consecutive days or more and a person or family so occupying a dwelling unit shall be referred to herein as the permanent occupants of such dwelling unit.
Per your own link that means 75% of nyc Airbnb revenue is derived from facilitating illegal transactions.
AirBnb is going to get knocked down a peg or two once the states get involved, they are able to dance around many cities and their attempts to reign it in but once a state level attorney comes for them it won't be simple.
however as with uber this comes down to private property rights, who do you choose to side with. Me, I am with the property owners as a Libertarian but I am with government regulation so that it is not abused to the injury of others. Specifically the idea of evicting people or requiring them to vacate during high profile events in town
What about the property rights of the landlord? The co-op? Fellow condo owners? In addition to violating state law most of these units in NYC are being rented in violation of signed agreements (leases, proprietary leases, condo rules incorporated into purchase agreements).
Look at Craigslist - terrible UI, hundreds of startups have tried to challenge it in the past 15+ years, and yet it's still my go-to when I need to sell some old furniture.
The real entrance cost to becoming a host in airbnb is not airbnb, its having a house. And a host will use airbnb or whatever to keep the appartment occupied. It can absolutely be commoditized, much like Lyft and Uber have. A service that posts your apt in multiple websites would make that permanent.
Today they must own the demand side: i have never seen something become so popular with no little ads (particularly in argentina, it was incredible to see it going from 0 to ubiquitous in 2 years). But demand on apartment rentals is incredibly price sensitive, demonstrated by the competition airlines have.
It simultaneously helps the organization’s tax efficiency and MAYBE something interesting gets developed
That this is a substantially harder mandate than that of Craigslist I take as a given.
AirBnB handholds the traveller from the moment they start looking to when they're going on the trip. CL just presents an ad, and lets the parties email/text on their own. AirBnB handles the financial transactions, with all that that entails, and CL does not. AirBnB facilitates the communication between the landlord and the customer. They also let you add on "experiences" as part of your trip. They also include an identity verification system for both landlords and consumers, and there's a review/rating system for both. It might not be perfect, but Craigslist has nothing like it. For example, I generally avoid renting places that don't have reviews, and landlords can choose to ignore/reject renters who have built up a bad reputation.
CL, on the other hand, has a reputation for being full of scammers and other shady people.
It _could_ introduce more barriers to reduce scammers, but that would come at a cost to both buyer and seller UX.
There is value in simplicity, and the market thus far agrees.
Craigslist is the anti-thesis to the hubris-fueled notion that technology can and should solve every problem, including dishonesty. I've not yet been scammed on Craigslist because I've built up a valuable skill in identifying scammers in general rather than relying on an imperfect system implemented differently on all marketplaces. In return, I do not get scammed as a _seller_, which is something most marketplaces seem to neglect.
More broadly, we often blame human nature on software implementations, as if there was a software solution to (all of) such without trade-offs.
When I log into a “modern” app today there’s almost always a new feature in my face or an old feature moved to a new location (or simply deprecated)
This is precisely because they're the kinds of transactions that most people would never even consider to take part in without first being able to establish a certain level of trust in the other party.
I think this is probably the biggest competitive advantage for AirBnB against challengers in the space. Bootstrapping a 2-sided marketplace is hard enough to begin with, but doing so while building up a network of trust among users so they can comfortably partake in transactions with a high trust-barrier is even harder.
The perception of safety could be more dangerous for some using air bnb as opposed to those on CL who are fully aware that there is no safety net nor hand-holding.
I love their UI. It's fast and does exactly what it needs to do, with the bonus that I don't have to download 12 js frameworks to look at a damn listing.
You could argue that Craiglist's brutalist aesthetic is its genius.
Traditional vacation rentals charge 15~20%, but they truly handle the key hand offs and such.
Instant book – A host can only have "instant book" on for one platform at a time, otherwise their listing could get overbooked. They'll likely leave this on for Airbnb because they have more guests than any other platform, which adds friction to booking for other platforms.
