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I Bought An Apartment To Rent Out On Airbnb (needwant.com)
583 points by j0ncc on Nov 1, 2013 | hide | past | web | favorite | 373 comments

If anyone is interested, this looks like the link to the place:


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.

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.

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.

Done: It is legal. This is a contract issue and is therefore covered by civil procedure and not criminal code. So, it is "legal". But, you may be sued for breach of contract and be found to have damaged the other party. But, that all has to be argued in civil court and you may win or the other party may be found to have no damages. Finally, be sure to pay your taxes. That actually is a law.

Zoning laws are a legal issue, not a civil one. So are licensing requirements and other hotel codes. The HOA stuff would be a civil matter, but that is only one of the things preventing this sort of action.

Because they can't be purchased as a second home, the down payment is the biggest hurdle in getting a unit (30-35%). The cash flow after that is quite nice if you can find the right property.

> 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.

A lot of people don't want to live next to a revolving door of new arrivals. They enjoy knowing their neighbors, having friends for their kids nearby, and building lasting relationships with the community. They are willing to trade their own right to rent out their house as a short term hotel in exchange for a legally enforced expectation that their neighbors won't do this either. Yes, this does amount to a limit on personal, individual freedom - you can not purchase a house and turn it into a short term rental unit (ie., a hotel) at will anywhere you please.

People have lots of preferences about housing, which is why people tend to make an effort to suss out their housing options. Whether your neighbors are permanent or transient is just another dimension along which your preferences can vary. I don't understand why that preference in particular should be legally codified, whereas practically every other variable gets determined by people voting with their feet and dollars.

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?

Have you ever bought a house? It's exhausting and expensive, and it's not as easy to "vote with your feet" after the neighbor decides to make his new place into a hotel. It's not like changing pharmacists. These protections exist for a reason.

Well actually, speak of the devil, I moved out of my last apartment specifically because my downstairs neighbors, who had lived there for years, were completely intolerable. If I could have waved a magic wand and replaced them with an AirBnB crash pad, I would have done so in an instant. Restrictions on short-term rentals are of little comfort when your long-term neighbors are worse. Then again, the arguments against short-term rentals go through just about as well for long-term rentals, so why not just restrict rental properties altogether? Many homeowners seek to avoid neighborhoods with high rental density, so why not make their jobs easier with a law?

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.

> 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.

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.

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

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.

Hotels are regulated for fire safety, food hygiene, etc etc.

You can see how it's useful to protect society to not allow people to run unlicensed hotels?

But the difference is, you bought something where short-term/vacation rentals are one of the main purposes. Your condo was designed so that it could be used as a short-term rental. You are working within an established business model.

Many dedicated AirBnB locations are supposed to be strictly residential with longer-term leases.

What's the name of the condos if you don't mind me asking? I'm looking for something similar.

Are there hotel and zoning laws in unincorporated communities in Nevada?

Probably. It's still in the state of Nevada and in a county. An "unincorporated" town isn't lawless.

Why probably? Even some incorporated areas don't have zoning laws. For example, Houston.

That's right, Houston doesn't have any zoning laws.

Yes it does. Houston has tons of zoing laws. http://www.slate.com/blogs/moneybox/2011/11/30/the_myth_of_z...

Right but from a quick scan of https://www.leg.state.nv.us/NRS/NRS-651.html (admittedly very quick) it appears all he has to do is post a rate card for his maximum daily rate and not discriminate against guests.

From a quick scan of what I think is likely the HOA rules (http://valenciahoa.com/admin/uploads/r&r.pdf), you can't have sub-30 day leases. I'm not sure this is the right HOA, but from the Google Street View, the logos are the same.

Hy HOA (not in Nevada) has this exact same clause, and when I read about this, I wondered what his HOA would say. If I were an HOA, I'd be pretty concerned about AirBNB.

If I worked for the HOA and I saw this I would try to figure out if anyone knows I saw it. If not, I would ignore it. It's technically against the rules but OP seems to be doing a good job of managing it, and I doubt I could apply a higher standard to the rest of the units. I'd wait for a resident to bring the issue to me, which would hopefully never happen.

If I managed a ritzier condo complex I'd probably do something about it immediately rather than take a wait and see approach.

Former HOA president here (for a 77 unit building in downtown San Diego).

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.

Did you ever consider changing the rules to allow short-term rentals?

You might want to reread my comment more carefully. I was actively stopping it in my building.

If anything we were trying to push an ammendment to make tenancy a 6 month lease minimum.

It's probably an insurance coverage issue, so ignoring it wouldn't be a good idea. Especially if the insurance company feels that you should have known about it.

Wait, why does my insurance company care about my HOA rules?

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.

