The Coming Death of Airbnb

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The Coming Death of Airbnb

Jason Reed
Investor · Minneapolis, MN · Member since 2017 · 11 posts · 22 votes

I have had a number of investors that have been excited to take advantage of airbnb with their rental properties and their own homes. Numerous clients of mine and aquaintances have already cashed in on airbnb. Properties that would normally bring in $1,200 a month are now receiving that in a matter of days. To further the frenzy, the Twin Cities will host the 2018 Super Bowl, nothing seems sweeter than getting $10,000 or more for one week's rent in February in Minnesota. 

I am all for capitalism and this is exactly what makes America great, however don't plan on cashing in on airbnb for the long-term. Despite the thousands of ecstatic owners that have used this great platform to earn new wealth, there are those that are being hurt by it. Airbnb directly injures hotels business. I know, you're not shedding tears for Paris Hilton and her pals, but owners that are currently cashing in on airbnb are already feeling their wrath. 

New York City, recently adopted legislation to ban any rentals shorter than 30 days. Airbnb spent $10 million fighting the legislation and then dropped a lawsuit after the city promised to only pursue the property owners and not Airbnb. In February, the New York Post reported that Hank Fried and a Real Estate Broker, Tatiana Cames, were collectively fined $17,000 for 17 violations. They are required to pull their Airbnb listings and will have the $1000 violation increased to $5000 each and then $7,500 each for a third violation. 

Similar bans have happened in Colorado, San Antonio, and Santa Monica. Hotels are the big ugly Gorilla that will cause problems for Airbnb, but they aren't the only problem that is surfacing. In Minneapolis, in 2010 the city collected $61 Million in revenue from the extra tax that they add to hotels. Couple this with the additional tax revenue that will be aversely affected by Airbnb, and the same folks that govern rentals will be looking to kill Airbnb because of the lost revenue. Restaurants, are losing revenue, along with downtown areas, as many of the Airbnb units are removed from the more densely populated areas. Once again, this will hurt large cities revenue sources.

Finally,  in large cities and vacation areas, voters will push Airbnb out of their communities. Politicians will respond to home-owners that vote, and many of them will complain about the tenants that are in the short-term Airbnb units. As a rental property owner, I know that it can be difficult to deal with tenants that are loud or disruptive to neighbors, this issue will be out of hand for many airbnb owners. After all, what are the consequences for a tenant that is in the property for two days, and then leaves the morning after they have kept the neighbors up all night. 

I am not against Airbnb, but I feel the end of this great revenue source is near.

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James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
9y

@Jason Reed

I think typewriters, hardback encyclopedias and, more recently, taxi cabs might have something to say about the staying power of disruptive technologies. An interesting take on Airbnb, for sure, but one I completely disagree with. More and more, people around my age or younger (and even older) are looking to Airbnb instead of hotels. Full kitchen and living space, outside the hotel district, often cheaper price? That is quite appealing to people. Right or wrong, what the market wants, the market usually gets.

There is no broad brush painting of cities' Airbnb laws. New York and San Francisco have certainly tried to ban all or portions of this industry. Take a quick look at the Airbnb site, and you'll see that's not working so well.

The laws are a patchwork of political positions across the country. Just 100 miles apart, three cities here in Colorado offer a perfect example of the variety of regulation. Liberal Boulder has very restrictive laws that, in certain scenarios, only allow you to host for parts of the year and only in your owner-occupied primary residence. A little further south in only slightly-less liberal Denver, the rules also restrict it to your primary residence, but tenants can also Airbnb and anyone who's legally doing it can do it all year round. Travel an hour south to conservative Colorado Springs and property rights rule. That city has no restrictions on short-term renting a property or properties. I've talked to the planner who oversees this stuff, and they have no plans to restrict that.

(BTW, I know the Airbnb and short-term rental laws quite well here, and I don't know of any "ban" on Airbnb in Colorado.)

To your other points:

  • Some restaurants may be losing out, but others are winning. Airbnb tends to take visitors to the non-hotel districts where local restaurants are capitalizing off an influx of new visitors. 
  • And any argument that can be made about a short-term tenant can be made about a long-term tenant. A bad STR tenant is gone in a few days. A disruptive LTR tenant is there for a year.

There are certainly downsides to Airbnb -- both to a city and to a landlord and neighborhood. But on the whole, I think Airbnb is a wonderful evolution of the accommodations market, and I don't see it going anywhere.

