All Forum Posts by: Raquel Pea

Hey Kevin!

I have years of experience professionally managing over 50 listings on AirBnB for others, I founded 5 hostels which reached Super Host status on AirBnB within 1.5 months of starting up, and now I offer design and management for co-living homes as well, so I have plenty of insight to offer.

Firstly, here's a technical run down:
Oakland residents who host short-term rentals must register their properties with the city and submit a 12% Transient Occupancy Tax for every reservation for fewer than 7 nights. In addition to the 12% tax, hosts must pay a 2% enforcement fee and a $220.00 non-refundable annual application fee to register their property.

Properties qualify for short-term rental so long as:

1. Short-term use is approved for this purpose by the property owner / landlord
2. It's covered by liability insurance of $1,000,000 (AirBnB provides this through their Host Protection Insurance)
3. Located in one of the following zones: R-1, R-1A, R-2, R-2A, R-3, R-4, R-5, R-S,
R-SMU, CDMU, C-1, C-NS, C-SA, C-T, C-W, MUR - Including any of these
zones with an H overlay

The following properties CANNOT be used for short-term rentals:
1. Is a Below Market Rate unit
2. Has had a no-fault eviction within the last five years
3. Is an accessory dwelling unit that:
a. Was built after April 1, 2017
b. Has been used as a long term rental since April 1, 2007

Paying Taxes
AirBnB collects and remits the 12% transient occupancy tax and 2% enforcement fee
directly from the guest during booking and pays this to the city. For example: If a guest reserves a listing for 5 nights at $100 per night for a total of $500, the guest will be charged an additional $70 (14% of $500) to cover the transient
occupancy tax and enforcement fee, which will be collected and paid to the city by AirBnB on your behalf.

My Advice

Obtain the proper business license if you plan to operate your property as a short-term rental for the majority of the year and register your property as well, which is very easy to do. The next thing you have to think about is designing an AirBnB space that will lead to satisfied guests AND satisfied neighbors. The last thing you want is to upset your neighbors and have a complaint filed against your property. Check-in should be seamless, so guests don't go knocking on doors. You should take into consideration security. How will you handle keys? Physical keys inevitably lead to security issues that will cause you headaches. Some electronic lock systems are not remotely programmable, so if there is a security issue and you need to re-code the lock, you will still have to visit the lock in person. There are ways to automate messaging so that your guests are updated with important information, such as "How is your stay so far?" messages that allow you to gauge if guests need anything, "Check-out instructions" messages so that turnover is smooth, and so on and so forth. House Rules should also be created and displayed digitally and in-person at the property.

I would love to chat sometime and share more... Typing is not my favorite!

Best,

Raquel P.

@Juan Diaz, there is one solution that pops into my mind when I hear your horror stories. The key, IMHO, is to find one quality and trusted tenant for each of your AirBnB properties. They will stay in your property long-term, may pay discounted rent, and will serve as a "presence" in your property. Having this presence in each home has REALLY made the difference for me. Even if this individual is not at the property throughout the day, guests will see that they come in and out, and will respect the space much more than when no eyes or ears are on the property. 

I've gone the distance to find long-term tenants who are also willing to clean and generally manage the property. This is not necessary, as I could still hire cleaners with the guest's cleaning fees, but it definitely minimizes my operating expenses month to month!

The only issue that arises is... this method can not be used with studio apartments, or small one bedroom properties. Sorry @J. Martin! Haha ;) 

In our larger properties, 2+ bedrooms, the long-term tenant is sometimes comfortable with staying in a shared AirBnB bedroom (shared female or male only rooms). This minimizes their monthly rent, and also increases our net profit as we don't have to give up an entire bedroom for the tenant, and shared AirBnB bedrooms have typically turned more profit for us.

I stand behind J. Martin regarding renting out room by room, rather than the entire property. When many travelers share one roof, there seems to be this atmosphere of camaraderie! You also avoid the typical "group issues", that are inevitable when a bunch of friends are traveling the world together. lol

Last tip! I find that when you allow the tenant who is serving as a "presence" to weave her/his story and personality into the property's listing description, you will receive higher quality requests, and avoid the shady individuals looking for a place to go unnoticed. Along with this, J. was on point when he advised you setup and display your property as business-friendly. The quality of photos and atmosphere you create on your property's profile will definitely set the tone for your entire AirBnB experience. 