I think he meant the HOA's insurance (including liability) for the common areas of the complex. If the HOA's insurance found out that an HOA board member or property employee knew about a residency violation, they might have grounds to cancel the policy, which would just end up costing the HOA money, which would raise the monthly dues of all owners.

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.

As someone else said: The HOA representative should care about the HOA's insurance. If there's insurance covering e.g. common areas, it is problematic if the insurance does not cover short term lets and units are used for short term lets, because the expectations of damage from places e.g. rented out as party pads would be far higher than otherwise.

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".

> You've clearly got a bit of a nanny mentality about this.

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 was wondering about the HOA restrictions too. Our condo in San Francisco that we live in came with CC&R's that limit how we can rent the unit out. It's permissible only for periods over 30 days and you're not allowed to offer typical hotel services like changing sheets, towels, etc.

I'm curious if the author looked into this.

I'm not saying you're wrong but I'm surprised this is the top comment on "hacker" news.

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.

When I was visiting Berlin last winter, I stayed at Airbnb flats and it seemed like a lot of the owners were doing exactly this. In fact, to your point, the city was, IIRC, about to forbid vacation rentals in certain neighborhoods. Berlin is rapidly gentrifying, there's a R.E. bubble going on, poorer people are being pushed out of the city, and this kind of thing intensifies that trend. I've no idea if cities in the US would be willing to step in and intervene if this became common here.

Berlin is rapidly gentrifying, there's a R.E. bubble going on, poorer people are being pushed out of the city

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.

It's not quite that simple. Building up can ruin the character of the neighborhood, which is often a big part of the allure.

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".

> Building up can ruin the character of the neighborhood, which is often a big part of the allure.

Well then, less allure would lead to lower prices, right? What's not to like?

That's all well and good. But all the wealthy people who already live there will probably use their political clout to prevent new construction.

And this is inherently wrong, why? People (of whatever their net worth) vote, speak at meetings, and talk to their representatives to try and pursue outcomes that they prefer. One of those outcomes may be maintaining a particular character for a neighborhood. It's complicated. Greater good for the larger city or whatever and all that. But I don't see anything devious about residents having a say in what their community looks like.

> And this is inherently wrong, why?

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.

> Because the world does not exist for the benefit of the rich and privileged

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.

> Does it exist for the benefit of the poor then?

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.

The Rich-Enough don't actually vote to change things, they buy politicians and make deals behind the scenes.

It's not quite that simple. Building up can ruin the character of the neighborhood, which is often a big part of the allure.

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?

I don't know if this is a great example, but: http://www.leavenworth.org/

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.

In Mitte, there are some buildings where most of the apartments are Airbnb rentals or similar. There are few local residents left who are not so happy about living in a 24/7 party hostel.

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...

I put my parents up in an AirBnB apt in Paris when they were visiting me. The renter had an agreement with a handful of friends that they would crash at their friend's apt when their apt was being AirBnB'd out. She said a lot of the students do it to earn extra cash. Same was true in most other cities we AirBnB'd in.

Berlin has been gentrifying ever since they tore down that wall. You can still buy apartments in East Berlin for under $100K.

this is definitely happening in NYC. A friend of mine just told me how he was considering getting in on it.

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).

Easily. I know at least two people clearing $100k/year by being 'airbnb slumlords.' Real estate agents are keeping apartments off the market and renting them out as hotels.

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.

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 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.

I agree that the way to deal with increasing rents is to build new buildings. In fact, I think that is probably Bloomberg's greatest accomplishment. He made it much easier to develop new buildings which led to a boom in development.

I would imagine Airbnb could at some point cap the number of nights you could let a place out, right? Certainly not ideal from their standpoint, of course, but manageable?

It also prevents a legal and valid use-case -- renting out your couch every night of the the year. So long as you still live in the place yourself full-time, this isn't illegal under most municipal codes.

"So long as you still live in the place yourself "

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.

This was the case at a place I stayed at in Boston - the place was a 3 bedroom apartment, 2 bedrooms were occupied by long term tenants, while the room I was in was exclusively for AirBNB.

I think rooms get far less than a full apt, even if you get the same space. Just having to deal with another person there means you can't totally relax in most places. (Like walk naked from the shower to the room.)

Seems pretty easily solvable - only enforce it for listings for whole apartments.

People might lie, but there is going to be some immediate negative feedback when people find out they've rented out a couch...

A consequence of this could be that people who rent places out also use AirBnB's competitors. So this could perhaps help AirBnB politically, but wouldn't fully stop the problem.

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?

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.

I think your missing a huge one. Taxes, hotels in major city's often send 10+$ a day to the local government. And before people complain about this that money often pays for things like museums and convention centers which is why many people are going to the city in the first place.

