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.
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.
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.
.. 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.
The same argument, after all, goes through for long-term renters too, whom a lot of people don't want to live next to. Should we zone all annual leases as well?
As I said, there are plenty of attributes that make different houses more or less desirable to different people. If the OP had converted their apartment into a sarin gas factory or a practice pad for MBV, it might be a little more understandable why regulation would be efficient. As it stands, having a short-term rental next door strikes me as an extremely vague sort of source of disutility: all you can say with certainty is that you won't have long-term neighbors. Which many people are fine with in the first place. If people have varying preferences about living next to short-term rentals (either because they view them as a source of variety in se or just don't mind that much either way, as I do) then it should be more efficient to let people figure it out for themselves. People already self-assort into spatially resolved communities according to many other attributes (e.g. school quality, proximity to nightlife, population density; all attributes which reasonable people can value differently) so it seems strange to pick 'proximity to a short-term rental' as the one intangible neighborhood-character issue to treat like 'proximity to a meth lab'.
So let me just state again: I wouldn't mind living next to a short-term rental. In fact, if they're as widely despised as you suggest, I'd mind it even less because the housing market would be effectively subsidizing my tolerance.
This is the extraordinarily naive libertarian position. Most people would not welcome a brothel as their closest neighbor for example.
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.
That's different from just renting out your place to some random traveller. Besides, even if renting your place is legal, nothing prevents you from whipping up a contract that places some limits on how rowdy the occupant(s) can get.
So no, there's nothing "naive" about thinking that renting out your property being illegal is fucking insane.
You can see how it's useful to protect society to not allow people to run unlicensed hotels?
Many dedicated AirBnB locations are supposed to be strictly residential with longer-term leases.
That's right, Houston doesn't have any zoning laws.
If I managed a ritzier condo complex I'd probably do something about it immediately rather than take a wait and see approach.
Short-term vacation rentals are forbidden here and they are absolutely shut down when found out. You can't 'manage' every single guest that comes thru - most will be respectful, but it won't take long before a group of college students use it as as a party pad. I lived next to one used for that purpose, and while I was on the board we had 4 others we fined to the point where it wasn't worth their while.
If anything we were trying to push an ammendment to make tenancy a 6 month lease minimum.
You've clearly got a bit of a nanny mentality about this. Maybe that's unfair.. But you have strongly criticized this and posted rebuttals to anybody disagreeing with you. All on the grounds of "this is probably bad, don't make your HOA [or govt, or insurance company]" mad at you.
I have to confess I feel a bit of... revulsion... in your advocacy of docile compliance. It must be the rebellious streak in me. But it's something I bet others here can relate to. I'm more of a "ask for forgiveness rather than permission" type of guy.
All that said, I won't be rushing out to buy a condo to rent on AirBnB. But I also would never sit on HN and try to argue against it because of HOA.
Though I also think you're totally within your rights, to be clear.
Your (as the hypothetical owner of an apartment unit) insurance cares about whether you are occupying the unit as you said you would. I'm sure you can purchase a policy for primary residence, long-term leasing, and short-term leasing. If you're violating your policy, it could be declared void at any time, in particular if you ever make a claim.
If I were a good insurance agent, hypothetically, I also wouldn't write an insurance policy for short-term leasing in a property where I suspected such use wasn't allowed. It would probably be in my best interest to get proof from the potential insuree that such use was permitted.
As for that rebellious streak, we're talking about an investment here, and ways that people might be breaking voluntarily signed contracts in order to make a few extra dollars (the real-estate agent should offer the HOA terms to any potential seller, and then you sign the HOA contract when you purchase the apartment). Also, I prefer disruptions to business models, not disruptions to living arrangement. As mentioned elsewhere in this thread, there is no upside to the other residents, it's all a nuisance to them.
But this also means your insurance company should care, as depending on your policy, if your insurance company would be on the hook for damages not covered by the HOA insurance, it is very much in their interest to ensure that you are not doing anything in violation of HOA rules that might affect the HOA insurance cover.