I suspect the moat won't matter that much, since a consumer ultimately doesn't care about which service they end up booking with, as long as it seems trustworthy, and landlords have little reason to be loyal to one service when there's no downside to being non-exclusive.
So I don't know where you're getting your impression from that booking charges more than those 15 percent, but you may wish to recheck your numbers.
Can't comment on ease of use on the supplier side.
Source: I know that because I used to work there, ran the infrastructure eng and prod teams.
to win over an existing market you need to offer something dramatically better somehow or angle it dramatically differently, not just a 3% cost difference. Remember craigslist was basically free.
IMO demand for ridesharing will not lower in bad economy compared to Airbnb which is driven by consumers mostly using during travel.
There is then the argument that such a time would quickly be bad for aurbnb bc the fees quickly cost more than the marketing or insurance are worth.
Adding to that, I'd say that a big part of how "monetizing labour" compares to "monetizing capital" is, in simple terms, that monetizing capital (homes) has more too to maneuver. Ironically, labour (drivers) is the more commodified market.
Uber is a market maker in a world with hard price competition on both ends: drivers and passengers.
Since "rentals" is more variable, a 5-10% change in price/cost/income is tolerable. You can redecorate a rental, for example, to affect its value. Seasonality can shift price by a lot. Etc. This generally lends better to a thick, market-liberal layer.
It's a slight irony (again) that this is the end point. Airbnb was innovative. It changed my travel habits immediately. But, conceptually it's just a holiday rentals site. Nothing new apart from quality and scale. One rental's ROI will be very different from another's. One consumer's choice will be very different from another's. It's a differentiation market. Diverse product, flexible prices.
For an Uber customer/contactor, both the app and the drivers are commodities. What Uber probably needs to do is ruthless efficiency, low marginal costs. Not many SV-startup style companies have that mentality, so hard road ahead.
Also, being capital-oriented, Airbnb gets better over the long term. At this stage, much of Airbnb's stock comprises properties bought or leased specifically to be an Airbnb business.
(My gut says Airbnb.)
AirBnB has renters and listings. Uber has riders and drivers.
As long as you have enough of the two sides, you can have a rival.
With Uber, a bad driver means an uncomfortable 45 minutes. Uber can tolerate bad actors more than Airbnb
That being said, here are the risks on the supply side for both in very different ways:
- Uber: Drivers are fungible and can move to any platform they want. Two risks here...unbundling (already happening) and driver acquisition cost.
- ABnB: If their supply bundles itself together, it doesn't need to pay a distribution fee and ABnB is done.
I usually prefer staying in hotels and will look for Airbnb only as a second choice.
- Price is usually higher on Airbnb.
- Airbnb crazy fees for multiple people, cleaning scam, outrageous service fees etc.
- Inconvenience to not have a 24H reception where I can get my keys.
The real genius of Airbnb is that they convinced a lot of people that they shouldn't look for Hotels anymore, which sadly is what a lot of my friends are doing (automatically looking for an Airbnb).
With a hotel, you get... a hotel room. There are some great hotels out there that stand out in many ways, especially if you're very wealthy, but your average hotel is very average. Generic interior design, generic wall-to-wall carpeting, generic wall art, a mini fridge where a soda costs $10, and some kind of weird desk/table/cabinet setup that's mostly home to a lonely-looking Keurig machine and an ice bucket.
I can't speak for anyone else, but I genuinely don't want to visit a hotel. The only time I'd be interested is if I'm staying 1-2 nights for a business trip or something where the only purpose is to have a place to sleep and store one's property.
The only advantage you get from an AirBnB is a unique facade, paired with having to clean up after yourself and possible fire and health code violations.
I agree that for simple stays - check in, do stuff, stay a day or two, leave - hotels are great. But for long periods, AirBnb can be much, much better.
For me the line is: are you staying long enough to need to do laundry or where you will get to the point don't want to eat out most/every meal? Then AirBnB is a better choice.