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

So if NYC just made airbnb charge the 5.875% tax, most of their complaints would go away? And by increasing the hotel supply, hotel prices would go down to better match actual long term renting? Then it would create a more liquid housing market enabled by computerized markets? It would still allow casual renting of people's houses that way.

No, their complaints aren't strictly about the missing tax revenue. There are other regulations that would need to be addressed (health, safety, etc...). Hotels are a heavily regulated industry with good reason. Regulations are a protection mechanism to protect the city/neighborhood and the consumer.

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.

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

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

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

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.

Not true. Paris had zoning laws (including building height restrictions and business location restrictions) since before Haussman, in the early 1800s[0].

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.

[0]: http://books.google.com/books?id=dONVGtJzxrwC&pg=PA20&lpg=PA...

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.

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.

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.

NYC had numerous building codes and restrictions previously, including the 1867 Tenement Law, and the famous 1901 new tenement law.

Buddy just asked a question that solicited an informative answer for all of us to read. Not sad.

The general "sad" for me is that HN has so many strong libertarian types who start from an assumption that government regulation is practically always wrong and done for corrupt purposes. Learning that this is not the case is a lesson one could easily pick up much earlier in life, so it's sad that they made it this far without understanding that.

I put it down to the poor state of our mathematical education. The naive understanding of economic systems libertarians display is actually fairly similar to what you see in introductory dynamical-systems courses. You can, with great care, construct some "well-behaved" systems where you present a set of rules, and the expected thing happens: you push lever X and Y happens. Raise the minimum wage and unemployment rises!

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.

If you keep treating your intellectual opponents like this, you're going to get trounced the next time you run into a smart one.

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.

Our attitude towards any law really should be a presumption of doubt, especially laws that interfere with consensual activities. Laws are blunt objects that come with their own enforcement costs and unintended consequences. We should be especially wary about regulations whose benefits are sharply concentrated among a small group (say, hotel owners), and whose drawbacks (say, slightly higher hotel costs for everyone else) are widely dispersed. That's standard public choice theory. That doesn't mean that no regulations are ever justifiable (far from it!), but it does suggest that we not favor regulation for the sake of regulation.

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.

These people are investors. Investors usually look solely at the money instead of the effects or consequences.

What NY is mainly worried about (and has the strongest public support for them worrying about) is AirBnB being used as a way of de facto running unlicensed hotels. People don't like discovering that the room down the hall from where they live has essentially been converted into a hotel room, with customers coming and going regularly, no hotel tax paid, and none of the usual health/safety regulations applied (industrial-strength fabric cleaning, etc.). By comparison, someone renting out a spare room now and then is not as likely to produce social or health problems, and most of the public probably views it as benign, even if also technically a violation of your lease.

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.

Illegal hotels aka slums. There is a reason hotels are fairly highly regulated. My first (and only) stay at an Airbnb rental resulted in me getting bedbugs.

You won't be safe from bedbugs just because you're in a hotel.

the likelihood of you getting bedbugs in a hotel room is smaller than from a random room in all of NYC. Granted , the rooms up on airbnb for the moment probably don't represent a uniform cut of NYC, but considering the type of people who would start running unlicensed hotels, I'd imagine it being more likely.

I have been for my entire life, but YMMV.

It is unrealistic to expect any dwelling, whether it be hotel or hostel, to be free of bed bugs, especially if you're in a region with lots of international travelers. There is no effective insecticide for them, they can be impossible to see, and they don't need to eat for months.

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.

In nearly all US jurisdictions, hotels are required to maintain units free of vermin, including bedbugs. Private residences are not. Thus, if a hotel fails to keep the room free of bedbugs, they are generally (1) obligated to refund your room charges and (2) pay to replace any luggage or clothing rendered unusable by the pest infestation.

??? If there's no effective insecticide, how do you think we're killing them? The various -methrin-based compounds are generally pretty effective, though occasionally resistant subpopulations crop up.

A shop vac removes them from a mattress.

If I read your comment correct (why is it bad for NY to be against airbnb scenarios like this) then no, it's not a bad trend. To elaborate, many places (not just the US, and not just New York) has rent-control laws. By and large not everywhere, and not all parts of the cities/counties who has. But for those that do, this is in clear violation of at least that, but also - possibly - sublet laws. That is a far fetched example though.

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.

I'm not intimately familiar with the legal landscape, but in short I think its because a) the myriad laws governing personal property are much different than those governing commercial property b) significant part of AirBNB's model ignores consumer protection laws.

In general, tenant / landlord relationships are heavily regulated - legal objections to AirBnB style rentals (pretty reasonably, in my opinion) claim that anyone who has a unit that is primarily a rental for tenants is a landlord, and should be subjected to all the regulations typically defined in that relationship - a different situation than someone who is going to be away for a few weeks renting out their own personal residence during that temporary time.

