The Rise of the Professional Airbnb Investor(priceonomics.com)
priceonomics.com
The Rise of the Professional Airbnb Investor
https://priceonomics.com/will-real-estate-investors-take-over-airbnb/
147 comments
Airbnb and its clones, although initially introduced positive disruption, are turning entire city districts into alien tourists traps. The range of "services" and prices there make long term inhabitants to stay away. Barely anyone with local salary can live there. So we end up with attractive historical districts with predominantly temporary rentals which are completely empty out of the season, and dull residential districts where people earning local salaries can afford to live. I'm talking from my observations in various EU cities (Berlin, Prague, Barcelona).
> Berlin
What ? You would have said Paris I would totally agree but Berlin, really ? It's definetly not expensive to live here compared to other european capitals (buying a flat costs 3,036€[1] per square metter, compared to the 8000 you need in Paris) and even compared to other german big cities (München, Hamburg).
[1] http://www.globalpropertyguide.com/Europe/Germany/Price-Hist...
What ? You would have said Paris I would totally agree but Berlin, really ? It's definetly not expensive to live here compared to other european capitals (buying a flat costs 3,036€[1] per square metter, compared to the 8000 you need in Paris) and even compared to other german big cities (München, Hamburg).
[1] http://www.globalpropertyguide.com/Europe/Germany/Price-Hist...
> buying a flat costs 3,036€
Maybe in an old not renovated building, or concrete communist blocks. Anything refurbished or newly constructed starts at 4-5k euro/m^2.
Maybe in an old not renovated building, or concrete communist blocks. Anything refurbished or newly constructed starts at 4-5k euro/m^2.
Which is still pretty affordable for the capital of a rich european country: it's half the price you get in London, Paris, Bruxelles or Roma.
Why is it necessarily the case that the non-touristic areas are dull?
They are not necessarily at the beginning. However if they are interesting, then they will draw visitors (tourists) which will lead to opening lodgings for them because enough of them like to stay close to places they like. This will then lead to higher rent prices for reasons already mentioned in articles so eventually, if area is popular enough, previous habitants can't afford to live there anymore.
This does not have to happen, but it does rely on relative draw of the area and therefore its relative "dullness" to visitors. In effect they can't be too externally interesting to survive.
This does not have to happen, but it does rely on relative draw of the area and therefore its relative "dullness" to visitors. In effect they can't be too externally interesting to survive.
It sounds like the process you are describing will result in the creation of lots of awesome areas that are worthwhile to visit, together with an increasing supply of housing in these areas. Why is this a bad thing?
Are you postulating that there is an infinite demand for interesting areas to visit, and an infinite supply of tourists who will completely displace locals everywhere?
Are you postulating that there is an infinite demand for interesting areas to visit, and an infinite supply of tourists who will completely displace locals everywhere?
I did none of those things. It was just a description of a process as value-less as I was able to write it.
However I do not think this process necessarily leads to the creation of an awesome area. Just one catered to particular type(s) of people which may or may not include people previously living there. "Awesomeness" depends on a personal point of view. I think most of us can think of an otherwise popular spot that we personally find repelling.
I also doubt it leads to increased supply of housing useful to locals in the same way as building hotels generally doesn't. It may increase capacity of a city to hold more people at any time, but without some redistribution (e.g. from taxes of such properties) may not have any (positive) effect on availability of long-term housing apart from moving some of it elsewhere.
I don't think there is infinite demand of areas or supply of tourists and certainly don't think locals will be displaced from everywhere. Their quality of life however may be reduced and it should be no surprise that they are not fond of this. If my daily commute becomes 15 minutes longer in each direction, than there are 2.5 hours fewer weekly or almost a week yearly over which I lost agency.
And I am only scratching the surface here of the problem(s) or my position which is unhelpfully that it depends. Sometimes such developments are positive, but not always or not forever. It may be a balancing act and what I am certain of is that there is no answer that would always be correct.
However I do not think this process necessarily leads to the creation of an awesome area. Just one catered to particular type(s) of people which may or may not include people previously living there. "Awesomeness" depends on a personal point of view. I think most of us can think of an otherwise popular spot that we personally find repelling.
I also doubt it leads to increased supply of housing useful to locals in the same way as building hotels generally doesn't. It may increase capacity of a city to hold more people at any time, but without some redistribution (e.g. from taxes of such properties) may not have any (positive) effect on availability of long-term housing apart from moving some of it elsewhere.
I don't think there is infinite demand of areas or supply of tourists and certainly don't think locals will be displaced from everywhere. Their quality of life however may be reduced and it should be no surprise that they are not fond of this. If my daily commute becomes 15 minutes longer in each direction, than there are 2.5 hours fewer weekly or almost a week yearly over which I lost agency.
And I am only scratching the surface here of the problem(s) or my position which is unhelpfully that it depends. Sometimes such developments are positive, but not always or not forever. It may be a balancing act and what I am certain of is that there is no answer that would always be correct.
I also doubt it leads to increased supply of housing useful to locals in the same way as building hotels generally doesn't.