...I also manage booking requests by hand because I find that the benefit outweighs the trouble. :) 

Hope these tips help in some way or another!

@Mike Curadossi

Do you plan to live in the property yourself, AKA House-Hacking? If so, managing the property is completely doable, but it will require you are home in between stays to replace sheets and prepare the home. You can always specify a 24 hour cleaning period (or longer) between stays, which would allow you to prepare the room at your own convenience when you come home from work, school, or the like.

If you would like to hire a cleaner to do the cleaning, it just comes down to managing their schedules and booking requests. You can sync your AirBnB calendar with Google Calendar, and then share that with your cleaner, or you can go the extra step of manually entering the cleaning periods into a new calendar by hand, just for your cleaners convenience. It does take a few hours each day to manage everything, not including the cleaning, but if you look at your monthly net income and divide by the hours you put in to manage, it will most definitly look pretty good! At least, this is my story, and I am in a pretty prime location for AirBnB (right by BART, few minutes from SF).

In terms of key drops, I have simply installed a lockbox on the front door so that I do not have to return home anytime a guest arrives. I give out the code as soon as a guest confirms their stay, and ask that they return it to the box when they leave. Anything I can do to minimize the time spent preparing for the next arrivals, I will do. I have never had any security issue doing this, and I regularly change the lockbox pin number too.

Honestly, I would recommend that you simply give it a try! There's no better way to learn if being an AirBnB host / house-hacker is right for you than jumping in and giving it a swing. You can always open up a small window of time for booking, maybe only one month, just to test the waters. You'll realize as time goes by that you'll develop ways to streamline the process and minimize your involvement. Keep track of your hours, maybe, and at the end of the month calculate your "hourly wage" and then try to improve it the following month.

Hope this helps in some way!...

I just realized your post was from 5 months ago, after writing this response. lol Did you end up giving it a go? 

~ Raquel

Nice job, @Juan Diaz, lovin' the look. Mind me asking what your ROI turned out to be? Is this one of your foreclosure investments soon to be featured in the Foreclosure Investor Tour meetup? ;)

Thank you, @Carrianne Mucho, for the advice! I'm currently contemplating taking the course at the local community college this summer, since they're conveniently online. We'll see if I psych myself into it! Like you were saying, the knowledge gained would make it worth it, whether I get my license or not...but at that point, why not just go for the license?! ;) Thanks again.

Welcome @Nate B.! It seems that once you have the real estate bug, there's no getting rid of it! I look forward to hearing from you on the forums, and maybe seeing you around at the upcoming Bay Area meetups. Here are a few links to some meetups I think would be worth your time: The Foreclosure Investor Tour, San Jose Real Estate Networking Club, and the SF Bay Area Real Estate Investing Club. 

When any real estate question surfaces in your mind, introduce it on the forums...it can definitely spark some very interesting conversations.

See you around!

@Leno Bellomo I almost want to tell you to not even consider buying in Oakland, because the less competition for properties, the better for me! But in all reality, it can either be a wonderful and empowering decision, or a horrible and debilitating decision. It all depends on how involved you would like to be with making your property "work" for you. It this area, you can take almost any property and turn it into an income producing revenue stream with good, hard work (not saying you should by-pass analyzing and re-analyzing any deals that come your way). One way to do this, which is the method I currently use, is through "House Hacking" and AirBnB. 

For an average nightly rate of $78 per AirBnB guest near West Oakland Bart, one can easily live rent free and come out with positive cash flow after each month. But, and it's a big but, it will take labor, or management and delegation of tasks.