In a hotel, you can address this problem quite easily. With AirBnB, you have to just live with it.
I've never encountered an Airbnb where you have to clean up after yourself, nor have I encountered an Airbnb that has fire and health code violations.
But again, different experiences. For example, a two-bedroom vacation home with a private pool, its own parking space, maybe its own beachfront, etc. is going to be nothing like a hotel.
I'll admit that gratuity is annoying, but that's a cultural problem with the US, not something specific to hotels. We just happen to live in a country where every person who serves you is expecting a tip. And to be fair, if I was staying at an AirBnB that for whatever reason had housecleaning or other service, I'd probably have to leave a tip there too.
* Always with public transport, no parking needed
* I've never tipped anyone in a hotel
* EU roaming is free, no need for wifi
* Fill the minifridge with my own beverages
All the AirBnbs I've stayed at have been somewhat sketchy, while this rarely happens with a hotel. Furthermore, I know hotels are fully legal and won't cancel my booking.
AirBnb is a clear winner when traveling with a small group though, as a multi-bed apartment is a better holiday experience and much cheaper than multiple hotel rooms.
1) I find with Airbnb I'm more likely to get lower quality from expectations to what is received.
2) Hotels are better are redressing issues whereas AirBnB doesn't seem to care, and you can't really say to Airbnb I want another room type thing on the spot either.
3) For price, I think it's cheaper for groups most of the time. When traveling alone for work I'd say I use it 30-50% for the cost benefit vs hotel.
Another issue is I feel I can't give honest reviews. As if say every 3rd or 4th place is below par I suspect people wont accept you if they see you give a bunch of brutally honest reviews, so I tend to give nice reviews so it leaves my booking options open for when I do use it.
- The first one had a host cancelling a week before my trip. It was a long expected Christmas trip, and I had booked well in advance. Airbnb offered a $30 voucher on their platform, but there was no more availability in the city, so we had to pay a hotel for three times the initial price, the voucher expired before we could use it.
- The second one had a room in very bad conditions. We decided to get a hotel and quickly found something much nicer for half the price. We notified the host that we would not stay, but since we were backpacking abroad it was very hard to contest anything with Airbnb. Ultimately we still payed the full price of our Airbnb booking.
Just stayed in an AirBnb that was broken-into during our stay. Window smashed, laptops stolen when we were gone for a couple hours.
It feels like we were watched when we arrived, were observed to leave, and then robbed.
We were shaken and ran-off to a hotel.
Really appreciated the hotel staff, secured elevator, anonymity of it all (lots of undifferentiated rooms in a long hallway), deadbolt, additional locks.
At this moment, feeling like I'll never stay at an airbnb again.
This seems like a made up guess, hotels have security and 24x7 surveillance and staffing. Further, at a hotel, there are folks you can turn to. AirBnB's service department is invisible. AirBnB's online complaint process feels more like a trial which places the burden of proof on the customer, rather than a hotel, whose employee's often go out of their way to make things right.
For example, if you're harmed at a decent hotel, the staff will call the cops on your behalf and do their own investigation. AirBnB will more likely require you to submit a completed police report to their online portal before they start to look into it.
But whatever shit happens. It was cheap so maybe buywer beware.
What was surprising was the flacid and uncaring support from AirBnB. They insisted on charging for time stayed (the evening of check-in) and refused to refund their fees and the cleaning fees. Why? Made no sense to me given Amazon's eagerness to make refunds for goods with actual COGS.
Haven't done it again since and I travel > 100 days a year.
To break into an apartment, walk up to the street door, ring any neighbour's doorbell and say the name of any company that delivers parcels, newspapers or advertising in that area.
There's something really nice about being able to cook in an AirBnB, after the kids have taken their showers and are in their PJs, and all sit around the table as a family, and then have them do the bed routine shortly after, perhaps after watching a bit of TV.