If that's the case, then building nice residential areas outside the touristic core which are useful to locals will not result in a horde of tourists AirBnBing those areas.
I think at this point it's important to note that the core issue here is that in most areas locals pass dumb protectionist laws against new construction, making it impossible for supply to increase.
I agree with you that when demand for a good increases the price of that good, the people who were previously enjoying lower prices might be unhappy. That doesn't mean the original purchasers of that good have some right to prevent new people from purchasing it.
If that's the case, then building nice residential areas outside the touristic core which are useful to locals will not result in a horde of tourists AirBnBing those areas.
I think at this point it's important to note that the core issue here is that in most areas locals pass dumb protectionist laws against new construction, making it impossible for supply to increase.
I agree with you that when demand for a good increases the price of that good, the people who were previously enjoying lower prices might be unhappy. That doesn't mean the original purchasers of that good have some right to prevent new people from purchasing it.
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You say that like it's a bad thing, but if that is the most productive use of property (i.e. the use that people are willing to pay most for), then I think that is what should happen, and I don't see any issue with AirBnB facilitating this.
Yes, it is a good thing when the rich enjoy the best quality real estate and normal working people live in slums on the outskirts of the city and commute for hours into the city. Normal people deserve to live on the outskirts, because they aren't smart and hard working like the rich.
How empirically adequate is the claim implicit in your criticism that Airbnb is primarily used by the rich?
Au contraire, Airbnb is primarily used by the young and (comparatively poor), students and young adults. The kind of person who comes to Berlin, Praha and Barcelona by Ryanair and Easyjet.
It is precisely the low-cost nature of Airbnb that has made it so popular: in order to save money you can fit multiple people into a small Airbnb if you really want, you cannot easily do that with a hotel. The wealthy (usually older) stay in posh hotels.
Airbnb, like low-cost airlines, has made travelling to major cities more affordable to the masses.
Au contraire, Airbnb is primarily used by the young and (comparatively poor), students and young adults. The kind of person who comes to Berlin, Praha and Barcelona by Ryanair and Easyjet.
It is precisely the low-cost nature of Airbnb that has made it so popular: in order to save money you can fit multiple people into a small Airbnb if you really want, you cannot easily do that with a hotel. The wealthy (usually older) stay in posh hotels.
Airbnb, like low-cost airlines, has made travelling to major cities more affordable to the masses.
* * *
In the US, the question of whether the "center" of the city is a tourist trap or a place where people live is irrelavent. Everyone goes everywhere by car, and the real center can move. However, in Europe, where we have REAL infrustructure, train stations, subways, tram lines. And we, the citizens, have invested TWO CENTURIES of tax money to build that incredible infrustructure, taking that center and saying "this part of the city is going to be too expensive for normal people to live there, is nothing short of theft. Normal people paid, with real money, taken out of their sallaries, which they earned with real work in order to build that subway system that they can no longer effectively use, because they live on the outskirts now. So any new zoning has to take that into account.
As for who is rich. Young, healthy, students who can afford to take time off and travel ARE RICH! You can say what you want about Ryan air being cheep and only €50 a flight. But the minimum wage in the Czech Republic is 11 000CZK or just €400 a month! Poor people have trouble paying for rent, and there is no chance they will be taking time off to take that ryan air flight to Brussels to spend the weekend in an AirBNB.
And those people don't benefit from AirBNB at all, given that they have no assets to invest in real estate.
As for who is rich. Young, healthy, students who can afford to take time off and travel ARE RICH! You can say what you want about Ryan air being cheep and only €50 a flight. But the minimum wage in the Czech Republic is 11 000CZK or just €400 a month! Poor people have trouble paying for rent, and there is no chance they will be taking time off to take that ryan air flight to Brussels to spend the weekend in an AirBNB.
And those people don't benefit from AirBNB at all, given that they have no assets to invest in real estate.
this part of the city is going
to be too expensive for normal
people to live there, is nothing
short of theft.
Anyway, let me remind you that I don't believe your claim that Airbnb has a substantial influence on property prices. As far as I can see, the dominant factor in property prices is distance from center, and proximity to amenities, in particular public transport -- all that regardless of Airbnb.
because they live on the outskirts
students who can afford to take
time off and travel ARE RICH!
Of course you can compare the average student in Denmark with the average worker in Malawi, and find that the former is wealthy vis-a-vis the latter, but this is not an interesting comparison.
Czech Republic is 11 000CZK
Poor people have trouble paying for rent
And those people don't benefit
from AirBNB
You warn me not to claim that taxes are theft by using examples of failed socialist utopias. My argument was that once people have paid their taxes, they deserve something in return, like the ability to take advantage of the infrastructure that they paid to build. If you simply take peoples money, and use it to subsidize the rich, then that is theft. This is a very different argument than that of Proudhon, who says that "property is theft", or of Thomas Paine who claims that:
>Every proprietor, therefore, of cultivated lands, owes to the community ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund prod in this plan is to issue.
http://rationalrevolution0.tripod.com/articles/capital_distr...