As an example, the investor I work for has a vacant 5 bedroom home facing the West Oakland BART station. He purchased it with a hard money loan, so his mortgage is pretty hefty at $4,000. He's employed me to list 4 private bedrooms on AirBnB, and to develop a way to automate the rental system. For $78 per primary guest with 80% occupancy rate, $50 per secondary guest with 60% occupancy rate, and a 3% AirBnB fee, the monthly income will look something like this:

$78/night x 4 primary guests x 30 days x .8 occupancy rate + $50/night x 4 secondary guests x 30 days x .6 occupancy rate =$11,088 - .03(11,088) AirBnB Fee =  $10,755/month

His mortgage is around $4,000, so the profit he is hoping to make month to month is $6,755, not taking into account expenses and taxes. We've already worked this system out with another property, and it is completely sustainable.

The system I've developed turns this process into a 99% passive income stream, so that the investor rarely has to lift a finger, and the house practically manages itself and puts cash into his pocket. Automation goes a long way! Cleaners are paid by the guests, cleaning schedules can now be managed easily online, stock ordered by cleaners and delivered through Amazon to the property, and inquiries responded to, all through a little system I built. If it's something you're interested in doing yourself or hearing about, PM me and I'd be glad to share with you.

So, that's my view on the matter. With some creativity, if you're adamant about investing in this location, it may totally be worth your time and money. And there are many ways to succeed apart from using AirBnB. If you're not set on Oakland, or you would rather invest in a market that isn't "teetering at the top" like some believe, there may be easier areas to get into. But again, Oakland has a lot going for it, and if you do your research on projections, what you hear may convince you... or maybe not.

Whatever you decide, I'm sure it will be a wonderful start to your adventures in REI. :)

Hi @Gregg Pauly, thanks for the map! Comes to show that West Oakland still has plenty of room for growth with regards to price/sqft. Looking forward to hearing more from you in the forums. 

@DG A. Research, research, research. I'm a bit of a research-a-holic when it comes to real estate topics. ;) Here is the link to the UC Berkeley project exploring the nature of gentrification in the Bay Area.

@Rob Hoffman Glad you decided to join the conversation and found the information useful!

With regards to how West Oakland's gentrification will affect greater East Oakland's development, it very hard to tell... But here are my two cents:

The majority of gentrification seems to occur where two things exist: 1) An excess of deteriorated homes in a central location and 2) Availability / proximity of professional jobs located in central business districts. Check out this East Bay "Gentrification Heat Map" by UC Berkeley Researchers below. Every pocket of gentrification (dark purple areas) can be seen to occur near a BART station or with easy access to a major highway.

It's obvious how West Oakland fits this criteria. Embarcadero, the financial and business heart of SF, is a mere 7 minute BART ride away from West Oakland BART station, and Downtown Berkeley a 14 minute BART ride away. West Oakland also has direct access to the bay and thus the San Francisco Bay Ferry, and for those looking to drive to work, the 80, 880, 580, and 980 are all a short scoot away. 

East Oakland, on the other hand, comprises a very large and spread out area, as seen in the highlighted area below. Within East Oakland there are distinct areas like San Antonio, Fruitvale, Central East Oakland, etc.

I believe the areas within East Oakland most likely to be developed are the Fruitvale area near the BART station and the area inland of the Coliseum BART station. In fact, both of these areas already see the beginning of gentrification. There are development plans covering hundreds of acres in the Coliseum area which include new stadiums, tech offices, luxury condos, hotels, and retail space. The hope is to create 30,000 new jobs in the area, and boost economic growth. Keep in mind, though, that East Oakland is still in the very early stages of gentrification. Here is the Coliseum Specific Plan project description:

You can read more about it here.

Of course, there is always worry and backlash when it comes to gentrification. Just like West Oakland, the process of developing areas within East Oakland will be arduous and cyclical, and for good reason. The inhabitants will want to see that their cultural history is preserved, that "Big Box" retailers and business do not take over their home town or overthrow the small business that define the area, and that ultimately they are not displaced to make room for the capitalist world.

I'm not really sure what to expect in regards to when East Oakland will see major changes or an influx of investors, but it is sure to happen in areas with access to major modes of transportation, most importantly BART, and where there is potential to develop deteriorated homes and infrastructure, ultimately drawing in investors such as ourselves!

Again, just my two cents. :) Hope this helps in some way or another!