So ask forgiveness all you want, but realise that your insurance may not be worth the paper it is written on if you break contracts that might affect insurance cover. And that's potentially a very high cost to pay for a "rebellious streak".
How is espousing that the right to swing a fist ends at another's nose "nanny mentality"? An apartment is in a shared property structure, with rules contracted into voluntarily, and in close proximity to the property of others. Insurance is offered as a contractual arrangement. No-one is forcing you to buy an apartment, but if you do so on the basis of a legal agreement around how you will use it with the co-owners of the building, breaching it justifiably attracts sanctions.
I'm curious if the author looked into this.
This is true in lots of fun cities, primarily because it's so hard to build new housing stock—which is a Bad Thing, as Matthew Yglesias describes in The Rent is Too Damn High. Britain is suffering from a variant of the "no building" problem too: http://www.buzzfeed.com/dlknowles/britains-dysfunctional-pro... : "Construction started on just 107,000 new homes in England last year. Excluding World War II, that’s the lowest figure since the 1920s."
The solution to "gentrification" and what not is "building new dwellings," which we know how to do very effectively (elevators and steel are century-old technologies). The problem is regulatory / political.
I do think we're chronically underbuilding in a lot of places (SF being an extreme example), but the existence of steel and elevators is not a panacea for the "gentrification problem".
Well then, less allure would lead to lower prices, right? What's not to like?
Because the world does not exist for the benefit of the rich and privileged; not simply the "rolling in Maserati" rich but those in a position to enact those gentrifying policies--who are overwhelmingly upper-income and capable of exerting more time to get what they want, have more money to apply to their causes, and generally are better-educated and able to execute.
The "selfish vote" amongst the privileged is indeed a problem. A lack of social responsibility and a refusal to understand that those unlike you must too be able to live are moral failings. They are wrong, and situations that increase the effectiveness and value of the selfish vote amongst people with privilege are undesirable.
No? Does it exist for the benefit of the poor then? -They sure keep voting for more wealth transfers and taxes on the rich, and they keep getting them too!
Note that I'm just an ordinary middle-class white person. I just wanted to point out that the world does not exist for any group's benefit. We're all just people, all just individuals here.
No. But we have ample historical evidence that huge wealth and privilege disparity does not lead to societal stability. The selfish vote of those rich and privileged seeks to increase this disparity. The selfish vote of the poor does not.
I don't think I've ever seen an example of this reflected in prices. Do you know of any, or of any studies of this phenomenon?
It's sort of a Bavarian themed down-town and city in Washington state. Its allure and attraction to tourists depends on its theme.
I say I don't know if it's a great example because I have no direct evidence about prices, but I assume the reasonable volume of tourists and business must raise prices compared to other cities.
If you don't end your contract, your rent is going to stay quite low in Berlin. If you're retired or unemployed and living decently with a rent around 100€ per month, it's not so easy to escape from the apartment. With a new contract, the rent might be ten times more expensive. Or the place is renovated and put into Airbnb.
People in general here in Berlin don't want more hotels. Especially for the residential neighbourhoods which makes all the prices go up even faster. Too bad some of the neighbourhoods are also very 'hip' places to stay...
Berlin has been gentrifying ever since they tore down that wall. You can still buy apartments in East Berlin for under $100K.
In NYC there's an enormous arbitrage. The cheapest hotel room in the city is $300/night. Meanwhile, you can rent a 1BR apt for $2,500 / month.
So you rent an apt for $2,500 / month and book it out on AirBnB for $200 / night ... and you're looking at a monthly arbitrage of $3,500.
The guy I know heard about it from a friend who's already doing this with 6 apartments ... so he was making something like $18K / month (less the cleaning expenses).
Airbnb is clearly forcing a convergence between hotel prices and rents. This doesn't just mean forcing hotel prices down, it also means forcing rents up.
I wish the tech community could stop reflexively defending airbnb and engage with the question of what the costs it is imposing are or might be.
I responded to this issue here: https://news.ycombinator.com/item?id=6657242 , but the short answer is to build more units.
Building the Second Ave Subway, extending express bus service, and doing similar things would also be helpful.