Because many of those who are renting out apartments in this manner are doing so without a "hotel license", charging the appropriate hotel taxes or otherwise abiding by laws put in place to preserve the rights of neighbors.

You could probably argue that they are most peeved about not getting the hotel taxes.

>> laws put in place to preserve the rights of neighbors. Sure about that?

If you lived in a high-rise condo and paid go money to do so, and the two places on either side of you started being rented out to random people who were there one week and gone the next, how would you feel?

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.

> If you lived in a high-rise condo and paid go money to do so, and the two places on either side of you started being rented out to random people who were there one week and gone the next, how would you feel?

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.

NY wants to protect the classic hotel business. Hotels and building owners need to take care of all kind of legal and administrative procedures, including security considerations for their users. Airbnb apartment owners are now competing for free with those business.

Not saying i agree, but that's the main motivation behind of Airbnb regulations, in NY and other places.

Not really - it's the rights of the neighbours, who didn't sign up to live in a hotel with people coming and going at all hours, partying, damage/wear and tear, etc.

An interesting bit of evidence that resident concerns are a common motivation: in upscale buildings, which have the funds to pay for it, the crackdown on AirBnB is in even more full swing, through "free-market policing". Some condo associations actually have employees regularly scouring AirBnB ads in their area and looking at the photos to find rentals that look like units in their building (it's often not hard to spot, if you know a building well). Then the owner is identified and sent a "stop doing that" letter, and/or sued for violating their contract.

Probably because it makes it harder for residents to find an apartment.

Perhaps in some (or even many) jurisdictions but isn't this just plain ole "Bed & Breakfast" (you know, the BnB in AirBnB) which has been around since forever?

How is this any different than VRBO, or any of the other vacation rental middlemen out there?

I suspect the difference (at least in the case of NY) is lack of regulation and kickbacks (sorry, taxes) for the local government.

If you want to visit my city and see its sights, you can "kick back" into the damn kitty that it takes to keep those sights maintained.

I'd prefer the opposite. I wish tourists didn't cover any costs of running my city. Then it would be optimized for those of us that actually live here.

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.

Many cities don't charge a hotel tax.

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.)

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

"But, computers!" is the difference.

But, yeah. Pretty much.

Well, that part isn't new. An illegal flophouse is already disruptive, and it didn't require computers to operate one. The new thing here is flophouses with online booking.

Or having a guest house on your property and running a Craigslist ad to rent it out for the summer.

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.

Easy: at the point where your sole use of the property is for short-term rentals.

The guy in question stayed in the apartment himself and let friends stay for free. So he's off the hook; short-term rental wasn't the sole use of the property.


This entire line of argumentation relies on the fact that there is (maybe) not a clear distinction between hotel and not-hotel.

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.

Throwing out the baby with the bathwater is preventing people like OP from doing what he's doing just because some guests might be a nuisance. What about we fine the house owner over those guests instead?

The problem is that the article itself tells us that AirBnB's protection mechanism to keep bad renters out it is broken (don't leave bad reviews for fear of getting bad reviews yourself). So AirBnB is taking all the benefit from this market, without providing a working way to curb any abuses.

My guess is that the fine is either a slap on the wrist (so the house owner just chalks it up to business expense) or so sever that the house owner stops doing short-term rentals entirely. I've not used AirBNB, but I assume that the house owner doesn't really know anything about the renters most of the time.

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.

> My guess is that the fine is either a slap on the wrist (so the house owner just chalks it up to business expense) or so sever[e] that the house owner stops doing short-term rentals entirely.

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?

The fine should high enough to serve as deterrent. If the house owner doesn't know anything about the renters, s/he can either ask for a bond from the tenants that covers the fine (and deal with the loss of customers) or AirBnB or a competitor could offer better vetting of tenants.

I think we agree on this point.

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.

So the guest house example. A hotel? Or because it's part of the property you also live in, not-a-hotel?

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?

No. Hotels do this all the time (see, e.g., the Ritz Carlton, which sells condos at the top of its hotels). Just having someone live in the building is not enough to make a hotel not 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.


You just deferred the problem to the definition of "sole."

Indeed, for many Airbnb hosts occupy their property at least part of the time. In fact, I think that's the niche it has filled best. There were already rental agencies (indeed, online ones!) to deal with permanent short-term rental properties. Airbnb offered a particularly hassle-free conduit for those who just want to rent their property out some of the time, such as folks who have multiple properties in various locations, occupy it seasonally, travel a lot for work, live abroad part-time, etc.

Your argument presumes that an extended-stay hotel needs to be licensed. I don't buy it.

Well seeing as you'd be obligated to collect things like hotel occupancy taxes in most cities and states, and all sorts of consumer protection laws apply to hotels, the reasonable assumption is licensing is required. At the minimum, you need a business licence.