At a hotel, you generally have to at least exit your room to go to the restaurant in the hotel... which breaks the whole "family groove" and makes it harder to keep the kids "in the zone" (everybody has to change clothes, etc . I find it much more difficult to manage because the hotel is essentially a bedroom/bathroom, nothing more.
You can cook there, etc -- they are fully serviced (eg you get cleaning people once or twice a week, beds are made and replaced and so on).
Usually these apartments are in clusters, and areas of a country that are well policed (at least in my experience).
I also prefer apartments if I stay somewhere for more than a week, or with family.
Unless you have experienced this personally you can't imagine the impact on your quality of life of such action in a multi party dwelling.
To scale up, the focus changed to inexpensive low-service accommodations with little character, or regard for the surrounding community. AirBnB is eating itself in the name of growth. In theory, it was a great idea, and I have no doubt it'll continue to make money in its current incarnation, but it's not building what it set out to create.
I always check prices on hotels and airbnb, and I mostly book airbnb. Because it is cheaper (even with fees and everything).
Only in Asia. In Western countries Airbnb is almost always cheaper than hotels. I still use Airbnb in Asia because you get nicer places with more space.
In my experience traveling across Europe it depends - for example just last month I was in Vienna and Marriott was cheapest on the days we were looking (apples to apples comparison). But then in Budapest AirBnB was cheaper. Got the best deal on booking for Amsterdam and London. You still need to go trough multiple sites if you're looking for the best deal.
So in a place with a lot of demand and little supply, the prices tend to be high and vice versa. Airbnb pricing is really a small projection of your local housing and rental market. I've managed to find cheaper places to stay on Airbnb than hotels and vice versa.
Note that Airbnb does take a service fee, but in reality so does your hotel.
It's abundantly clear that Airbnb has zero interest in helping Vancouver enforce these rules. Vancouver has had to struggle to enforce its rules and is failing at doing so.
It seems premature to claim whether Airbnb is subject to more laws like this or not. Many cities have enacted new regulations or sued Airbnb over failures to comply with existing laws, and it seems like a complex legal issue still in the midst of being hashed out.
Can you elaborate on this?
Available housing, apartments, condos, etc, is being eaten up by short-term renters. The price of short-term rentals are more expensive than long-term rentals, but due to so much inventory not being free for long-term rentals, the price for long-term rentals has gone up a lot. This is the same inflation that we see in the expected vacation destinations but in non-traditional locations, like Portland and it's suburbs.
AirBnB is supposedly built to empower individuals to post a rental here or there. What has been found is that it has enabled and encouraged individuals and companies with large inventories to convert long-term rentals into short-term ones. And that 15% that AirBnB takes is simply passed onto the consumer - which then affects the price of long-term rentals.
There is also the negative effect of renting prices going up, or having your neighbour replaced with 3-4 party organizers a month.
Building something creates wealth. Changing the channel through which payment occurs doesn't create wealth. The host's revenue comes from displacing hotels; the guest's savings come from increased rent for other tenants. If you consider the negative externalities imposed on neighbors, there'd be a stronger argument that AirBnB destroys wealth.
Yeah, you don’t have an axe to grind here, I’m sure.
That being said, there are _many_ communities upset by AirBnB's influence on their area. Example: https://www.theadvocate.com/new_orleans/news/article_ad1c91a...
Of course, Googling for that article turns up, primarily, AirBnB listings in New Orleans.
The other interesting comparison point is Sabre: completely the opposite end of the distribution scale and not a rapid growth company, but they're significantly more profitable than AirBnB at a tiny fraction of the valuation (and have an excellent moat)
There's a Booking.com ad in Australia that is very AirBnB-esque (to the point that my partner thought it was an AirBnB ad until the Booking.com tagline came up); so my feeling is that they're ready and keen to compete in that space.
Perhaps a cynical or unpopular point of view but until the technology becomes a hindrance, does that really matter? Its not as though people are going to these sites because they have great technology. They go to them because the prices are good and they have good UX I assume?
It is very cell phone and cable billing, there is only a very loose relationship between the advertised price and what you will actually pay.