A way to game this might be to:
1) Buy a place
2) Rent out 1 room full time to someone who agrees
to #3 in exchange for below market rent.
3) Rent out the other room or rooms.
People might lie, but there is going to be some immediate negative feedback when people find out they've rented out a couch...
Also, NY specifically worries that it will change the local housing market. If investors buy up enough local properties and turn them into mini hotels, locals may be priced out of these neighbourhoods and those neighbourhoods will in turn suffer.
Plus there are the complaints from the locals. Having a neighbour rent out their place to tourists a couple of times a year is not a big deal, but if it happens every single week it gets annoying. You never know who is coming and going and they aren't always all that worried about noise, garbage, etc.
And just to clarify, I think the state is right to be concerned about these issues. But at the same time I would hate to lose the ability for someone to put their primary residence on a site like Airbnb a couple of times a year. This helps visitors and the residents without significantly hurting anything else in the equation. Things only start to turn sour when enough people create dedicated Airbnb properties as investments.
Edit: NY get's 10$ on a one room 140$ hotel room stay as it's
$2.00 per day per room* + 5.875% of the rent. http://www.nyc.gov/html/dof/html/business/hotel.shtml
I think that there is a clear difference between renting out a room or occasionally renting your entire place, versus keeping a separate apartment strictly for renting out on AirBnB.
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.
New York passed the first US laws, as far as I can tell from a quick search (although I do see vague references to San Francisco using zoning laws against the Chinese in the 1880s, and a lot of people, including Wikipedia, quoting a more limited achievement of 'the first comprehensive/city-wide zoning laws' for New York), but Europe definitely predated them. I believe Germany and some other countries also had them, besides France.
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.
These are all new builds in the past 8 years.
But of course, most systems are not so well-behaved, so that is only a lead-in to the real examples, where you change the setup slightly and suddenly analysis grows more complex. Now what happens when you push lever X depends on what region of the state-space you're in! And sometimes pushing lever X can change the region of the state-space you're in, too! There is feedback and internal dynamics. I see very little libertarian economics that displays even a 101-level understanding of any of that.
To be very brief, you seem to think that libertarians believe, roughly,
(1) "the world is simple, so we should have simple rules."
Instead, you suggest:
(2) "the world is complicated, so we should have complicated rules."
But this claim is entirely unresponsive to:
(3) "the world is complicated, so we should have simple rules."
which is what most libertarians I know actually think. If you respond to (1) when your opponents are arguing for (3), you will not have productive conversations.
I don't like to psychologize people, but I wonder whether this attitude is a sort of mental heuristic on the left, which often finds itself fighting with folks on the right who seem to believe, roughly, that regulation is intrinsically bad, and should be abolished. This has encouraged the counter-formation of the view that regulation is intrinsically good, and should be preserved. I guess that's a little easier to remember than the subtler view that regulation is intrinsically bad, but should sometimes be preserved when it can still improve outcomes over the status quo.
It's almost as though you have to examine things case by case and decide whether a dangerous tool should be applied, instead of just forming a mental affiliation with it.
I don't like this kind of thing as a customer, either. When I look for a place on AirBnB, I expect it to be someone's actual house/apt, which they treat as their own, because they also live there. If that's not the case, it should be made really clear up front.
Now, any decent hotel will be doing periodic checks for bedbugs around the box spring and headboard, and any other wooden furniture. But there will always exist a small chance that the last person to be in the room brought a couple and you will get them.
Good news is they don't transmit any disease, and if they bite you, it just itches for a few days and goes away.
But the more worrying part is that it drives up prices as more and more do this (not talking 1-2 appartments in a neighbourhood, talking increasing).
Another issue is the housing situation. In many larger cities it's a real issue that there aren't enough places to live as needed.
For hotels it is bad, as it's driving business away.
So, from both sides of the spectrum this is bad.
For people looking to get some extra cash (not saying it's bad - as the post also mentions, it's an active investment), and for people looking for a place to rent while on vacation, it is good.
