Dallas officially bans Airbnb, will we see a flood of listings?

[Michael Castro]

I'm sure you've heard, Dallas city council voted to ban all airbnbs in residential areas. I've been seeing people saying this is going to bring a flood of listings onto the market and cause a crash in prices. I could not disagree more, and just wanted to share my reasoning in case any of you are making any investment decisions based on this theory.

[Dan H.]

Quote from @Bruce Woodruff:

No way there would be a flood of listings. Most landlords are smart enough to just turn their rental into either a long-term rental or a medium turn rental.

I recently did not get a permit for one of our STR units. There were nearly 200 units in a fairly small community that did not get STR permits (you are familiar with San Diego so almost 200 units in Mission Beach did not get STR permits). We converted the unit to MTR. We refused some crazy absurd rent offers. The rent offer we accepted was absurd (versus crazy absurd). Market LTR rent was $3.5K to $3.7K (2/1/1 ~100' from the boardwalk, 732.5 Jamaica Court). We accepted $3.5k/month (basically we are possibly/probably renting our unit furnished, paying utilities, and paying MTR PM rates (which is higher than LTR PM rates) for less than we could get renting it out unfurnished as a LTR. This is what happens when close to 200 furnished units all lose their ability to be STRs at the same time.

Note our PITI on this unit is ~$4K, so the MTR rent does not even cover the PITI much less PM, cap ex/maintenance, utilities, vacancy, etc.

We have already made a lot of money on this property; certainly, I am not looking for pity.  I can handle the large negative cash flow but it is difficult for me mentally (I have never purchases a negative cash flow property and this property has produced crazy good cash flow over the years).  My point is to show that if enough furnished properties are converted to MTR at the same time, the MTR rents can fall significantly.