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  • Clayton Barnes
    Bloomington, IN · Member since 2017 · 53 posts · 37 votes
    9y

    It certainly seems worth having a backup plan, but not doing something that doesn't seem morally wrong out of fear that it may some day violate regulations seems premature to me. I wouldn't buy a property that needs to airbnb successfully for the next 30 years, but if you can increase your profits over the next few years and just go back to renting it as a normal unit why not?

    11Reply
  • Derek Johnson
    Investor · Minneapolis, MN · Member since 2016 · 4 posts · 2 votes
    9y

    I've had airbnb tenants mention the Minneapolis tourism bureau recommended AirBnb's by lake of the isles so I'm not sure how hard anyone's pushing to get rid of it here.

    1Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @Jason Reed

    I think typewriters, hardback encyclopedias and, more recently, taxi cabs might have something to say about the staying power of disruptive technologies. An interesting take on Airbnb, for sure, but one I completely disagree with. More and more, people around my age or younger (and even older) are looking to Airbnb instead of hotels. Full kitchen and living space, outside the hotel district, often cheaper price? That is quite appealing to people. Right or wrong, what the market wants, the market usually gets.

    There is no broad brush painting of cities' Airbnb laws. New York and San Francisco have certainly tried to ban all or portions of this industry. Take a quick look at the Airbnb site, and you'll see that's not working so well.

    The laws are a patchwork of political positions across the country. Just 100 miles apart, three cities here in Colorado offer a perfect example of the variety of regulation. Liberal Boulder has very restrictive laws that, in certain scenarios, only allow you to host for parts of the year and only in your owner-occupied primary residence. A little further south in only slightly-less liberal Denver, the rules also restrict it to your primary residence, but tenants can also Airbnb and anyone who's legally doing it can do it all year round. Travel an hour south to conservative Colorado Springs and property rights rule. That city has no restrictions on short-term renting a property or properties. I've talked to the planner who oversees this stuff, and they have no plans to restrict that.

    (BTW, I know the Airbnb and short-term rental laws quite well here, and I don't know of any "ban" on Airbnb in Colorado.)

    To your other points:

    • Some restaurants may be losing out, but others are winning. Airbnb tends to take visitors to the non-hotel districts where local restaurants are capitalizing off an influx of new visitors. 
    • And any argument that can be made about a short-term tenant can be made about a long-term tenant. A bad STR tenant is gone in a few days. A disruptive LTR tenant is there for a year.

    There are certainly downsides to Airbnb -- both to a city and to a landlord and neighborhood. But on the whole, I think Airbnb is a wonderful evolution of the accommodations market, and I don't see it going anywhere.

    34Reply
  • Kevin Powell
    Minneapolis, MN · Member since 2014 · 48 posts · 28 votes
    9y

    @James Carlson well said!. Denver just passed tax laws for AirBnB didn't they to make for some of the lost hotel revenue? I don't see Denver on AirBnB website. 

    @Jason Reed when the technology is mature and the impact is so immense I can't see how it will be stopped or slowed down. Rather I feel it will be like retail with the rise of ecommerce, the hotels will just need to adjust to a market correction. 

    Colorado

    State of Colorado

    Guests who book Airbnb listings that are located in the State of Colorado will pay the following taxes as part of their reservation:

    • Colorado Sales Tax: 2.9% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit the Colorado Department of Revenue Sales Tax Publication.
    • County Lodging Tax: The county lodging tax rate varies by county. The rate is typically .9-2% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit the Colorado Department of Revenue Sales Tax Publication.
    • Local Marketing District Tax: The local marketing district tax rate varies by district. The rate is typically 1.4-4% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit the Colorado Department of Revenue Sales Tax Publication.
    • Local Sales Tax: The local sales tax rate varies by city and county. The rate is typically 1-5% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit the Colorado Department of Revenue State-Collected Local Sales Tax Publication.

    Boulder

    Guests who book Airbnb listings that are located in Boulder, CO will pay the following taxes as part of their reservation:

    • Boulder Short-Term Rental Accommodations Tax: 7.5% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit the Boulder Short-Term Rentals website.