You could probably argue that they are most peeved about not getting the hotel taxes.
As others have pointed out, residential zoning laws aren't generally the product of corporate malfeasance. Usually they are there to help combat it. That's what NIMBYism is all about.
I probably wouldn't care because there would be no way to detect if it was happening, without me standing outside my door all night like a sentry.
Sure, I'd be annoyed if some of the guests came and went at all hours of the night and that was waking me up regularly, but that could happen just as easily with more permanent neighbors, and I'd be able to do just as little about that.
Not saying i agree, but that's the main motivation behind of Airbnb regulations, in NY and other places.
If there's one thing I've learned in my old age, it's that I love buying things for people. Because then the power dynamic is in my favor: this is my city, enjoy your visit but leave no trace.
Some tourists would prefer to support the town they're visiting by directly paying shop owners, etc, instead of having "hotel taxes" of indeterminate destination tacked onto their expenses.
(But you're right, using "kickback" was needlessly offensive.)
At what point does somebody giving me money in return for staying on my property turn my property into a hotel? I'm not talking the legal definition, I'm talking common sense.
The only working definition I can come up with is "when you reach a scale where the government can start taking a cut"
Back in the old days, that was a good-sized establishment. With computers, however, the government can go after anybody -- including lots of folks that earlier slipped through the cracks.
Engineer-ish types take this to mean that the line is arbitrary and therefore irrelevant, concerns addressed by that distinction are invalid, and efforts to circumvent/exploit it are victories in the battle against analog logic. Other people understand that fuzzy definitions do not mean that the distinction therein is imaginary, merely difficult to identify.
If you've ever heard the phrase "don't throw out the baby with the bathwater," it applies here.
One solution might be to pass the fine onto the renters, but that leads to another problem: "Quiet" renters would probably be more put off by the possibility of an extra surprise charge than "Party" renters. The latter category probably ignore the penalty clause when booking the apartment and then try to avoid paying the fine after the fact. So now your set of renters is mostly loud partiers and the problem is even worse.
This is tautologous. Either the owner does not cease to rent out his unit, in which case fines are a business expense, or he does. What sort of third option were you imagining might happen?
My post was in response to the parent, which suggested that any property "solely" used for short-term leases should be regulated.
I was not suggesting that was a useful or appropriate test. Leaving aside the question of whether regulation is necessary, a "dominant purpose" or even "substantial purpose" test would lead to less absurdity.
If I bought an apartment building and lived in the penthouse, could I rent all the apartments out short-term and not be a hotel?
Letting someone live in your apartment while you're temporarily away (or while you're still present) is a very different thing from regularly renting out a unit in which you don't reside. If you can't see the difference between those situations, I don't know much more clearly I can make it.
By same token - I don't mind someone renting out AN apartment. If the issue is tax - Airbnb can simply collect it on behalf of the renter. As far as consumer protection - the guest deals with AirBnB and not an individual host.
If license was obtained by simply filling out a web form and paying a fee - I'd be all for it. But the way things are now, the whole issue of licensing is about protecting the hotel industry.
I have to agree with the upstream commenter's general sentiment that this idea gets all the support here because it lends itself to an easy narrative of armchair libertarianism #winning
There's a lot of behaviour that is undesirable to neighbours because it directly and negatively affect our lives, that we are still willing to accept (if possibly grudgingly) if doing anything about it would mean interfering in someones private life.
I don't get the logic at all.
Instead you don't want your next door neighbor to rent out his apartment on a full-time basis and see requirement to obtain a license as a measure that would prevent that from happening.
I do agree it's a valid concern - but I'm not really sure why we need extra laws for this. The guests are either doing something illegal or they are not - in which case, I don't see any problem.
If you drive badly, what will the police do with your license?
But somehow I imagine that red tape required to obtain a hotel license is significantly longer, benefiting large companies.
Neither do I. This is not something the State needs to be involved in at all.