To me the issue is scale. Just like people can hold garage sales or lemonade stand w/o a license vs running a bar.

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.

If you live across the street from me and have a garage sale every day of the week, we're going to have a problem. Your casual dismissal of licensing and oversight, as merely protections for the entrenched, overlooks the fact that there is more than one interested party here.

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

Yeah, that's the difference for me also. If my neighbor rents out a couch or spare room on AirBnB a few times a year, no problem. If he is running it as a 365-day-a-year hotel, much more of a problem.

What if he/she dated and brought home 365 people a year? You may not like it .. but it is really your business what someone does in the privacy of their own home?

The moment the person operates it as a hotel, the person has turned it into a business and semi-public space and regulation does not affect the privacy of the owner. In the dating scenario, on the other hand, it would.

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.

Ugh. My sister says the same thing: If someone does something for profit, suddenly it's everyone's business.

I don't get the logic at all.

And no one tried to justify it.

Ok, so the issue is not really licensing, if we get honest.

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.

No, you don't know what the point of licensing is about.

If you drive badly, what will the police do with your license?

Fine - so let's make obtaining an 'airbnb license' as easy as the driver one. Then if host has issues - take it away.

But somehow I imagine that red tape required to obtain a hotel license is significantly longer, benefiting large companies.

And the infrastructure and regulations to administer an airbnb license just pop out of the ground magically?

I don't think it's a reasonable assumption.

Your argument presumes that an extended-stay hotel needs to be licensed. I don't buy it.

Neither do I. This is not something the State needs to be involved in at all.

There's something analogous to the weak anthropic principle here in that we mostly live in places where the problems that come with unlicensed hotels have been stomped out, sometimes for generations, largely through successful regulation.

I don't think we are against hotel regulation. We just don't consider renting one's apartment on Airbnb the same as a hotel.

State involvement is probably preferable to angry neighbors taking matters into their own hands.

Nothing. I like it.

And the neighbors may not. Licensing isn't just about the man screwing you over.

Airbnb's review system fills the roll of licenser.

Does AirBnB's review system let neighbors to the property file negative reviews?

Do potential AirBnb customers care about the opinions of neighbors? Also, does government regulation/zoning let neighbors file reviews?

> Also, does government regulation/zoning let neighbors file reviews?

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.

They're disrupting an obsolete industry.

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.

In my personal experience, I love travel agents. They were able to:

(1) Make valuable recommendations (2) Offer me a better price than any website (3) Save me hours upon hours of wasted time

I actually still use a travel agent for nicer vacation bookings. I almost always pay the same price as on the website, but get upgrades, free breakfast, spa credits, etc. etc.

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.

(2) only because they are members of larger organizations that can strong arm prices down.

(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.

(2) Yay! The client wins! :) On a more serious note: That is how internet companies continue to stay in business: automate, lower prices, increase competition, etc. Agents just beat them at their game.

(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.

> (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.

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.

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.

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.

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.

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.

50-100 nights/year in good hotels is not for everyone. May I ask how you foot the bill?

A combination of aggressive use of hotel points (eg I paid for 7 nights in Bali just now, about 100-150/night for huge suites with my girlfriend, and am doing 14 days in Bangkok starting 5 nov for free on the points I earned (due to promos, etc).) and work reimbursement. I'm also sort of homeless in that I don't pay rent. (Gf has condo).

A lot is work reimbursed (looks like about 200 nights in 2014 if things go well), plus Starwood points from work and personal Amex.

A quick list of gripes is a pretty unconvincing argument that hotels are "doomed". There is no guarantee that any of those things would be better at an AirBnB. Likewise, a corresponding list of gripes could be assembled for AirBnB-like services. Neither type of service seems "doomed", although the AirBnB-type stuff is probably on shakier ground at the moment, merely due to the legal gray areas.

The big thing for me, is predictability. If I book in at a chain hotel in particular, especially a chain I've stayed at before, I have a certain expectation that the standard is roughly en par, and that the level of hassles will be similar. If I book via AirBnB, I have no idea if the next host will be anything like the previous, and have to put in effort checking reviews. It's hassle I might take if I'm going to spend lots of time planning a long vacation. Not something I want to deal with for short stays or business trips.

Here's the alternate view:

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.

OK, asshole here:

"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.

The probability of getting cheap reliable internet is inversely proportional to the cost of the room, I've found.

> The fence is coming down. Hotels are doomed.

doubt it.

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...

Airbnb is for people with more time than money. Hotels are for people with more money than time (they do not want to spend time chatting to arraange a booking, or to set up social proof for themselves on yet another social network just so that people will consider them).

My one Airbnb experience was massively negative because I value my time.

