Airbnb hosts to get relief in coronavirus stimulus bill

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Airbnb hosts to get relief in coronavirus stimulus bill

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

Looks like Airbnb hosts will get some relief under the coronavirus stimulus package about to pass Congress.

The current language includes two provisions that could help short-term rental owners that are struggling:

  1. Hosts testing positive for Covid-19, or hosts with family members testing positive with the virus, would be eligible to apply for unemployment benefits.
  2. Hosts are also eligible to apply for small business loans to cover your mortgage and utility bills and possibly independent contractors like cleaners.

This will be welcome news to a lot of our clients in Denver and Colorado Springs (as well as Erin and I, as we own an STR duplex in the Springs with some partners). I know we've been scrambling to get medium-term renters in there, like traveling nurses or others.

There's a small blip here written by Reuters.

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Tim Schroeder
Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
6y

I don't see the point in loans. My losses for March and April and probably more are permanent losses, so what good is a loan? If it's to cover the mortgage, then that implies I have no reserves, and I'm a fool and have no business being in this business. 

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  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    Very positive news. I wonder if you can file unemployment if the town ceases STR activity? Our STR is in Mammoth Lakes Ca that has restricted nightly rentals to at least May 1st, but it's likely going to be longer.

    2Reply
  • James CarlsonPro Member
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    I'm wondering how this will effect people who are doing this on a bigger scale:

    @Luke Carl
    @Michael Greenberg
    @Tim Schroeder
    @john underwood@Tim Schroeder

    [email protected]720-460-1770
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  • James CarlsonPro Member
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y
    Originally posted by @David VanWert:

    Very positive news. I wonder if you can file unemployment if the town ceases STR activity? Our STR is in Mammoth Lakes Ca that has restricted nightly rentals to at least May 1st, but it's likely going to be longer.

    At least the news reports I'm reading don't mention under what specific circumstances the outbreak has negatively impacted your business -- be it host cancellations or city shut-down rules due to CV. So I'd think you'd qualify. 

    [email protected]720-460-1770
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  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    I read it as you would have to be infected with the virus or a family member. Will be interesting to see how it works if you don't even have the option to rent your space. 

    0Reply
  • James CarlsonPro Member
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    I think you're only eligible for unemployment if you are infected or a member of your family. But Airbnb hosts -- even those not infected -- are also eligible to apply for a small business loan to help cover mortgage and utilities.

    [email protected]720-460-1770
    1Reply
  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    Yes, that’s good news about the SBA loan. I like cheap money with a potential 30 year term @3.75%. 

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    So this doesn't apply to people who have a w2 job and do this also, at least not the unemployment part.

    The money is a loan that has to be paid back.

    Heloq and cash out refis are probably as cheap at 3.75% these days.

    So if someone was a PM doing vacation rentals it would help them or if someone wanted to borrow money and go in debt or further in debt this would help them.

    I wonder what qualifications the SBA will require to borrow this money and what the length of the loan would be? It might just be a 5 year loan to give people enough time to get back on their feet?

    At least they are thinking about STR Hosts.

    I wonder what their definition of Host is? Is it someone renting their own property or would that include someone renting out others property?

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @James Carlson:

    I'm wondering how this will effect people who are doing this on a bigger scale:

    @Luke Carl
    @Michael Greenberg
    @Tim Schroeder
    @john underwood@Tim Schroeder

    You forgot me in that list.  From what I've heard, the refinery is going to eliminate all non-essential personnel.  No contract work will be done.  I rent my 23 STRs with 83 beds to refinery contractors.  

    $40 per barrel is the break even point for this refinery.  If crude is above $40, they make money.  If it is below $40, they are losing money by converting the crude into fuel.  They are losing money right now. My only hope is the $500 billion that is allocated to industries affected by the crisis.  

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    John is correct. You are essentially borrowing money it will have to be repaid with interest. And how will you prove the losses? If you had $20,000 in bookings cancelled, what will you do when some of those dates are booked again, thereby erasing that loss? Unless you were a big, full time business, I don't think it would be worth the effort.

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  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    6y
    Originally posted by @David VanWert:

    Yes, that’s good news about the SBA loan. I like cheap money with a potential 30 year term @3.75%. 

    That doesn't sound like short term help, it sounds like cheap money people will use to invest in more properties -- not at all what the goal is. Of course that's the problem with blanket stimulus bills, money isn't always used in the way they wish it was. They can't control it

    0Reply
  • Tim Schroeder
    Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
    6y

    I don't see the point in loans. My losses for March and April and probably more are permanent losses, so what good is a loan? If it's to cover the mortgage, then that implies I have no reserves, and I'm a fool and have no business being in this business. 