Yes, that's part of the point of it. I live in an apartment building. My neighbor, who lives the next door down from me, lives in another residential apartment. We get along fine. However, we would get along considerably less fine if he were to open a dance club, a restaurant, or a hotel in his apartment. It is zoned residential, so this is not an issue. But I would be very interested if there were a proposal to change this zoning, because the situation of sharing a thin wall with a household, versus sharing one with a techno club or a hotel or a cinema, differs considerably. And indeed, there is a mandatory public notice and comment period if there were a proposal to change the zoning. If it were allowed at all, they would likely be required to upgrade the noise insulation, in the case of a hotel to have regular inspections for bedbugs, etc.
I am not aware of AirBnB running a similar consultation process where they give me public notice that my neighbor plans to turn his place into a full-time hotel room, and allows me to file objections. I also suspect the rigor of their health oversight is lacking.
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.
(1) Make valuable recommendations
(2) Offer me a better price than any website
(3) Save me hours upon hours of wasted time
When it's more than the website, I do a cost-benefit analysis and decide whether the value I'll derive from paying a slightly higher price for amenities is worth it or not.
And, I get the benefit of the travel agent's expertise, as you say, who knows a little bit about me and what I care about. Sure I can do the research myself (and I will often do so), but it's nice to get all this stuff for basically nothing.
(1) I'd rather the aggregate recommendations of a million people than the personal opinion of just one in most of these situations - you want the statistical mean experience, because a travel agent can be given special treatment or just have had a lucky streak placing clients in an otherwise seedy place.
(3) Hopefully another thing tech can fix. I mean, yeah, you have the rare extremely special case circumstance you can't easily break down into a power search, so they have a niche, but as a general tool for people looking for places to stay, you really don't need another fleshy body directly involved with the seeker.
(1) How many online reviews are fake? How many are written out of spite? There is a level of trust you have to give someone: either an online reviewer or a person.
(3) Having a human to work with is usually better service than not. But it really depends on the situation.
Edit: I'd like to mention that I am not an agent of any sort. I do more business online than anyone I know, but I also realize the pros/cons of both sides of the spectrum.
That is why I quantify pretty explicitly a million - I'd never consider any sampling below, say, a hundred reviews, and even then you have to accept the inherent inertial bias that anyone content with their experience won't review it, and disproportionately people will complain about a negative one than praise a great stay. You need enough aggregate results to smother false reviews or non-systemic bias.
> (3) Having a human to work with is usually better service than not. But it really depends on the situation.
It is really situational, but one critical aspect of the information age is a litmus test on every human service position on whether or not actually having gassy meat on one end of the transaction is really worth the comparatively huge costs of keeping said meat bag alive and happy. And it is a personal test - which is why most industries that have been displaced by the Internet still exist to serve the population that values that interaction.
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.
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.
A lot is work reimbursed (looks like about 200 nights in 2014 if things go well), plus Starwood points from work and personal Amex.
I used to "commute" to the Bay Area every 6-8 weeks for a couple of years. I'd stay a week each time. A hotel offered me a certain expected standard of service, which might not be great, but it was there. It offered me regular cleaning. It meant I had a reasonable expectation of a room of the standard expected of the hotel whenever I came over, as the number of rooms available meant I did not have to deal with people who had a single room or a handful of units available that'd regularly book up.
After a handful of trips, I had my list of 3 preferred hotels in the area, and knew I'd generally get one of the types of rooms I liked best every time I came over.
And every now and again I made use of room service or laundry services, and those few instances were themselves often worth it. But most of the time I spent a total of perhaps 10 minutes dealing with hotel staff over the course of a 1 week stay.
For a lot of people, hotels offers a certain set of expectations that might very well not include "great service" to be worthwhile. Not having the risk of suddenly dealing with some owner flaking on me would alone make picking a hotel worth it. When arriving after 16 hours of travel (11 hour flight + annoying time on both ends), I wanted to be able to walk up to the desk at the hotel, present them my details, including my bonus card, and know I'd be in the room and relaxing five minutes later, with no hassle.
"Walking through a beautiful neighbourhood" or chatting with a host would be far down the list of things going through my head at that time. In fact, my boss at the time lived nearby, in a beautiful, expensive house in Palo Alto, and I did stay with him once and it was nice as a social thing. But the hotels, while far less personal have what for many travellers is an advantage of being extremely predictable.