Though I agree with both authors in general, my claim of theft was not the same as theirs at all.
> The main purpose of public transport is to enable those living in the outskirts to get to the center in the morning, and go back in the evening. The drive to separate out work from living quarters goes back to the industrial revolution when work suddenly became noisy, dangerous and polluting, so the old model (working and living in the same place) had to go. This required mass transport, be it cars or public transport Anyway, there is nothing wrong with living in the outskirts. Many prefer it, especially those with children.
In Prague, most people don't work in the center, so the commuting to the center argument is a mute point. The center is literally only for tourists.
> Yes, and why is this interesting? The minimum wage in Malawi is ... what $1 per year? The cost of accomodation always correlates strongly with the average income
The reason why it is interesting, is that a €50 flight to Brussels, and a €8O AirBnB stay for two nights, would be a third of a months salary at Czech minimum wage. So it is totally unrealistic for people on the east who make that kind of money to travel west. However, westerners have no trouble traveling east. (Some eastern students are able to travel west, but they are among the wealthy).
> economies of scale
Economies of scale do not exist in the urban housing market, because supply is pretty much fixed. The more demand, the higher the price.
I'm not %100 against AirBnB. But I feel that the use of AirBnB to rent out whole apartments is unfair in cities where taxpayers heavily subsidize infrastructure and common spaces. Especially when the investor is a foreign one. Then the money from the west flows east and then flows right back out again.
>Every proprietor, therefore, of cultivated lands, owes to the community ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund prod in this plan is to issue.
http://rationalrevolution0.tripod.com/articles/capital_distr...
Though I agree with both authors in general, my claim of theft was not the same as theirs at all.
> The main purpose of public transport is to enable those living in the outskirts to get to the center in the morning, and go back in the evening. The drive to separate out work from living quarters goes back to the industrial revolution when work suddenly became noisy, dangerous and polluting, so the old model (working and living in the same place) had to go. This required mass transport, be it cars or public transport Anyway, there is nothing wrong with living in the outskirts. Many prefer it, especially those with children.
In Prague, most people don't work in the center, so the commuting to the center argument is a mute point. The center is literally only for tourists.
> Yes, and why is this interesting? The minimum wage in Malawi is ... what $1 per year? The cost of accomodation always correlates strongly with the average income
The reason why it is interesting, is that a €50 flight to Brussels, and a €8O AirBnB stay for two nights, would be a third of a months salary at Czech minimum wage. So it is totally unrealistic for people on the east who make that kind of money to travel west. However, westerners have no trouble traveling east. (Some eastern students are able to travel west, but they are among the wealthy).
> economies of scale
Economies of scale do not exist in the urban housing market, because supply is pretty much fixed. The more demand, the higher the price.
I'm not %100 against AirBnB. But I feel that the use of AirBnB to rent out whole apartments is unfair in cities where taxpayers heavily subsidize infrastructure and common spaces. Especially when the investor is a foreign one. Then the money from the west flows east and then flows right back out again.
Economies of scale do not exist in
the urban housing market, because
supply is pretty much fixed. The
more demand, the higher the price.
There is no technical reason that prevent increase of supply. You could flatten the old town and build Dubai-style 100 floor skyscrapers, creating >20k new flats. The only reason why this doesn't happen is legislation, zoning laws, building codes etc, which in turn reflect the will of the majority of the population who don't want radical change of cities.
In Prague it would suffice to start walking around throwing paint at tourists and smashing 14th century statues. That would get the demand down enough that normal people could move back to the center.
Edit: My point being, that buldozing the center and building high rises would solve the problem, not due to incresed supply, but due to decreased demand. There's a reason why Frankfurt and London are the only cities in Europe with high rise centers and its not the price of steel. There are pleanty of sky scrapers in Europe, but they always end up being some dead part of town that nobody visits for any reason other than work or sleep. I guess that just returns to my point about "real infrustructure". I think that in the US, you can't even really talk about the "center of the city" because people don't "go to the center" as a thing to do. People stay at home, or drive to the gym, or go to the movies. They don't "go to the center, stop to watch a movie, get out, walk around a bit, have dinner in the center." While all the time thinking of their activity as "spending time in the center" rather than "going somewhere".
Edit: My point being, that buldozing the center and building high rises would solve the problem, not due to incresed supply, but due to decreased demand. There's a reason why Frankfurt and London are the only cities in Europe with high rise centers and its not the price of steel. There are pleanty of sky scrapers in Europe, but they always end up being some dead part of town that nobody visits for any reason other than work or sleep. I guess that just returns to my point about "real infrustructure". I think that in the US, you can't even really talk about the "center of the city" because people don't "go to the center" as a thing to do. People stay at home, or drive to the gym, or go to the movies. They don't "go to the center, stop to watch a movie, get out, walk around a bit, have dinner in the center." While all the time thinking of their activity as "spending time in the center" rather than "going somewhere".
If that's what you think the problem is, then I've got bad news for you: this system applies to a whole lot more than just housing. This is how all scarce resources are allocated, and it's the most fair and efficient system that has been invented so far.