    Carbondale

    Guests who book Airbnb listings that are located in Carbondale, CO will pay the following taxes as part of their reservation:

    • Carbondale Sales Tax: 3.5% of the listing price including any cleaning fees, for reservations 29 nights and shorter. For detailed information, visit the Carbondale website.
    • Carbondale Lodging Tax: 2% of the listing price including any cleaning fees, for reservations 29 nights and shorter. For detailed information, visit the Carbondale website.

    Colorado Springs

    Guests who book Airbnb listings that are located in Colorado Springs, CO will pay the following taxes as part of their reservation:

    • Colorado Springs Lodgers' Tax: 2% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit Colorado Springs Lodgers and Campgrounds Rental Tax guide.
    • Colorado Springs Sales Tax: 3.12% of the listing price including any cleaning fee for reservations 29 nights and shorter. For detailed information, visit Colorado Springs Sales Taxwebsite.

    Durango

    Guests who book Airbnb listings that are located in Durango, CO will pay the following taxes as part of their reservation:

    • Durango Sales Tax: 3% of the listing price including any cleaning fees, for reservations 29 nights and shorter. For detailed information, visit the Durango Finance Department’s website.
    • Durango Lodging Tax: 2% of the listing price including any cleaning fees, for reservations 29 nights and shorter. For detailed information, visit the Durango Finance Department’s website.

    Golden

    Guests who book Airbnb listings that are located in Golden, CO will pay the following taxes as part of their reservation:

    • Golden Sales Tax: 3% of the listing price including any cleaning fee for reservations 28 nights and shorter. For detailed information, visit City of Golden Sales and Use Tax website.

    Pagosa Springs

    Guests who book Airbnb listings that are located in Pagosa Springs, CO will pay the following tax as part of their reservation:

    • Lodging Tax: 4.9% of the listing price including any cleaning fees, for reservations 29 nights and shorter. For detailed information, visit Pagosa Springs Lodging Tax website.

    Steamboat Springs

    Guests who book Airbnb listings that are located in Steamboat Springs, CO will pay the following taxes as part of their reservation:

    • Steamboat Springs Public Accommodations Tax: 1% of the listing price including any cleaning fees, for reservations 29 days and shorter. For detailed information, visit the Steamboat Springs Tax Information: Accommodations guide.
    • Steamboat Springs Sales Tax: 4.50% of the listing price including any cleaning fees, for reservations 29 days and shorter. For detailed information, visit the Steamboat Springs Tax Information: Accommodations guide.

    Snowmass Village

    Guests who book Airbnb listings that are located in the Town of Snowmass Village, Colorado, will pay the following tax as part of their reservation:

    • Town of Snowmass Village Lodging Tax: 2.4% of the listing price including any cleaning fees, for reservations 29 days and shorter. For detailed information, visit the Town of Snowmass Village Sales Lodging Tax website.
    • Town of Snowmass Village Sales Tax: 3.5% of the listing price including any cleaning fees, for reservations 29 days and shorter. For detailed information, visit the Town of Snowmass Village Sales Lodging Tax website.
    4Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    Hey @Kevin Powell 

    Yep, a law went into effect Jan. 1, 2017 that did a number of things, including requiring hosts to pay the 10.75% lodgers tax that hotels also pay. Hoe Denver Airbnb hosts collect that tax is up to them. Unlike Colorado Springs, Denver does not have an agreement to collect on behalf of hosts, so it's up to the hosts to collect it. That's a real pain. 

    0Reply
  • Jason Cox
    Investor · St. Louis, MO · Member since 2017 · 4 posts · 0 votes
    9y

    First, I'm a supporter for AirBnb.  I think its a great idea and I use it personally for vacations and travel all the time. 

    With that said, I was interested in investing with it. I purchased some marketing for my area from a company called AirDNA that seemed promising. Then several of the local municipalities started passing ordinances either banning short term rentals or imposing restrictive permitting practices and requiring owners to get a business license etc.   

    I think these places are out of line and I hope something gets done at the state level.  

    James has some good points though.  