So no, hotels are not doomed at all. Some hotels might lose some types of customers. Likely the type of customers that are fickle and leave money in local breakfast places rather than in their restaurants, care about the cost of extras because they pay for it out of their own pocket, and otherwise generally contribute less to their profits anyway.
"Then, there are the guests. As soon as someone stays at a hotel, they think they're entitled to act like an asshole."
You know, you may have a tremendously challenging job, are jet-lagged and still have to give 100%. Then you pay 400 Euro for a hotel and they charge you another 30 or 40 Euros per day for Wifi. You get annoyed but you don't care because you will get reimbursed. Wifi will be unreliable and you can only connect four devices at a time. And while this did not bother me, it bothered some of my colleagues that were travelling with an extended family (I mean, Computer, Phone and eReader may eat up already 3 out of 4).
And then you have the fancy shower. I tried for five minutes to get it to work. Manged to get water for a few seconds twice. Finally, while having a PhD in engineering, called the front desk to send somebody to show me how the shower works. No, it was not me. "plumbing problems, please wait 15 minutes". And another 15 minutes, and another 15 minutes. Finally it was time to go to bed without a shower.
So, yes, hotel guest can be annoying and can be "picky". But if I pay 400 Euros for a night then a working shower with preferably warm water and a reliable internet connection can be expected.
1. Corporate business and negotiated rates (a large % of business)
2. Groups (unless you cram 20 - 40 people in an airbnb room?) - this includes conferences, conventions, aircrew, functions, tour groups) (another large % of the business)
This assumes we're talking about city hotels with a normal(ish) business mix, but individual travellers often don't make up the largest portion of business for the hotel (this really does vary, but outside of pure tourist and transit areas it's roughly accurate). Add into the mix the zoning and health & safety requirements, and I'm not sure you could call "doomed" just yet.
There is scope for (ahem) disruption in booking and distribution, which we already see - but the physical product is probably going to be around for some time. Sometimes, you just need a big building with lots of rooms...
My one Airbnb experience was massively negative because I value my time.
Hotels are not remotely doomed. Demand for them may go down, though.
that gives them or any "DISSSSRUPTIVE!" startup the right to break the law , doesnt it ? as long as it's on the web , anything goes,hey...
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.
- the population density of the UK as a whole is about 7x greater. The US has really got a lot of space that could still be built on.
- there is limited reason to live in Las Vegas unless you work in hospitality (although there has been a recent boom- and bust-cycle).
- housing market tends to be more divergent in the US than in the UK: it's more likely you can find some city that's relatively cheap.
Manchester - £55K+
Leeds - £70K+
Birmingham - £45K+
Hull - 50K
Bristol - 100K
Norwich - 70K
If you're happy with a small village then I think you can find even cheaper.
Are these places you're likely to be able to rent out to full capacity on AirBNB? That's a different question.
Where in the UK are you going to pick up a (small) house in a non-rough area of a city for ~£61k? Let alone the equivalent of Las Vegas.. (don't say Blackpool!)
As someone who owns property in the UK, has lived in numerous areas of it, and is actively looking for somewhere new to live, I hope I'm not too misinformed in this area, but standards do vary. I'd contend you'd find nothing as attractive as the Las Vegas pad in the UK at such prices though.
Are you referring to the glut of available real estate, or the tourist attraction? Or is there some other thing that makes Las Vegas special?
Ugh, I feel sick. And need to move.
Las Vegas is somewhat unique in having low housing prices coupled with a huge tourist market which makes such a setup workable.
So yes, I think the capital is overheating.
But yeah, Cambridge is ridiculously expensive. So, increasingly, though is rural Lincolnshire! I'm looking for a 4 bed house close to town and £250k is about the minimum for something decent. I suspect that would barely buy a nice flat in Cambridge though..!
[Brora is also home to my favourite whisky - Clynelish]
Somewhere like Arnisdale or, even better, Inverie in Knoydart are far more remote (the latter is probably the only village on Great Britain that has no road access).
