All Forum Posts by: Kevin Dickson

Note most cities have a zoning law to the effect of "maximum number of unrelated adults per dwelling unit is X"

I think Denver is 2 per unit in the single unit zones and 6 per unit in two unit zones.  Denver also has a limit to the number of cars, which is the number of legal adults plus one.  A large family of driving age kids could therefore have like eleven cars.

But as others have said you are not describing a lodging house.

Justin,

Thanks much for the SF breakdown.

Back to the OP's question, which is should I check out if there are Airbnb rentals in a San Francisco condo building I'm interested in, and does it affect the value?

Yes, you should check it out. But if you don't see any ads today or evidence of Airbnb today, that doesn't mean it won't happen in the future. Or if it is occurring, the owners could pass a new HOA rule to expressly prevent it.

Airbnb activity could hurt value if it's annoying, or boost value if investors and homeowners are making more money because of it.  In my opinion, the latter is actually more likely.

Al Williamson is investigating a method for landlords to profit from more than the one unit as allowed in SF:  http://www.landlordology.com/make-extra-money-sublet-with-airbnb/

I think it has to be your primary residence or else it is illegal.

A decade ago, this company publicized their efforts:

http://money.cnn.com/magazines/fsb/fsb_archive/200...

http://articles.latimes.com/2004/jul/25/realestate...

In 2003, I started a similar strategy in Denver, and was able to acquire over 40 homesites in Overland, near the Evans Light Rail Station.  I almost got derailed by the Great Recession, but now I have started replacing some run down postwar boxes.

Here's what I wrote in 2006:  http://tippingneighborhoods.blogspot.com/

@Micki McNie    From experience, I'd say it's too hard to snap up the entire block, but  the idea of positioning adjacent to the mixed use is a good one.  Making money on rentals while the neighborhood gentrifies is pretty easy.  Kickstarting the gentrification by opening the charming local coffee shop is a lot harder, but that coffee shop or something like it is essential.

Last Friday I received 10 unsolicited contracts in the mail from an apparently desperate investor trying to "shake the trees and see what falls out".  I'm actually considering accepting one of them.  BTW I'm impressed with the strategy.  Yellow letters get tossed out quickly, but it's not that much harder to send a contract which will probably get looked at.

"That sounds a lot like Florida's Rise of the Creative Class."  The strategy also has elements of Gladwell's Tipping Point.  My neighborhood has officially tipped.

Among many other factors, the legalization of marijuana was the single biggest force in turning the neighborhood around.  Lots of young people have moved to Denver to get in the business.

 The main difference is that the owner has not given his permission for the subleasing.  Interestingly, the new law in San Francisco requires that the Airbnb host must be a "permanent" resident of San Francisco.  What is that supposed to accomplish?

Most cities have a law in their zoning code that prohibits rental periods of less than 30 days.

That doesn't apply to guests, since a guest has no rental agreement.

To me, it's a classic economic issue, the full utilization of assets.  When there is a vacancy of any sort, it's not good for anyone.

This new technology makes it easy to eliminate these vacancies.

Enforcing the zoning laws will not eliminate illegal short term rentals (STRs).  It's very similar to the prohibition of alcohol.  When there is strong demand, supply will be created, legal or not.

Commercial and larger operators of STRs will be happy to pay the hotel tax.  For occasional landlords, it's not worth the hassle.  They will avoid licensing and taxation, so don't bother.

Deal with complaints as they arise, because there aren't many.  Short term tenants can enter a building very quietly if they are required to.  Once they are inside, they are likely to be just as quiet as any other tenant.

Summit County, Colorado (birthplace of VRBO) is a good place to study the issues.  75% of the housing stock is not occupied by permanent residents.  The internet handles a large and growing percentage of STRs, and no hotel tax is paid.  Hotels are not complaining. Permanent residents are not complaining.

The efficient utilization of  these assets can prevent the construction of large hotels, which are even more inefficient in the off season, and provide a less interesting and more expensive experience for the traveler.

As Azita said, STRs are likely to have better maintenance inside and out.

My wife owned a timeshare at a resort called Skier's Edge, south of Breckenridge a few miles. She owned a very desirable March (Spring Break) week. Even so, demand is far less than supply, and we are usually unable to rent the week out. Other owners have been experiencing similar issues. For different reasons, many owners don't want to keep their week and would like to sell, but can't, even for zero dollars. So many of them default, which puts the HOA at risk of bankruptcy.

Amazingly, we received a letter last week from the HOA board:

"Pursuant to a properly noticed special meeting of the owners of Skier's

Edge Condominium Association, Inc., the Condominium Project was declared

obsolete and the Board of Managers was authorized to sell the Condominium

Project. At the end of September the Condominium Project was sold. As a

result, there will be no 2015 assessment to the Owners."

This is a great result, but I didn't think it was actually possible.  The original cost of the week was $3500, but anything we receive above zero will be welcome.

I just got another one in the mail with a real live LOI attached. The offer was very reasonable, but not quite up to my "make me move" price.

I think the "cash offer" is a real attention getter.

Chase Quick Pay works really great.  Free.

It's worth an extra 10 or 20 minutes at lease signing to help them set it up right there.

"Erect the assessory building first and return to building safety and say they had ran out of money and could not build the main building."

I attempted this in Denver, and they wouldn't let me get started.  Apparently they've been burned before.