    0Reply
  • Ro Maga
    Newark, NJ · Member since 2015 · 162 posts · 102 votes
    9y
    What hasn't been discussed is the issue of over-saturation and basic market dynamics. Way too many aspiring hosts might be a little late to the party. Look at places like Jersey City, where it's legal to do Airbnb. The number of listings there has exploded due to mom-and-pop one-unit offerings and "professional hosts" with multiple listings (some owned, some being subleased). The result: too much supply! These days you can find great, whole house listings to come visit NYC for a pittance -- a beautiful, brand new apartment for 7 for $125/night or your choice if stylish accommodations all close to transportation for 4 for under $100/night. This certainly wasn't the case just last summer. Two summers ago, we paid three times those rates, but not these summer. In a market where a 2 bedroom apartment rents for $2,000-3,800 a month long term, by the time you factor in time and costs, Airbnbing your rental is not necessarily that much more lucrative anymore (if at all). On the other hand, it's a great time to be a tourist!
    4Reply
  • Rich Ferradino
    Investor · San Antonio, TX · Member since 2013 · 206 posts · 71 votes
    9y

    @Jason Reed In San Antonio and probably in other cities you have to re-zone your residence and get it approved by the city. I don't think the city would just strip you of your zoning approval after the fact, however I can see them limiting it to not approving new rentals. Could be a way to corner the market. Thoughts?

    0Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @Jason Cox I love Airbnb as well. My wife and I have hosted hundreds of guests here in Denver and have stayed all around the country and world in Airbnbs. (We used it for our honeymoon in Istanbul and Croatia.)

    I think what @Ro Maga said is true for those big cities. It seems like the best cities for Airbnb are not necessarily the ones you'd think of. Seattle, San Francisco, New York, Boston, etc. obviously have a lot of tourism but don't necessarily make the best Airbnb investments. With the big cities come big costs and heavy regulations. Too small a city and you don't have the demand. There is a sweet spot in the middle. Second (and third) tier destination cities like Branson, Missouri and Galveston, Texas. 

    It's not unlike the regular rental market. It's all about the numbers. Where can you buy relatively cheap and rent relatively high?

    1Reply
  • Timothy Church
    Real Estate Agent · Galveston, TX · Member since 2015 · 255 posts · 219 votes
    9y

    On a whole, AirBnB is on the rise. Just 2 years ago in Galveston, (according to AirDna data) there were only 154 active listings on the island. Last year it was 552 and now it is at 1273!! Anything with that type of exponential growth is going to be difficult to stop. 

    Last year several cities throughout Texas banned Uber (Galveston included). With the support of its user base, Uber was able to push through legislation to lift all the bans and only restrict them in places such as airports. Since coming back it has taken off!

    I see the same thing with AirBnB and similar sites. They have build up a strong fan base that will support them with votes to push through legislation. I think the legislation around AirBnB comes down to a simple battle of capital vs votes. The money from the hotels versus the votes of the people. 

    As a STR owner and manager here, I stay tuned with what is happening on the local level. They have put rules in place to enforce our 15% HOT tax, require registration, and also require a local property manager. The city is happy, the vacationers are happy, and the homeowners are happy.

    Honestly it will teach hotels the same thing Uber taught taxi drivers, "If someone offers a better service, don't fight it. Step up your game!" 

    4Reply
  • Joe Davis
    Investor · Houston, TX · Member since 2017 · 83 posts · 42 votes
    9y

    @Timothy Church I have recently been interested in Galveston vacation rentals - but feel that the supply could soon outweigh the demand, coupled with the impending legal implications of cities trying to curtail the rise in these.

    Basically, with 1,200+ units to choose from, a holiday goer will soon see rapid price drops to try and gain bookings from the owners as their occupancy levels decrease...

    What's your realistic short-term and long-term predictions in this space, and do you think there is still viable potential here?

    0Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    9y
    The rental averages nationwide for AirBnB will be pushed down by a combination of factors mainly consisting of Hotel Lobbying pressures, government rent seeking, government regulation costs, neighborhood antipathy, and market saturation. This doesn't mean it won't be very profitable in certain markets.
    0Reply
  • Dan Schwartz
    Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
    9y
    Yes, it's collapsing. Please abandon ship. Especially if you are in the Scottsdale market. I would like all (other) Airbnb hosts in Scottsdale to cease operations immediately. ;-)
    9Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    I certainly understand those that profit from AirBnB but like Uber I believe they are hurting business more then they help any one investor.

    They should all be banned, if for no other reason than the negative impact they have on home owners, condo owners and neighbourhoods.

    If investors want to run a hotel they should buy a hotel.

    0Reply
  • Timothy Church
    Real Estate Agent · Galveston, TX · Member since 2015 · 255 posts · 219 votes
    9y

    @Joe Davis I think one of the key variables is the fact that 79% of all active hosts only have 1 listing. This is about 500 of the hosts. That shows that between a third to a half of all the listings are simple mom & pop type hosts. They bought a second house down here that they choose to rent out when they aren't here.