It is neither efficient nor fair. It is a system that is good at keeping power and a system that is destroying nature and the earth.
Agreed. If a location is attracting tourists (and their money) from across the globe, it would be wasteful to turn all that money away because locals want to live there and not 4 subway stops further.
Or, to put in other terms: your historic city centre is a gem, a rarity and such things are understandingly more valuable (in monetary terms) than ordinary locations. Want to live there? Make enough money to afford it.
Or, to put in other terms: your historic city centre is a gem, a rarity and such things are understandingly more valuable (in monetary terms) than ordinary locations. Want to live there? Make enough money to afford it.
This turns the districts into cheap theme parks (even though everything is expensive). It takes 10 min bus ride to discover that people in the country actually don't speak English, beer doesn't have to cost 8 euro, the history left many marks many of which are not photogenic, and not all local females work in strip clubs.
Why would it be "wasteful" to prioritize quality of life for residents over investors' profits? Some cities (like Copenhagen) structure their housing mainly as owner-occupied cooperatives for a reason. A functioning city that works for its residents is valuable, and it'd be wasteful to throw one away in hopes of speculating on some kind of Disneyland attraction.
> Why would it be "wasteful" to prioritize quality of life for residents over investors' profits?
Fair enough but are you willing to compensate the investors/landlords for the lost income from foregoing these opportunities or asking the govt to have the tax payers foot the bill to help tenants stay in their properties at artificially lower than market rates?
I say let supply and demand sort this out and just focus our efforts on exposing anti-competitive violations like price collusion among landlords etc etc.
Usually landlords/investors who are attracted to this "trade" are lured by the prospects of short-term profits and if that doesn't materialize for any reason, they'd seek more stable income by entering into long-term arrangements at more economic rates with permanent tenants.
Fair enough but are you willing to compensate the investors/landlords for the lost income from foregoing these opportunities or asking the govt to have the tax payers foot the bill to help tenants stay in their properties at artificially lower than market rates?
I say let supply and demand sort this out and just focus our efforts on exposing anti-competitive violations like price collusion among landlords etc etc.
Usually landlords/investors who are attracted to this "trade" are lured by the prospects of short-term profits and if that doesn't materialize for any reason, they'd seek more stable income by entering into long-term arrangements at more economic rates with permanent tenants.
> Why would it be "wasteful" to prioritize quality of life for residents over investors' profits?
Because investors' profits don't come from nowhere. You're prioritising the residents' wishes over the tourists' wishes, despite the fact that the tourists are willing to pay more to use the property. That's not fair.
Because investors' profits don't come from nowhere. You're prioritising the residents' wishes over the tourists' wishes, despite the fact that the tourists are willing to pay more to use the property. That's not fair.
While your sentiment is partially right, it is important to note that in Prague, after the fall of the iron curtain, local currency was very very cheep compaired to foreign currency. And normal Czechs just didn't have any money anyways. So the problem in Prague is not caused by Airbnb. It has existed for about 10-15 years.
What do you think about the recent Airbnb ban here in Berlin? Do you think it's done anything to improve that situation or at least "stem the tide"?
http://www.independent.co.uk/news/world/europe/airbnb-rental...
Of course, it's a pretty controversial and complex topic, but I feel like the ban was a step in the right direction. I use Airbnb myself as a guest in other cities and I like that it exists, but I also don't believe that historical city centers should simply be sold to the highest bidder.
...though it's also entirely possible I'm just a hypocrite.
http://www.independent.co.uk/news/world/europe/airbnb-rental...
Of course, it's a pretty controversial and complex topic, but I feel like the ban was a step in the right direction. I use Airbnb myself as a guest in other cities and I like that it exists, but I also don't believe that historical city centers should simply be sold to the highest bidder.
...though it's also entirely possible I'm just a hypocrite.
The observation in Berlin is incorrect. What area is being gentrified by AirBnB or similar services?
. Bhandal
Here in Amsterdam I find that the rates of short-term tourist rent to long-term citizen rent is about 3:1.
i.e., an apartment which costs $1000 a month, could be rented out for about $100 a day, or $3000 a month.
That does mean you need to be there managing the thing, handling listing and bookings, doing a hand-over of the keys and a brief tour, and cleaning up after. I know a friend of a friend of a friend has been providing a service for 2 years now where he does all that for 20% of the profit on other people's properties.
Amsterdam has set up rules that limit Airbnb to 60 days a year. I think that's sensible. It allows people to make some money while traveling two months of the year, lowers costs of housing because in the up to 60 days the home owner is gone, the space is not wasted but instead utilised. But it prevents investors from arbitraging the 3:1 ratio between short-term subletting income vs costs of holding the property long-term, which turns your city into a tourist paradise at the expense of raises prices for actual citizens too much (because all the investors push up prices) for my taste. This 60d rule is a good balance. (it's just yet to be enforced)
i.e., an apartment which costs $1000 a month, could be rented out for about $100 a day, or $3000 a month.
