The (Overdue) Collapse Of Short Term Rentals

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2023-10-27に共有
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#realestate #airbnb #business

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Short term rentals are a one hundred BILLION dollar [$100,000,000,000] market that have reshaped global tourism, accelerated a nation-wide housing crisis, and created fortunes for early adopters. But now customers, the government, the public AND the hosts themselves are turning their back on a concept that started out as a fun alternative to stuffy hotel chains, but became everything wrong with modern real estate.

The short term rental market took off when Brian Chesky and Joe Gebbia tried to rent out a spare room with an air mattress to attendees of a conference because they realized all of the hotel rooms had been booked out.

They called their service Air Bed And Breakfast which was later shortened to the short stay app that you know and love (or hate) today. Air BNB is now worth more than hotel chains like Hilton and Wyndham combined. The company is by far the largest short term rental company, and it has achieved excellent penetration into markets around the world where other similar peer to peer or network market apps like Uber, Doordash, Lyft and even Amazon have failed to take share away from local competition.

It WAS a good idea, customers loved it for giving them a cheaper alternative to outdated hotels, and hosts liked the opportunity to earn extra income on a spare bedroom or even an entire separate property.

But the four parties that make the short term rental market work, the customers, the hosts, the public and the platforms are all not dealing with four unique problems that are threatening to undo this market and take out a lot of other real estate investments with it.

The first problem lies with the people who it’s hardest to feel sorry for, the hosts.

AirBNB and other short term rental platforms provided a unique opportunity for people to profit off real estate in a totally new way.

The extra income was nice but the added flexibility of a short-term roommate was the biggest appeal to most people. With a short term tenant, any problems are only going to last as long as their short stay. That was the early value proposition of AirBNB, but sharing a spare room and staying with a random person while on holidays only appealed to a certain type of alternative traveller.

Most people who AirBNB are putting up entire properties for guest to use as exclusive accommodation.

Instead of a short-term alternative to a roommate, the market became a short term higher yielding alternative to a conventional long term tenants in an investment property. They fitted doors with keypad locks that could be changed remotely between guests, easily cleanable surfaces, inexpensive but fashionable fittings and preferred properties with minimal landscaping.

All of this cut down on the additional effort hosts needed put in to managing a property.

But like all good thing it didn’t last forever.

AirBNB advertised its platform just as hard to new hosts as it did to guests and investors started buying multiple homes to turn them into AirBNBs.
Their fee was higher, but the higher short term rental price meant owners still came out ahead.

The additional cashflows from higher yielding short term rentals also made it easier to qualify for more home loans because the additional income could be used to pay for the loan on the next property and the next property.

The inevitable result was clear… for little additional effort hosts could make more money from their properties, so the market became oversaturated and host started to struggle to rent out their properties enough to make it worthwhile.

Short term rentals also made long term rentals more expensive so the gap between what someone can make from a short-term rental versus what they could make from a long-term rental is narrowing.

For many hosts it’s no longer worth the additional risk and effort to rent out properties short term, and for others that could only afford their loans because of the higher rent they got from short-term rental yields, they might be forced to sell.

So it’s time to learn How Money Works to find out how short-term rentals got so big, and failed so quickly