Hotels are not remotely doomed. Demand for them may go down, though.

Doomed? You've obviously never stayed in a Four Seasons or any other five star hotel...

Oh , yeah , "DISSSSRUPT" ! the new startup leitmotiv.

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...

Just to be clear: your answer is, "nothing", right?

well, there's the whole blogging about it aspect, so not entirely nothing. :)

I think he's saying that the previous industry that airbnb is disrupting is "nothing". As in, there was nothing pre-existing that satisfied the same demand as airbnb.

No, both of us are saying that buying a house to rent out full time is no different than running a hotel. "nothing" is the difference. tptacek appears to have recognized the sarcasm, but apparently nobody else did. I win again.

Yes, you're right of course. I must have jumped the rails tracing back up through the thread.

Is insurance obsolete? How about tax? How about making sure businesses aren't run in inappropriate locations?

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.

Several aspects you may want to consider on UK vs US:

- 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.

I think you exaggerate. zoopla and some research gives me (all city centre addresses):

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.

You're talking in terms of pounds, $100k is approximately £63k. I'm inclined to agree with the parent here, good luck finding a place in a decent area in Manchester for less than £100k.

Yes, I think the OP is rather mis-informed. There are plenty of places in the UK where you can get a one bed apartment for between £50-70k and not get a 'brick through the window'.

Are these places you're likely to be able to rent out to full capacity on AirBNB? That's a different question.

I said "a house for under $100K" not a one bed flat. The one bed flat comparison was in my first paragraph.

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.

> the equivalent of Las Vegas..

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?

The solution is simple, get an apartment above the 3rd floor and no one will be able to throw a brick high enough.

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.

If it makes you feel any better (I'm sure it won't), folks in San Francisco and New York face similar.

Las Vegas is somewhat unique in having low housing prices coupled with a huge tourist market which makes such a setup workable.

Well, it makes me see the appeal of the Vegas tech scene ;)

as far as i'm concerned, though, is that other than zappos... there really isn't that much of a tech scene there. tony hsieh has been trying to develop one, and has put a lot of his own money behind it, but honestly i doubt it's going to work.

but then you'd have to live in Vegas...

Don't move to Vancouver, Canada. We are right up in in unaffordability, just like London, NY, Hong Kong, SF, Zurich etc.

Aren't you guys in a bubble?

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

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

London has its own economy when it comes to property. Prices have soared to a new record high just in a month (+10%).

So yes, I think the capital is overheating.

I feel your pain.

Blame the governments of both Labor and Tory persuasion that decided that it should be incredibly difficult to build new housing virtually anywhere in the country. In particular the pernicious greenbelt rules and the grotesque planning permission process. Also worthy of special condemnation are London's protected views.

Your GitHub says Cambridge, is that true? I am in Cambridge and it is not cheap here.

No, I live in the middle of Lincolnshire. Cambridge is a relatively easy 2 hour drive though and GitHub only let me choose from a limited number of UK cities (at least at the time I set up my profile).

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..!

Here's one for £65K in Brora - not the most attractive of properties but Brora is a pretty nice town (bit out of the way though):


[Brora is also home to my favourite whisky - Clynelish]

"bit out of the way" - I thought where I was living in West Dorset was remote :D

I wouldn't say Brora is that remote - it's about an hour from Inverness by car, is on the main A9 road and is on the Far North Line.

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).

I also find this incredible. Particularly when you can spend $50k just renting a place in Vegas for three months. I realise there are slums in Vegas but the place actually looks quite nice for the money.

$200/month for an unlimited cleaning lady? Those are Thailand/China prices. Crazy.

Seems like a clever way to skirt labor laws to me.

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.

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.

Indeed. Seems like the place to be is AirBnB property manager. Have 6-12 properties to manage and you have a full-time income and perhaps part-time work.

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.

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.

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

That stood out to me as well. She's cleaning his place probably > 4x per month plus doing miscellaneous point-of-contact duties, all for $200 a month? That's insane. It's hard to imagine that if she doubled her prices, the blogger would be better-served to find a new manager.

To answer your question, there's at least one company that believes there's money to be made out of this: https://urbanbellhop.com/. I read about them on Springwise a while ago, and they handle all the check-in/check-out process for Airbnb and VRBO hosts. They don't provide cleaners, but it would make sense for them or another company to do so. I think there could definitely be a market for that kind of all-around vacation rental management services, at least in cities like SF and NYC. Edit: Airenvy mentioned somewhere in this thread seems to do just that.

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

He is quite likely violating the COA of the condo development in which he purchased the room. He's also probably violating the building code for short term rental units, which could mean very heft fines. Depending on where the property is located in Vegas, he could also be violating local zoning and use restrictions.