That does mean you need to be there managing the thing, handling listing and bookings, doing a hand-over of the keys and a brief tour, and cleaning up after. I know a friend of a friend of a friend has been providing a service for 2 years now where he does all that for 20% of the profit on other people's properties.
Amsterdam has set up rules that limit Airbnb to 60 days a year. I think that's sensible. It allows people to make some money while traveling two months of the year, lowers costs of housing because in the up to 60 days the home owner is gone, the space is not wasted but instead utilised. But it prevents investors from arbitraging the 3:1 ratio between short-term subletting income vs costs of holding the property long-term, which turns your city into a tourist paradise at the expense of raises prices for actual citizens too much (because all the investors push up prices) for my taste. This 60d rule is a good balance. (it's just yet to be enforced)
If the highest value use of apartments is short term rentals, why is it "sensible" to limit that use?
I understand why rent seeking locals would favor this. But how is this any different from, e.g., Austin cabbies ripping off the tourists and getting Uber banned?
I understand why rent seeking locals would favor this. But how is this any different from, e.g., Austin cabbies ripping off the tourists and getting Uber banned?
I would bet good money that many people who want the state to prevent landlords from renting out their own apartments to strangers also do not want the state to prevent strangers from crossing the state's borders.
I have a friend who rents out apartments on Airbnb in London, and the other people in the building _HATE_ that there are constantly new people around.
I once rented a flat in a conservative housing society in Pune (for those unfamiliar, India has extremely Victorian attitudes to sex), and some other people living there _HATED_ the fact that I quietly enjoy the company of lady guests that I'm not married to.
In the US I'm sure you can find people who _HATE_ when their neighbors enjoy the company of guests that they found on Grindr.
Does that mean we should shut down Grindr (or prevent Grindr from giving 1 person more than 1 match/month) or pass laws against these activities?
In the US I'm sure you can find people who _HATE_ when their neighbors enjoy the company of guests that they found on Grindr.
Does that mean we should shut down Grindr (or prevent Grindr from giving 1 person more than 1 match/month) or pass laws against these activities?
Its sensible to limit that use because otherwise you'll end up with entire cities in which no one can afford to live, which you need both to provide services to the tourists and to provide tax income to keep the city running.
Well no, you'll have cities with higher prices in the touristic core, and it'll just be people with lower incomes who get pushed out. That will also help with your second problem.
You can pay for services by charging property taxes. since the value of land will go up (thanks to it being used for it's most productive use) and lower income people getting pushed out (such people are more likely to be a net drain on resources), you'll actually have more money to pay for services.
You can pay for services by charging property taxes. since the value of land will go up (thanks to it being used for it's most productive use) and lower income people getting pushed out (such people are more likely to be a net drain on resources), you'll actually have more money to pay for services.
And as ever the people in the lowest paying jobs bear the brunt of it, now having to commute from the suburbs to get to minimum wage jobs serving people with money to burn.
Negative externalities. It's easy to imagine global utility decreasing (e.g. from the permanent resident's dissatisfaction with living next to short term rentals) despite it being marginally profitable for the property owner.
>It's easy to imagine global utility decreasing (e.g. from the permanent resident's dissatisfaction with living next to short term rentals) despite it being marginally profitable for the property owner.
It's also easy to imagine that the land owner's rent gains are higher than the "externalities" endured by the neighbors. I'm skeptical that the government can find a good tradeoff here.
It's also easy to imagine that the land owner's rent gains are higher than the "externalities" endured by the neighbors. I'm skeptical that the government can find a good tradeoff here.
The negative externality is, from what I can tell, "I don't like it when my neighbor engages in activities in the privacy of his own home that don't affect me".
When did this become a valid reason to regulate an activity? Can I use this as a reason to regulate other private activities as well? If not, why not?
When did this become a valid reason to regulate an activity? Can I use this as a reason to regulate other private activities as well? If not, why not?
I guess for the same reason home owners associations exist. Personal choices that are visible in the communal space can affect property values and people's enjoyment of the area.
For many living next to a constant stream of strangers is undesirable.
For many living next to a constant stream of strangers is undesirable.
There are lots of things people don't want to live next to. For example, lots of folks don't want to live near the wrong type of people.
Typically we consider those desires morally invalid and not something to be supported. Why is "short term" a morally valid way to characterize the "wrong type of people"?
Typically we consider those desires morally invalid and not something to be supported. Why is "short term" a morally valid way to characterize the "wrong type of people"?
>When did this become a valid reason to regulate an activity?
When you operate on the assumption that people aren't affected by AirBnB rentals in their buildings this is an easy argument. But sometimes people are affected.
When you operate on the assumption that people aren't affected by AirBnB rentals in their buildings this is an easy argument. But sometimes people are affected.
It's not your neighbor that engages in activities. It are random strangers with minimal vetting that will be gone the next day.
Are you unable to see the difference and how that might affect you?
Are you unable to see the difference and how that might affect you?
A guest my neighbor met on Grindr is a random stranger with minimal vetting that will be gone the next day. Should we also regulate Grindr?