コメント (21)
  • @44zeex
    I was done when they told me I had to clean the bathroom, wash the sheets, and mop the floors. And they would still charged me for a cleaning fee. We canceled so fast and just split a hotel instead
  • I sort of just stopped using it because it just wasn't a good price most of the time anymore. It's OK for some one-off unusual rentals or maybe for a big house for a large group, but travelling as a couple for short stays it just costs more than hotels these days for a less reliable experience.
  • In a nutshell: It went from offering travelers an authentic affordable stay with locals who make some extra cash on a spare room, to overpriced short-term rent filling the pockets of real estate overlords. Creating an artificial housing shortage and pricing out residents from long term rental in the process.
  • @Riggsnic_co
    The issue is that either the renter or the owner must in some way pay insurance and property taxes if they want a "permanent roof" with utilities like electricity, gas and water. Because of this, many people—at least in California, where I currently reside—are living in tents. No taxes, rent, mortgages, or insurance. The number of people who tell me they live in their car that I meet amazes me. Its crazy out here!
  • @laydsimba
    AirBnb died the moment they allowed all of these property management companies to list on their platform. The fees are utterly outrageous and there is always a BOOK of rules, regulations, and chores so thick that you can’t even enjoy your stay. I’m over it.
  • My simplified read on the whole AB&B thing is that everyone just got greedy. AB&B realized the profits they could make by simply adding fees and fines. And not doing anything to stop the fraudulent damage and repair cost claims against guests. Most of the hosts started jacking up the prices just because they saw home sale and traditional rental prices going up, without adding any actual value into their listings, all while doing little to no services of any kind. Then of course the investment firms started pushing their way into the market when they saw the potential gold rush.
  • Imagine going on vacation, and having not only to clean somebody else's house, but having to pay 30% more for "cleaning fees". And it's still more expensive than a hotel. No thanks.
  • @madi_oh
    I was the cleaning lady for a few luxury air bnbs this summer. The most expensive unit was over $1500/night. The cleaning fee was $200. I was paid with that fee, except the hosts kept about half for themselves plus about 10% for cleaning supplies. So I made ~$90 every time I cleaned that unit. What the hell was the rest of the cleaning fee for??
  • @AdmiralMEOW1
    I recently looked at Airbnb in Melbourne for a holiday. The difference for a 4* hotel and a airbnb appt was $20 for a 4 day stay with airbnb being cheaper. I went with the hotel because they'll clean my room every day
  • @IonVladutu
    It was the cleaning fees that turned me back to hotels. Having to pay a fee and still be required by the host to clean before we left was something got under my skin. And there was one occasion that the fee increased about $100 per guest per night, and that immediately out priced itself over a hotel
  • I live in a tourist destination. Airbnb and other short term rental apps destroyed the housing market. Homes were bought up for an extreme price and immediately put on Airbnb for vacation rentals. It made it impossible to buy a home or even find an apartment. As a firefighter in that town, we are fully volunteer. Airbnb put a huge load on the emergency system as the people who own the homes don’t live in the same state, so they would just call 911 when a tenant needed something. Towns finally banned Airbnbs and the effects still are around. Airbnb ruined so many peoples lives and cost tax payers so much money. Screw Airbnb and alternatives.
  • @DTEL77
    I recently saw a rental that was $80 for a night, but the host added a $200 "host fee" and a $200 "cleaning fee". I got a hotel for $77 a night that included breakfast and parking. Bye Bye Air BnB.
  • @TimmyTheNerd
    It's a real problem in the mountains of Colorado. You have these people who are no longer able to afford in the mountain towns that they work in, because people are buy up properties for short term rentals and are even lobbying the government to build more housing. And people go: "Well, more housing means the people who live there all year round will have homes." No, they wont, because those new houses will be bought by people turning them into short term rentals.
  • @dsgcloud6092
    Worst accommodation experience ever was at an Airbnb which was described as a "luxury" townhouse charging about $400 a night, but had dirty stinky sheets, bugs crawling all over, and full of cheap old furniture and leftover food in the fridge. Owner refused to give even a partial refund and so we moved to a five-star hotel for $50 more per night. Airbnb doesn't even make any sense anymore.
  • @FigaroHey
    I remember travelling to Prague and Budapest in the early 1990s. Arrive at the train station and people standing on the platform would ask you if you want a room. You liked the look of them, asked the general area and they pointed it out on a map. You went with them to their house or apartment, looked at the room, said OK, gave them a small fee (by western standards) and you had a clean simple room, usually, breakfast with your host and an interesting experience. Turn it into a business and it all gets ruined.
  • @hatuletoh
    Three houses in my grandmother's neighborhood were sold to people who turned them into Airbnb rentals. That was less than ideal in a quiet, residential neighborhood, and it was technically against city code, but my family figured it wasn't that big of a deal. Then we started seeing the whole street packed with cars as businesses rented the houses for their company parties, or people rented them for wedding receptions, big parties, etc. They'd bring in DJs, bounce houses, and food trucks, and although they usually ended the parties when noise ordinance kicked in at 10 PM, that often still meant a whole day, and sometimes whole weekend of noise and cars and general disruption. So we reported the properties to the code enforcement arm of the city, and we haven't seen any big parties since. I'm not sure if all rentals have stopped or if the owners are being more judicious about whom they rent to, but the main problems have seem to have been rectified. It takes a certain sort of arrogance to buy a half million dollar house you intend to rent as an Airbnb in a place you know doesn't allow them, and I don't have the slightest pangs of guilt for messing up someone's business under those conditions.
  • @Cowprint1
    I will shed precicely zero tears for Airbnb bros who have to leave the market becuase they now can't make any money.
  • @wllywaliy
    I rented an Airbnb once when I was having surgery in another state, so I booked an apartment for a week to recover. The day before my flight the host cancelled my entire stay, so I had to scramble last minute to find other accommodations. I ended up settling with a hotel because there were no comparable Airbnbs at such short notice, and I couldn’t afford for some random person to cancel on me again. Not to mention, the number of misleading hosts who say you’ll get their entire apartment or house, only for somewhere in the fine print to say that it's only a bedroom and you’ll actually be sharing with their family and/or other guests makes it too sketchy and unreliable for me to ever use again.
  • @mebrandonb
    Me and the rest of my apartment building were given 1 month notice to vacate. I lived there for 5 years, rent paid on time every month. The reason for asking everyone in the building to leave: the building owners were turning all of our units into Airbnbs. Absolutely disgusting that this was ever allowed.