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

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

that and volume. new people coming in every 3-5 days are potentially more disruptive to neighbors and building owners.

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.

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

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

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.

Because those people, even if you don't know them, are part of the community of the building, and for the most part people will respect the building they live in (obviously there are those people who don't as well). When you have strangers coming and going constantly, you lose some security in who is around you and when - and while it might be that the largest percentage of AirBNBers will treat the property with respect (and not just the apartment, but the building), it still increases the overall risk (either directly form bad short-term tenants, or even not properly closing the lobby door, or letting people in behind them that should not be in the building).

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.

Upvoted to counter the downvote. US citizen (who went to college in Europe) here and I agree that it's no surprise that AirBnB started in America. I've seen ruthless business practices all over Europe, but there is always a level of social responsibiltiy that is more generally lacking in the US.

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.

Downvoted for the unnecessary nationalistic swipe.

I could be American myself, for all you know.

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

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

He's breaking the contract with the owners association that he agreed to on purchase. It lowers everybody else's property values and prevents them from selling their unit.

Where'd you get a copy of the contract he signed?


Section VIII:

"Short term leases (leases with terms less than 30 days) are prohibited."

Having new, random, unvetted people accessing your building on a daily basis should make a difference to you.

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.

As others are pointing out, your original comment is rife with blaming statements: "probably illegal", "live with himself", "people who don't know", "everything that is wrong". If you don't understand what that means, it means you are making up shit and saying it for someone else. <----- this is an example of a blaming statement as I imply you don't understand what I just said before you actually have a chance to reply.

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 agree that the 'hate' is unnecessary on the OP's part, but you are grossly underestimating the labor/time/costs of doing someone else's laundry, managing a property and cleaning a unit. Have you ever hired someone to clean your home before? $200 even for 5 visits is a steal... not to mention that he has tacked on the $35 cleaning fee per the actual listing. If he has 6 separate stays, he makes a profit on the cleaning.

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.

It's not like the cleaner is working 40 hours / week at this guy's place. Depending on how the booking is for the month, she might have to go in and do some cleanup like 10 times per month. Combine her tasks like laundry with other clients to optimize time usage and she can probably handle 20 clients / month.

You made so many assumptions about this guy.. Don't try and assume...

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.

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

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.

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.

It is relatively common for vacation properties to be priced this way because, well, it tends to reflect the owner's costs in that someone is paid to thoroughly clean the property when the renter checks out. (And it's either not cleaned or cleaned much more cursorily on a day to day basis.)

The distinction is that the cleaning fee is per stay; I'd agree that it would be smarmy if the fee was per night.

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.

I'm not seeing the abuse here. How is it abusive to make a profit if he gets enough volume? I am not aware of any commonly held moral value that forbids potentially making money on an honest business venture. My boss makes money on my work. Do you think he'd continue paying me if that were not the case? I would sincerely hope not.

Frankly, it's a little offensive to assume these people are being taken advantage of and don't have any idea. It's entirely possible they know exactly what is going on, and don't need a galant white savior to tell them how oppressed they are.

Those evil white men up to no good again. When will the evil white man ever understand his evil? He won't, because evil never knows itself. It's in his nature after all.

In other words, yawn.

If he's offering $200/mo and she accepts, it's the best she can get. If she were being offered more by someone else I imagine she "knows" enough to determine the bigger of two numbers and accept the better offer. Her options range from $0/mo to $200/mo. You think her best option, the one she chose, should be taken away by force because after reading a blog post you know how to make better life decisions for her? I find that morally objectionable.

What's your opinion on minimum-wage laws, and about the thought process that went into creating them?

You apparently have no fucking clue why some people come to the U.S. The overprivileged assumptions so many Americans make are just completely out of touch with what goes on in many parts of the world. There are plenty of people not eating who would be happy to work hard so they live better than that.

Just out of curiousity what about pre 1913, when there was no income tax and no minimum wages? Were all those people exploited? Was that all immoral or illegal? It was then that the American wealth was created, at the rates that seem incredible now?

I think you would be hard-pressed to argue that large parts of the American wealth before 1863 were not created immorally. 1913 is not very much later.

Maybe you're being sarcastic, though, since _The Jungle_ was published in 1906.

Before destroying jobs that people -- such as the cleaning lady -- may need to feed their families, can you try to back up your accusations with something more than racial remarks?

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.

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

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

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.

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.

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.

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.

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


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

So, you just need to write down the PIN somewhere you have service, right? Or am I misunderstanding when the PIN gets sent?

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

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

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).

Is it even available yet? I thought it was still in development

From there website looks like they're still trying to ramp up product. Maybe he has an early unit though.

Lockitron works over WiFi, Bluetooth 4, NFC, and text messaging.

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...

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.