I think HomeAway was a little bit better about this, amortizing the fees over the length of the stay and including in the listed per night price.
I used to run infrastructure for Booking until a couple of years ago. I'll honestly admit that there's lots of tech debt. AMA - but I'll say that I'll provide no response time SLO due to work travel.
Not sure if this is financial engineering or if they're actually profitable, but I'm so curious to see how Wall St responds to this "profitability", especially since growth plays (e.g., FAANG) just cratered in Q4'18.
Not to get too involved in the dichotomy but I'm interested to see if AirBnB plays like a Snapchat (i.e., tons of hype then gets killed in the public markets), or more like a Dropbox (i.e., takes a bit of a haircut but share price remains fairly stable).
Most companies are evaluated based on EBITDA as well anyways
Current valuation? Who knows, but I see ~$30B being mentioned in a few media reports.
Assuming that AirBnB eventually becomes an enormous, stable, established company with a P/E ratio of ~15, that would mean ~$2B in profit per year.
Will be interesting to see if they achieve that!
- Were they also $1 in the prior period on EBITDA? That would indicate that their growth is stalled and they can't fix profitability problems. An IPO could help address that with the right allocation of raised funds, maybe.
- Did they lose $1 billion on EBITDA in the prior period? That would indicate that they've rapidly solved their profitability issues, but an IPO might indicate that they're overvalued and want to dump that problem on the market so that they can correct down to a good market cap vis a vis their earnings.
- Did they make $1 billion on EBITDA in the prior period? An IPO would indicate investors scrambling for the exits.
And so on. Even if earnings are paltry compared to their scale, if they are massively improved over the prior period, that is a potentially good indicator of performance to come.
It's hard to react to unforeseen conditions in the market and/or grow the company when you have no war chest. You could borrow more money, then you'd no longer be 'profitable' for at least some amount of time.
Still, they are killing it, truly.
This is something like a human child, even including the rule-skirting and risky behavior that sometimes leads to opportunities that others don't have (a practice that has also helped Uber become dominant).
So I wonder what the business world would look like if we treated more businesses with a longer term support and nurturing mentality... would we have more success?
Even some of the pivots and direction changes of Airbnb are reminiscent of a growing human changing hobbies or finding their balance of skill + motivation.
I suspect a good part of the success (measured in multiple ways) of Silicon Valley is due to this finding and support that elsewhere is unmatched. Banks certainly aren't supportive parents, and the stock market is the school bus bully.
Probably at least worth between 50 and 100 billions now, I would say $80-$120 billions.
YC will be funded for a couple centuries with that IPO.
i.e. should be "raised $4.4 billion" not "raised $4.4 billions"
On a mobile here - did anyone look out for financial statements?
I'd be curious to hear from anyone who seriously thinks Airbnb will be able to achieve substantial growth in the next 5 years, given the increasing likelihood of a slowdown and more regulations from large cities.
The risk for regulation has passed as citizens see AirBnB as an accepted reality. Hotels aren't happy, but rightfully see AirBnB as a competitor.
I agree with your overall, but I'm not so sure I agree with this part.
South Lake Tahoe just passed a voter initiative in November that bans AirBnB (and VRBO) except for a few places right next to the major hotels. It was, not surprisingly, heavily supported by the major hotels.
I’m very conflicted about these types of bans. I have an apartment which I share with extended family, and we share the costs. Technically the way these bans are written would prevent us from doing that without somehow getting everyone’s name of the lease which would not be practical.
I wish that people would fine heavily for actual bad behavior, and let fair economic arrangements between respectful parties happen. But I also understand that enforcement is very difficult, and most people are assholes.
Under the new rules, you can only rent out your primary residence that you actually live in (not second homes/condos), and you can only do that for up to 90 days a year. That'll remove a pretty large percentage of the AirBnB inventory if it's enforced, since a lot of units on AirBnB are investment properties used purely to rent out, not anyone's primary residence.