I don't see any difference that matters, nor do I see the underlying moral principle that allows me to distinguish between one and the other. The principle you've stated clearly isn't it, unless you also favor regulating Grindr.
(I'm deliberately choosing Grindr here in order to make my example conflict with left wing mood affiliation.)
I don't see any difference that matters, nor do I see the underlying moral principle that allows me to distinguish between one and the other. The principle you've stated clearly isn't it, unless you also favor regulating Grindr.
(I'm deliberately choosing Grindr here in order to make my example conflict with left wing mood affiliation.)
Your neighbour is going to supervise their Grindr date (probably much more...intimately than any other kind of guest) and not leave them in the apartment for a long weekend while your neighbour leaves town. That's my scant understanding of Grindr, anyway !
Grindr guests are personal guests, not customers of a service like Airbnb guests. As another person stated, the Airbnb guest is likely to be unsupervised, and has no vested interest in keeping the house and local community nice other than general decency and their Airbnb reputation. This is enough for many visitors, but there are a portion that don't care.
Are you willing to admit that this may change the local community dynamics in a negative way for long term residents?
I use Airbnb. I think it's great (from my perspective). However, I understand why some may want to limit it.
Are you willing to admit that this may change the local community dynamics in a negative way for long term residents?
I use Airbnb. I think it's great (from my perspective). However, I understand why some may want to limit it.
I agree that lots of things might change "local community dynamics" - for example, a gay neighbor having a parade of flamboyantly dressed houseguests can do the same thing. So can letting in neighbors of a different race.
I guess I'm just the kind of person who believes that two consenting adults should be allowed to do whatever they like in the privacy of their own bedroom.
I guess I'm just the kind of person who believes that two consenting adults should be allowed to do whatever they like in the privacy of their own bedroom.
In the US the answer is clearly 'yes you can regulate his private business'.
In many US cities renting out a home is a violation of local zoning code. The government places a large number of restrictions on what you can do on 'your land.'
In many US cities renting out a home is a violation of local zoning code. The government places a large number of restrictions on what you can do on 'your land.'
Salviati: "It is morally wrong to pass a law saying my neighbor cannot rent his home to negroes, and those advocating for such laws are bad people."
Simplicio (historical): "In the US the answer is clearly 'yes you can regulate his private business'. In many US cities renting out a home to a negro is a violation of the local zoning code."
Do you see the fallacy of this argument? I'm arguing "should", not "is".
Simplicio (historical): "In the US the answer is clearly 'yes you can regulate his private business'. In many US cities renting out a home to a negro is a violation of the local zoning code."
Do you see the fallacy of this argument? I'm arguing "should", not "is".
> Do you see the fallacy of this argument?
I do. If you go read the historical justification for zoning law in the US (by the way zoning and land use laws were originally intended to keep negroes out rich neighborhoods) they rest on the idea that as long as the government can come up with a "rational basis" that the law would "improve the public welfare" than zoning laws are a legitimate exercise in state police power. This was around the 1920's.
Later you have a concern for civil rights but the courts pretty much ignored the issue of how zoning might impact poor minorities.
There's been some lefty rumbling about maybe modifying the zoning code so that poor minorities can still afford to live in rich areas. Of course the remedies proposed are better zoning laws, not no zoning laws.
My concern is that these land use laws take away yield from capital (ie rent from landowners). The US economy has not been growing very fast lately - I don't think the US can any longer afford the costs of an extensive regulatory state. Locking away the returns to land in exchange for centrally planning all the land uses might make things feel "nice" in the short run but in the long run could impoverish the country.
I do. If you go read the historical justification for zoning law in the US (by the way zoning and land use laws were originally intended to keep negroes out rich neighborhoods) they rest on the idea that as long as the government can come up with a "rational basis" that the law would "improve the public welfare" than zoning laws are a legitimate exercise in state police power. This was around the 1920's.
Later you have a concern for civil rights but the courts pretty much ignored the issue of how zoning might impact poor minorities.
There's been some lefty rumbling about maybe modifying the zoning code so that poor minorities can still afford to live in rich areas. Of course the remedies proposed are better zoning laws, not no zoning laws.
My concern is that these land use laws take away yield from capital (ie rent from landowners). The US economy has not been growing very fast lately - I don't think the US can any longer afford the costs of an extensive regulatory state. Locking away the returns to land in exchange for centrally planning all the land uses might make things feel "nice" in the short run but in the long run could impoverish the country.
To clarify, you don't think that any city should regulate people selling short term stays in their private residence, in any way?
I think if they do regulate it, they should have a good reason for it.
All the reasons cited in this thread seem pretty bad. I say they are bad because when you apply the same reasons to regulating anything other than AirBnB, suddenly they don't seem like good reasons at all.
All the reasons cited in this thread seem pretty bad. I say they are bad because when you apply the same reasons to regulating anything other than AirBnB, suddenly they don't seem like good reasons at all.
>they should have a good reason for it.