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...

also significant labor invested and ongoing to make $13,608 per year (not passive, as you note), transaction costs if you want to sell it, not risk free (although not necessarily much riskier than say the S&P) .

Do you rent to the same people for extended stays?

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.

Our maid runs it now (hands off keys/cleans up). It costs us about 15% of the rental money we get. We focus around 1 week stays.

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

she's probably getting ripped off in this deal.

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!

Not really. It doesn't take much effort to manage properties like this. Most guests on Airbnb don't want negative feedback as the author mentions, so they make an effort to leave the place as they found it. The person managing the property is probably not the same one cleaning it. She sources her own cleaning team most likely, and very may well have 60 or so properties under her wing. @ 80 properties & 200 bucks per month, after paying the cleaning team, she is pulling 12000 without lifting a finger. Also, I would be willing to bet she does not report all that income.

Ummm, based on my experience in service-related industries, this doesn't ring quite true. Customer-facing work is really really hard.

Yeah, a stat I wish the author had included was what this works out for her hourly wages; seems like it must be quite low.

Could actually be a business opportunity: Propoerty management for Airbnb spaces.

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)

I'm sure there are lots of reasons, but here's one: if you don't differentiate between hotel zoning and residential zoning in a tourist-heavy city, the rental and hotel markets would start to merge together. This means in both pricing and in who your neighbors are.

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.

Part of it is that it's very different as a neighbor. My whole building is zoned residential. My neighbors are semi-stable, living here 1+ years at a time, usually longer. I recognize them, we feel reasonably comfortable about the people in the building, we have some idea about how to handle noise in a way that doesn't cause huge problems for people, etc. For example, my building at least has some informal etiquette about posting a notice that you're having a party in advance.

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.

While part of hotel taxes are simple politics (the best tax base is the one that can't vote for or against you), some of it is also rational: a large tourist population adds cost to running a city, so the cost should be borne by the tourists. For instance, Las Vegas has a population of 600,000, and receives 40 million visitors. If the tourists stay one night a piece, that's an average of 110,000 tourists at any given time -- an extra 18% to the city population which isn't paying most city taxes.

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.

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.

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)?

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!

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

>The only way to buy insurance would be to lie and commit fraud.

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!"

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.

You can't buy insurance for an illegal activity.

Why? Do no insurance polices cover landlords? Or do those policies specify a duration for a tenant to stay?

I own two houses. I live in one and rent out the other (traditional, long-term lease style... not AirBnB style). My insurance company doesn't care that one is a rental. That is to say, I don't have to lie to them... they know one is a rental and accept it like any other property. The only real difference in my two policies is that the one for the rental is for structure only (possibly some liability too since I am the property owner... I don't recall) while my home has additional coverage for the contents of the house. The renters are advised to get renter's insurance to cover their stuff in my house... but that is completely optional to them.

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.

AirBnB offers insurance.

    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)

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

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.

He's not paying the tax.

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.

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?

If anyone's interested in creating HDR photos for real estate, check out my startup TurboHDR (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.

How are you promoting Lockitron when they are still not shipping? http://blog.lockitron.com/

They've shipped a few devices already.

There was also an old version of the Lockitron. My understanding is that the old one was a deadbolt replacement while the new one goes over an existing deadbolt lock. They still sell the Lockitron Access (https://lockitron.com/store/buzzer) which works with electronic locks. It is possible that he has one of those.

So the whole post is suspect?

That's what I'm thinking.

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.

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.

I wonder what the neighbors think.

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.

Nitpick: lien.

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

Condo associations usually allow only a certain percentage of apartments to be rented. If too many units are rented, a buyer won't be able to get a mortgage. And most prohibit short term leasing.

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

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.

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

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

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.

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

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.

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...

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.

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 by aggregating everything we can find.

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.

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.

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.

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.

It looks like AirBnB also allows that.

I saw those on Amazon a while back, too. It works out quite well, both sides get a say.

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.

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

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)

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.

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

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

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.

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

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.

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!

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.

Doesn't sound too risky at all to me. Cheap price for the unit (would be $200k where I live) and has already made back a reasonable portion of his investment.

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%!

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.

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

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

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.

"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?"

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.'

Incredibly valuable would mean it cost more than $40k.

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 ?

I wonder how he deals with unruly guests.

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)?

By crossing his fingers, I'd imagine.

From the sound of some AirBnB horror stories, its by refunding their money, and eating the loss.

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

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!

> 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.

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.

2) or just getting caught by going public with it... People should not boast about something that is illegal in a state...

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

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.

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.

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.

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.

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.

I think this article was just an ad for Lockitron.

Why did you choose to do this remotely?

He probably lives in an area that is less touristy.

He lives in SF-- high property values

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

Its called a timeshare.

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.

Too bad it's illegal.

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