A good framing for me: If Airbnb were just looking to compete with hotels, this wouldn't be that exciting of a business, even if I knew they could survive. What's exciting about Airbnb is that they're looking to win in places that hotels aren't.
Last time I looked, many/most vacation rentals are multiply listed on VRBO, etc. Is there a reason to think that AirBnB is stickier than the other vacation rental sites?
My experience is that as long as you go to a tourist destination (like Hawaii, Croatia or Santa Cruz) VRBO is fine, but as soon as you start to go off the beaten track (like Northern Northern California past Redding, or suburban rentals near major cities, or rural college towns) AirBnB has much more selection. I just did a quick test at my alma mater (Amherst MA) and VRBO had 4 listings, AirBnb had 15.
When your reputation score stays with the platform and is a major factor in who will host you, it behooves you to pick one platform for all your travel and stick with it, so getting the "long tail" of non-resort travel is a big coup for AirBnB.
1. Has more volume of listings.
2. There are much cheaper options on airbnb than other sites like VBRO.
3. More trustworthy and better brand recognition.
But it’s still at the end of the day just a real estate play. If AirBnB wants to make another dollar, they have to list another property. They can’t just jack the prices like Netflix because they have serious competition on every front. There’s no services they are launching which will provide the kind of returns that technology investors are looking for. It’s linear growth at best.
> I don't think the regulatory environment will be even a speed-bump on its path.
They certainly haven't treated it as such. "Laws? Fuck'em". Witness: New York. Witness: Gibraltar-issued anonymous credit cards to avoid taxation issues.
I'm not sure these are things to be proud of or aspire to.
Regulations are positive for airbnb not negative.
It is a fantastic business with a fat 20 to 30% margin on every booking. There is plenty of market left to capture, between mouth to mouth rentals and what used to go on craiglist, or never wanted to go on craiglist because it wasn't trustworthy.
2. Given the extreme volatility of IPOs and small amount of past history on a company's fundamentals, this will essentially be gambling with the potential of unlimited downside
edit: whoever downvoted this, do you not understand how buying puts works? your risk is capped at the money you spent on the contracts. you can only lose that amount.
Would he pay premium for the options? - Sure. But that buys something. Limiting the loss vs shorting for example. Besides shorting isn't exactly free either.
The point is, you don't use options for investment decisions where you don't know the timing of when you'll be right, unless you're hedging another investment.
Every single auto insurance in US I had is a 6 or 12 month contract which expires at the end. The expiration time/date is very specific to the minute.
You usually get a new contract after that which you can choose to pay premium for or loose coverage otherwise.
But that's priced into any analysis of the puts. If you're just arguing that speculation in general isn't prudent, then I'm with you, but you can't really say that a particular bet would be a "terrible strategy" (if you mean that in a negative EV sense?) when we don't know what the prices will be.
That said, Airbnb's most promising growth opportunities aren't in the US in my opinion, they're international. While there's always a risk of regulation, the world is huge and has a lot of places who'd love to be this year's Iceland (although they might regret that 5 years from now) driven by cheap flights and/or housing.
Also - a slowdown could be counterintuitively good for Airbnb, as constituents may start lobbying to relax some of the more onerous regulations so that they can more easily make money via Airbnb (regardless of the accuracy, it can easily be cast as the hotel lobby vs. the recently unemployed family who has a room he wants to rent out).
Ultimately, I guess my position is that it's almost definitely overvalued right now, but not by as much as bears think it is and that I think they can probably remain a good business for the foreseeable future assuming good leadership.
Do you see Google, Facebook etc being hurt by the regulations put in place in the last 10 years?
I would also add that the city and location probably influence the economics and profitability of it a lot.
Instead, I'd suggest buying a primary residence that is a duplex or is larger than you need, and subletting out the extra room(s) or other half of the unit. Your financial commitment is much less (just the difference between purchase prices of larger vs smaller houses), financing via mortgages is much more reasonable, and legal statutes that cover this use case tend to be more favorable to you.