    The difference between those hosts and the majority of people on this site, is they tend to treat it like a hobby while we look at it like a business. Prices will begin to drop in the next year or two but that provides a unique situation for us as investors. What we are left with are homes that are fully equipped and turn key to be purchased. I have a few under contract right now for other investors. This lowers the initial investment substantially for us. 

    The key in this market is how you manage your rentals. There are far too many people who set it at $150/night every day of every month! They get low occupancy rates, get discouraged, and sell us their houses. On the flip side there are those who rent too cheap and stay fully booked. While that is great for them, without proper systems in place it is exhausting.

    Personally I use a dynamic pricing system (used wheelhouse and beyondpricing and love them both) and I adjust my prices on a weekly basis. I maintain a minimum 50% occupancy and have last minute price drops to fill the gaps. The majority of bookings happen with a 30-day window so being booked for 3 months means you're far too cheap!

    The difficult part with individual property hosts is they offer a level of service that is amazing. Their places not only have the usual addition amenities but little things that go above and beyond. I know certain hosts who always have a bottle of wine or a 6-pack of the guests favorite beer waiting. 

    I think the market will slowly saturate over the next two years and peak out. At that point, the hobbyist will slowly die off and the business minded investor will pick up their scrapes and build a beautiful portfolio. Yes ROI has gone down but in my personal case it has gone down from 30% to 25%. That still beats my 15% LTR any day!

    1Reply
  • Timothy Church
    Real Estate Agent · Galveston, TX · Member since 2015 · 255 posts · 219 votes
    9y

    @Thomas S. Besides the hotel industry, I don't see which businesses they are hurting. 

    One of the things I love about Galveston is that a lot of the restaurants are small hole in the wall type places. They aren't giant chains which the same food across the nation. The downside to this is that they can be difficult to find. Even with apps like Yelp, most of these aren't promoted enough to gain wide recognition. 

    When a guest stays at one of my vacation rentals, they get a digital guest book with information not only about the house but about the cool places to go. I can promote these small businesses that I didn't even find until living on the island a few years. I can tell them which pho place is my favorite or what places are kid friendly. There is a place here called Board Game Island. The ratings aren't the best but they have decent food and any board game you can think of. When someone sorts an app by the ratings they will miss it.

    All vacation rentals are doing is moving money away from corporate hotels and putting them into local economies. That to me is a win!

    4Reply
  • Joe Davis
    Investor · Houston, TX · Member since 2017 · 83 posts · 42 votes
    9y

    @Timothy Church great advice and input thanks, would like to one day really dig into the Galveston market, so maybe we can get in touch soon :)

    0Reply
  • Joseph M.
    Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
    9y

    I have read about all the cities cracking down on Airbnb. I know in Los Angeles there is a lot of talk of banning Airbnb, but the city could lose tens of millions in revenue. Article about that here:

    http://www.latimes.com/local/lanow/la-me-ln-airbnb...

    In NYC (or at least Manhattan) where all properties are multi family condos or apartments it seems to make sense to just have the HOA decide if they want to allow airbnb rentals rather than just banning it across the whole city.

    I've still never used Airbnb or rented out to anyone via Airbnb but I generally just hear positive things about it. 

    I think there is a perception that everyone renting an Airbnb is going to use it for a big party or something but in reality I don't know how often that happens. They'd also get rated badly on Airbnb too and imagine they could be kicked off the platform.

    0Reply
  • Alf Penland
    Tucson, AZ · Member since 2017 · 24 posts · 48 votes
    9y

    So if a short term rental of 30 days or less is banned, then you have the guest sign a 31 day lease with an escape clause allowing them to abandon the property after 24 hours with no notice and no early termination fee.  They are still responsible for the normal fees of course, but you then get to repeat the process every 48 hours and go about your business.

    If anyone calls you on it, just explain it's really hard to find good tenants now days...... 