The Supreme Court says otherwise: https://en.wikipedia.org/wiki/Rational_basis_review
In order to justify the New Deal the Court lowered its standard for state infringement of liberty to: "You just need any reason for this law, it doesn't have to be a good one"
The Supreme Court says otherwise: https://en.wikipedia.org/wiki/Rational_basis_review
In order to justify the New Deal the Court lowered its standard for state infringement of liberty to: "You just need any reason for this law, it doesn't have to be a good one"
I just responded to one of your examples elsewhere in the thread: https://news.ycombinator.com/item?id=13680648
One major issue is that apartments aren't designed the same way as hotels are. Everything from security to heating systems and garbage collection are different based on the intended use of a building.
Another is that usually short term rentals are already against rules or regulations so the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change.
Another is that usually short term rentals are already against rules or regulations so the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change.
The fact that there seem to be no major AirBnB disasters suggests that hotels are probably overdesigned, and this is all unnecessary.
Another is that usually short term rentals are already against rules or regulations so the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change.
At one time people purchased homes assuming they weren't going to live next to negroes. Did they also have a reasonable expectation to have a say on if that's going to change? If not, why not?
Another is that usually short term rentals are already against rules or regulations so the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change.
At one time people purchased homes assuming they weren't going to live next to negroes. Did they also have a reasonable expectation to have a say on if that's going to change? If not, why not?
Because one is about how someone is born and one is about how they intend to use a thing? The idea that they are in any way equivalent is so preposterous I can only presume you are making a poor form rhetorical point of some sort.
My point is that your argument is clearly incorrect - you don't actually find the same argument convincing when applied to a case where it clearly applies, but which contradicts your intuitions.
I.e., it's a rationalization, not a reason.
I.e., it's a rationalization, not a reason.
> when applied to a case where it clearly applies
Typing these words doesn't remove the differences between the situations. "Desiring to rent out my apt to tourists" is not a protected class.
Typing these words doesn't remove the differences between the situations. "Desiring to rent out my apt to tourists" is not a protected class.
All you are really saying is that currently the law often prohibits AirBnB and does not prohibit renting to non-whites. I'm saying that the law should do neither one.
Kasey_junk - if I understood him correctly - was arguing that the law should not be changed because "the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change."
If that argument were valid, then the law about renting to non-whites should not have changed either to create protected classes (which didn't exist at the time the original zoning laws were made).
Kasey_junk - if I understood him correctly - was arguing that the law should not be changed because "the people who bought assuming they weren't going to live next to a hotel have a reasonable expectation to have a say on if that's going to change."
If that argument were valid, then the law about renting to non-whites should not have changed either to create protected classes (which didn't exist at the time the original zoning laws were made).
You think it should be legal to discriminate based on race as a landlord or property manager?
Edit: I'm less interested in Kasey_junk's argument and moreso in your unwillingness to acknowledge the vast difference between discriminating against protected classes and regulation of commercial activity in private recidences.
Edit: I'm less interested in Kasey_junk's argument and moreso in your unwillingness to acknowledge the vast difference between discriminating against protected classes and regulation of commercial activity in private recidences.
I'm arguing a reducto ad absurdum. Specifically, X => Y. Y is crazily wrong. Therefore, X must be false.
I have no strong opinion on the legality of discrimination by race. It offends my moral intuitions, but I cannot construct a solid argument in favor of it that doesn't lead to other crazy conclusions. So I accept my uncertainty here.
Edit: I'm less interested in Kasey_junk's argument and moreso in your unwillingness to acknowledge the vast difference between discriminating against protected classes and regulation of commercial activity in private recidences.
I acknowledge the vast difference in feelings that these situations inspire. But I cannot come up with a good principled argument to justify the existence of protected classes, or to distinguish between these cases in some other way.
I have no strong opinion on the legality of discrimination by race. It offends my moral intuitions, but I cannot construct a solid argument in favor of it that doesn't lead to other crazy conclusions. So I accept my uncertainty here.
Edit: I'm less interested in Kasey_junk's argument and moreso in your unwillingness to acknowledge the vast difference between discriminating against protected classes and regulation of commercial activity in private recidences.
I acknowledge the vast difference in feelings that these situations inspire. But I cannot come up with a good principled argument to justify the existence of protected classes, or to distinguish between these cases in some other way.
How does it lead to other crazy conclusions? I likely will disagree with the other crazy conclusions and the logic that leads to them :)
To paraphrase kasey_junk: "people purchased homes assuming they weren't going to live next to negroes have a reasonable expectation to have a say on if that's going to change."
I argue that this line of reasoning is invalid - if it were valid, then white homeowners had some reasonable expectation to have a say on if segregation was going to change. I don't believe they did.
I argue that this line of reasoning is invalid - if it were valid, then white homeowners had some reasonable expectation to have a say on if segregation was going to change. I don't believe they did.
>If the highest value use of apartments is short term rentals, why is it "sensible" to limit that use?
As long as you're paying for the externalities (which in most cases of AirBnb rentals, you aren't) then sure.
As long as you're paying for the externalities (which in most cases of AirBnb rentals, you aren't) then sure.
What externalities? Please be specific.
So have six friends buy an apartment and split airbnb? Each one sells it to the next after 60 days.