    6Reply
  • Aaron T.Pro Member
    Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes
    6y
    I don't mind cheap money. I am just praying that we are able to cover expenses through all of this and not go into the red.
    0Reply
  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 262 posts · 229 votes
    6y

    @Nathan G. I think the benefit would be for people like me and David Van Wert in places where they have temporarily shut down all short term rentals.

    I applied for the loan last week and haven't heard anything back yet. The cheap money is important to me because I was doing this as my full time job and had employees and 1099 contractors working for me that I'm unable to pay. Thankfully I have long term rentals too, but I'll be wiping all of our savings if this goes more than a couple of months. And from all the lenders that I've talked to, very few people are doing HELOCS or refinancing right now anyways. I just closed this week on a townhome complex and the lender told me we got it done just in time, they're putting a moratorium on lending for the next 60 days.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Shelby Pracht:

    @Nathan G. I think the benefit would be for people like me and David Van Wert in places where they have temporarily shut down all short term rentals.

    I applied for the loan last week and haven't heard anything back yet. The cheap money is important to me because I was doing this as my full time job and had employees and 1099 contractors working for me that I'm unable to pay. Thankfully I have long term rentals too, but I'll be wiping all of our savings if this goes more than a couple of months. And from all the lenders that I've talked to, very few people are doing HELOCS or refinancing right now anyways. I just closed this week on a townhome complex and the lender told me we got it done just in time, they're putting a moratorium on lending for the next 60 days.

    I am in a similar boat with my management company. I have two employees that can't work but I have to continue paying them. My workload has increased but I've lost 30% of my staff. I make my money from management fees, which only works if tenants pay rent. Lots of unknowns.

    However, I'm thinking about how an SBA Loan would help me. If my losses were $20,000 and I get an SBA Loan, I get the $20,000 back but it will cost me about $2,500 in interest not to mention the amount of time it takes to apply. And it makes me slave to the government.

    I maintain a healthy savings and can easily absorb up the loss without impacting my business or personal lifestyle. I think we would rather spend what we've got than to incur additional debt.

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  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 262 posts · 229 votes
    6y

    @Nathan G.

    That's totally reasonable.

    We just dumped a large portion of our savings into that new complex that just closed, and I'm nervous about long term tenants not being able to pay rent, so I'd rather have the extra cash as a backup. But who knows if we'll even qualify. Best of luck!!

    0Reply
  • James CarlsonPro Member
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Tim Schroeder @Nathan Gesner

    Totally hear you about the efficacy of small business loans. I'm not sure what a better approach is, though. I mean hopefully you have some reserves to cover slow or non-existent months. But for Airbnb owners that don't have the reserves and want to keep their places, I'd take a loan to float you through a few months and survive to fight another day.  

    [email protected]720-460-1770
    1Reply
  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    To add on to this, has anyone looked into mortgage deferral from their banks at all? Wondering if it will have any negative impact with future loans at all? I know they note it will not be reported to credit agencies but I would think during underwriting for future loans they might see a gap and look at that negatively? Luckily have 5-6 months of reserves but would be nice to not drain those accounts if the payment can be deferred until things get stabilized a bit. I think a deferment along with a loan might be a nice little cushion to keep things going and keep you reserves in tact. 

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @David VanWert:

    To add on to this, has anyone looked into mortgage deferral from their banks at all? Wondering if it will have any negative impact with future loans at all? I know they note it will not be reported to credit agencies but I would think during underwriting for future loans they might see a gap and look at that negatively? Luckily have 5-6 months of reserves but would be nice to not drain those accounts if the payment can be deferred until things get stabilized a bit. I think a deferment along with a loan might be a nice little cushion to keep things going and keep you reserves in tact. 

    I have an awesome lender! He contacted me last Friday and told me that they were happy to work with me to defer payments if I had any difficulty. I actually laughed because he has all my accounts and most of my loans so he should know I'm about as stable as one can be. But it was nice that he took the time out of his day to contact me directly.

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  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    @Nathan GesnerGreat of them to look out for you! Did they say if there were any negative impacts at all if you took advantage of it? 

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    No, we didn't get that far. In my mind, nothing is free. If payments get pushed down the road, there will be a price attached to that, one way or another.

    I follow the sage advice of people much smart than me and maintain a healthy reserve. I also work hard to keep my income high while my health (mental and physical) allows. I could lose 100% of my income and survive the next year.

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  • David VanWert
    Member since 2018 · 105 posts · 34 votes
    6y

    Agreed, would rather weather the storm, tap into reserves a bit and not possibly get bit in the butt down the road and not qualify for the next property. 

    0Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    6y

    Skeptical.

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    6y

    @James Carlson this isn’t going to be very valuable for most people.

    Not everyone can get bailed out. Rental property owners are going to be among the last people who get bailed out and STR owners will he below that. It's a risky form of investing, this is part of the risk.

    2Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    6y

    Skeptical.

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Paul Sandhu, it seems you may be hit with a double whammy, the pandemic AND oil prices

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