    9Reply
  • Betty Cruz
    San Antonio, TX · Member since 2016 · 240 posts · 163 votes
    9y
    Rich Ferradino I didn't know that info about San Antonio. Where did you learn that and when did it take effect? Was I under violation last summer when I rented my house out on Airbnb?
    0Reply
  • Betty Cruz
    San Antonio, TX · Member since 2016 · 240 posts · 163 votes
    9y
    Alf Penland I have thought the same. Would that work?
    0Reply
  • Rich Ferradino
    Investor · San Antonio, TX · Member since 2013 · 206 posts · 71 votes
    9y

    @betty cruz My realtor told me about the process. The only people right now that can really deny airbnb is the HOA. I put a SFH under contract as my primary residence and since it's .5 miles from the pearl I'm going to airbnb an rv. I was thinking a tiny house but they are just glorified trailers, and for the $/sqft you pay on the good looking ones, you might as well just have a stick built casita.

    0Reply
  • Alf Penland
    Tucson, AZ · Member since 2017 · 24 posts · 48 votes
    9y

    @Betty Cruz I'm not an attorney and I have no idea if that tactic would work, but I'm a think outside the box kind of guy.  If I owned a property in NYC, especially a popular spot like Times Square or something and I was making good money on Air, I would be pissed with the new legislation.

    Given the amount of money at stake in NYC for this kind of thing, I would certainly be ponying up money to have an attorney explore the idea for me.

    Someone is going to figure out how to do a workaround.  Maybe it's a 31 day lease paid upfront and any unused portion of the lease is refunded as a pro-rated amount.  So instead of a daily or weekly rate, it's a 31 day rate with a pro-rated refund based on their actual usage of the property if they leave early....

    1Reply
  • Chris Armstrong
    Realtor · Charleston, SC · Member since 2016 · 229 posts · 159 votes
    9y

    @Thomas S.

    You are wrong and how do you feel you have the authority to say that? Stay in Canada with your negativity.  Your points are not even close to being valid. I own several units in a condo complex that are airbnb rentals and our properties are the best in the neighborhood. Actually, people started improving their properties as a result of ours and now property values have begun to rise across the whole neighborhood. 

    They have many positive impacts on areas that would normally not have tourism, so again, you are wrong on the negative impacts on neighborhoods. This is all contingent on owners being responsible on not renting to just everyone. 

    Lastly, not just anyone has the funds to buy a hotel, so thats not going to work either, I feel that you have some interest in the hotel business and you lobby against it because you feel threatened that there might be a better option out there than your hotel. Like it was mentioned earlier in the post, if you are worried about competition then step your game up and give the consumer the best option or shut up and stop complaining. 

    2Reply
  • Jason Reed
    OP
    Investor · Minneapolis, MN · Member since 2017 · 11 posts · 22 votes
    9y

    I am surprised I made so many people become so upset. If people read what I said, I don't have anything against Airbnb, I am just seeing some investors that are relying on it. The wife and I have spent several vacations in VRBO units in different parts of the country, and we even have thought about doing ourselves.  So, the backlash about being against the Idea of Airbnb on my part isn't necessary. I am not a Luddite, nor do I have anything against Airbnb, I just think it will be targeted because of the clout that hotels have, and the potential tax revenue that the city will lose.  Two other examples that I have seen where big business and the government get in the way of what the market is calling for are:

    1. In the neighborhood surrounding the University of Minnesota, there are zoning rules set up that limit the number of people that can live in each unit. In a duplex, there are only 3 unrelated people that can live in each unit, despite the rule many owners have built additional bedrooms and had 5 tenants living in the space. The cash-flow is awesome for the owner until a neighbor, or an upset tenant tells the city. The city then fines the owner. If they are caught a second time they lose their license, and need to sell the building. 

    In this case the market is is "calling for something" as James Carlson refers to the market for Airbnb, but the city and the neighbors shut it down. The sad thing is that multiple new apartment buildings have been built in the same area, and the owners are allowed to have four students living in a two bedroom apartment. Once again showing that the rules often are changed for big business. 

    2. Watch the movie Tucker and you will see how big business and government can get in the way of something that is great. 

    Finally, to the uneducated person from South Carolina, I am not in Canada, and we are much more advanced in Minnesota than you may know, and I am not being negative. I am just trying to help advise people to see what may happen and not to count on something that may only last a short-time. I advised people not to take ARMs prior to the 2008 crash. I also advise people to look at zoning in an area vs. how a building is being used so they don't get burnt if the city tells them that they can't lease or use a building in the way they intended. Maybe I should have titled the article "The possible death of Airbnb?" Sorry, next time I'll go all positive.....

    3Reply
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