$200/month for an unlimited cleaning lady? Those are Thailand/China prices. Crazy.
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.
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.
Of course, I would start out low ($200/month) then raise and raise the fee when you become indispensible. The absentee owner is essentially just an investor with the capital outlay. And being far away and totally reliant on the cleaner/manager, you can probably squeeze him until he's making only 10% annual return (better than stock market, just to leave some incentive). The owner makes it easy to arbitrage him when he puts his financials in the open.
In your EDIT, I think you are essentially talking about a real-estate investment portfolio manager. You'd take money from investors, fly around and buy up property, then manage the cleaner/managers, take 50% of the profits and give the other 50% to the investors.
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.
Edited to add: Americans almost always say "vacation" instead of "holiday" but you could be a long term expat who is picking up the local language.
"Short term leases (leases with terms less than 30 days) are prohibited."
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.
How about doing a real analysis on this?
The screenshot had $90 a night with 13 nights highlighted. Assume $100 so I can do math late, and 16 nights rented a month. Assume blocks of stays, say 3 days average each (it's Vegas) and that means you get 4-5 'stays' by visitors a month. That's a one bedroom apartment, free of personal clutter - it would probably take 2 hours tops to travel to and clean it up with one person. Do that 4 times a month and that's ~8 hours of work for someone a month. Washing sheets at home is easy - takes me 30 minutes of my time to do a load of laundry and fold it.
200/9 hours = $22 an hour. This 3 times minimum wage in Nevada.
I understand 'it's just business' and I personally don't have an ethical 'beef' with what he's done... but he really is getting a great deal on the cleaning service and his margin was already pretty amazing on the property. I think he could afford to spend $300 on cleaning/managing and he would probably still break even from the fees. This is a microcosm of the inherent problem with 'trickle-down' economic principles... the person with capital will not spend more than is necessary.
You made so many assumptions about this guy.. Don't try and assume...
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.
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
So if you stay one night you pay $35 and if you stay seven nights you still pay $35. Raising the per night rental fee would mean penalize people who stay longer than the average stay.
In other words, yawn.
Maybe you're being sarcastic, though, since _The Jungle_ was published in 1906.
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.
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.
EDIT: Included more detail about needing a working mobile phone with service, due to ahlatimer.
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.
I'm wondering about the amount of work it would take to clean up the room after each guest, and whether that would outweigh the profit.
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)
I'm not arguing for or against the laws, but I think it's clear why many residents of such a city would decide to use legal force to prevent that.
If the apartment next door turned into a hotel, there would be random people coming and going and I wouldn't be able to count on any of this. I would expect more problems, but even worse, rotating problems, where someone comes and goes and then another person comes. At least if it's one person you can talk to them and work things out, but if it's a new person every 2 days, it's all over again from the beginning each time, and they may not even care, because they aren't invested in living here.
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.
Just do a textual search for "insurance" in the article. Zero results found. Yep, it's "disruption" all right! Full speed ahead!
I'm sure that's what's happening, probably unintentionally. And you're okay, until a crime is committed, someone is hurt, damages are done or the place burns down. Then the insurance company says, "Oh, you were renting it out? Good luck!"
There isn't really any ding to my premiums for it being a rental. I lived in the rental before it was a rental. The full insurance premium (when I lived there) was about twice as much as it is now as a just rental.
Average monthly revenue: $1,634
Rough monthly profit: $1,134 (after cleaning, bills and other expenses)
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)
Assuming a $300 for utilities + HOA fees sounds believable
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.
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.
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.
But yes, if I'm a neighbor there and I find out this is going on, I get angry.
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), 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.
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.
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)
I have several customers who are AirBnB hosts who use my service, Ringo , 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.
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.
Yeah, I know, reputation system, rare chance, but rare chances is the kind of thing you often don't want happening to 60K investment!
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.
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.'
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!
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.
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.
I'd freak out if someone were to start fiddling with my electronics, perusing my Laserdisc collection, etc.
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.