Anti-AirBnB ordinances in Akron?

Question

Hello,I’ve located a property near the university that may be perfect for student housing, 7bd/2ba. However, trying to keep 7 students on one lease sounds like killing 7 birds with one stone.My thought was that this property may be perfect for AirBnB arbitrage. I lease it one person/entity who then can sub-let each room at their leisure so long as the monthly rent is still paid.First, what are peoples thoughts on this strategy? Second, are there any legal barriers in Akron or summit county I am not yet aware of?Thank you.

James Galla · Answer

Hi there, Aaron!Regarding the topic of anti-AirBnb ordinances/legal barriers in Akron, I'll refer you to these three law firms again (if you don't like them, I have a few more suggestions if you'd like):Maguire GroupBuckingham Doolittle & BurroughsTzangas, Plakas, MannosHowever, I'm not too sure how the AirBnb idea connects with the whole student housing idea. Since I am a student, and while I do own my house, I'll say the lastplace I would check for student housing is AirBnB.Since we're talking about student housing, location is key. When I was in undergrad, I rented a house that was partitioned into 3 units. In total, the house was rented out via at least 14 bedrooms or so (his gross rent was approx. $30k/semester, which is $60k/year plus an additional 3 months of vacant time he used to fix the property). He made his money with 0% vacancy because his property was directly across from the university while other landlords had more difficulty in finding placements for their units. There was also a heavy zoning factor that played in landlords' favors because students were only allowed to live in certain areas.When looking at Akron, we have a very large area where students can live. Not every 7 bedroom property is illuminated as a student housing opportunity. Most 'student housing' is located directly south or directly east of campus within immediate proximity (there is also a location to the west, but it is not as populated with students as the southern and eastern locations). You ought to note the southern portion is terrible, unless you are extremely close to the university. That being said, if your property is located somewhere else in Akron, it's not special, not equipped for student housing, and it ought to be considered just another house with too many bedrooms.The whole subleasing idea is low tier. You're essentially just hiring a property manager via giving them a 'master lease.' Normally you give a master lease in a commercial setting with a heavy asset and you can possibly pull capital gains from it. Shrinking it down to individual bedrooms substantially increases the risk, the numbers don't line up, and it's just not appetizing.I hope my thoughts give you some insight. If you have any questions, feel free to ask here or shoot me a message.

Aaron Hale · Answer

Thank you, James. These insights are helpful, and I have a call scheduled with McGuire next week. Do you know if the university has this zoning posted online or whether Excelsior Ave. falls within the student housing zone?

Aaron Hale · Answer

Right. My thought was to purchase this property at auction for potentially 15% of the market comps, rehab, and lease it to an industrious entrepreneur who could then market it to students ow whomever room by room possibly via AirBnB.This neighborhood’s saving grace is the proximity to the university. However, the turnover rate and personal involvement may kill the margin when dealing with a full time PM. I’m just exploring the AirBnB angle as a possibility but don’t know much about it yet. Additionally, cities around the country are cracking down on AirBnB through local regulation. If I can find an industrious and hungry local, possibly a student themself, to take on the challenge, it may turn out to be profitable for both of us. Market rents in this area probably won’t clear $1000/mo. ...but, say one person signs a year long lease and rents each room for $300-350’mo. They have the burden of keeping the house filled but I’m making $1000/mo, better than I would if I put a family in there, and the entrepreneur is pulling down$1100-1450/mo after paying the lease. That’s enough even for lean times when the school is on break. Win-win!

Charlene McNamara · Answer

I don't know about Airbnb in Akron. However, do know that with student housing, people often choose to rent rooms individually because they can make a lot more money. It'd be easier to get 7 people to agree to $400/Mo, than it would be to get one person to agree to $2800/Mo. Of course, it's definitely a lot more work, too!