>So have six friends buy an apartment and split airbnb?
I love how you make sound like it's no big deal to have six people split on an expensive capital asset like real estate, all to get around an AirBnB law.
I love how you make sound like it's no big deal to have six people split on an expensive capital asset like real estate, all to get around an AirBnB law.
Doesn't work:
1. 6% house sales tax.
2. BAG registry contains all address registrations in incredible details. Public data. More available for a price.
1. 6% house sales tax.
2. BAG registry contains all address registrations in incredible details. Public data. More available for a price.
6% is insignificant compared to the 200% returns here. Anyway they could sell for a nominal amount maybe?
I don't see why it being public would matter: the whole point is that this should be legal since the owner is only airbnbing it for 60 days.
I don't see why it being public would matter: the whole point is that this should be legal since the owner is only airbnbing it for 60 days.
That's 6% every two months, so you're going to be paying 36% of the value of the apartment every year. For an apartment that costs, say, half a million, that's 180,000 euros a year in taxes. I mean, if you're renting the flat for 15,000 euros a month (instead of the 1000 it would actually fetch), it might work.
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Trivial to verify addresses on Airbnb side.
> Trivial to verify addresses on Airbnb side.
Not trivial at all. Without even pausing to think, I could offhand list at least four different ways of writing my home address that would be impossible for AirBNB to automatically disambiguate from other (potentially) different residences, without actually visiting the building... but which would be perfectly unambiguous for a guest who actually visits.
Address verification is hard. Not impossible, but when you're operating in many cities and countries that have wildly different ways of organizing their addresses, it's not trivial at all.
Not trivial at all. Without even pausing to think, I could offhand list at least four different ways of writing my home address that would be impossible for AirBNB to automatically disambiguate from other (potentially) different residences, without actually visiting the building... but which would be perfectly unambiguous for a guest who actually visits.
Address verification is hard. Not impossible, but when you're operating in many cities and countries that have wildly different ways of organizing their addresses, it's not trivial at all.
Some countries (like the UK) have a widely used address registry rather than freeform addresses. And most online shopping services have figured this out (even multinational ones that ship to many countries), so I doubt a company as large as AirBnB would have technical trouble doing so if it really wanted to. The way it works when I order online: I first enter my postal code, then it shows me a drop-down box with the valid addresses in that postal code (there are exactly 16 of them), then I choose one of those. Online merchants like it because it reduces chances of fraud/misdeliveries/etc. (their contracts with parcel delivery services might also require it).
Agreed. The USPS also provides address verification / normalization services. [1]
Though I'm honestly not sure those are as comprehensive as certain other countries, as you mentioned. Germany has the Meldepflicht[2] for instance, which requires all residents to register their address with an Einwohnermeldeamt, and I'm pretty sure that's validated against a nationwide database. Granted, it's not granular enough pinpoint exact apartments (since apartments aren't generally numbered here), but still, I imagine that kind of thing would make it pretty difficult to bypass a law like Amsterdam's 60 day rule.
[1] https://www.usps.com/nationalpremieraccounts/manageprocessan...
[2] https://de.wikipedia.org/wiki/Meldepflicht
Though I'm honestly not sure those are as comprehensive as certain other countries, as you mentioned. Germany has the Meldepflicht[2] for instance, which requires all residents to register their address with an Einwohnermeldeamt, and I'm pretty sure that's validated against a nationwide database. Granted, it's not granular enough pinpoint exact apartments (since apartments aren't generally numbered here), but still, I imagine that kind of thing would make it pretty difficult to bypass a law like Amsterdam's 60 day rule.
[1] https://www.usps.com/nationalpremieraccounts/manageprocessan...
[2] https://de.wikipedia.org/wiki/Meldepflicht
There is no nationwide database of that kind in Germany. The data is kept local (but there are mechanisms to access it from another place in certain cases). The address you give them is often not validated and many people have a typo in their official address causing all kind of mayhem.
I think it sounds like a good idea and I agree address verification is hard but is it worth the risk? I imagine this would throw out all insurance liability if things go wrong.
> I imagine this would throw out all insurance liability if things go wrong.
AirBNB doesn't offer insurance - it offers a "guarantee", which is legally different in an important sense.
In any case, if you're looking to rent out your place full-time, you probably don't really care about AirBNB's guarantee anyway.
AirBNB doesn't offer insurance - it offers a "guarantee", which is legally different in an important sense.
In any case, if you're looking to rent out your place full-time, you probably don't really care about AirBNB's guarantee anyway.
Airbnb already has a whole lot of listings out there lying about the address because the people that put the apartment for rent don't want the building association to know that they are renting. They often just claim that the apartments for rent is in an office building in the same block.
Therefore, Airbnb doesn't really verify addresses at all, and lets people bypass any system that relies on this. This happens in major markets where Airbnb has people on site too: A good chunk of listings in San Francisco's SoMa are doing this.
Thus, I have little faith that any system to prevent breaking local laws based on addresses will go anywhere unless Airbnb does a lot more work to verify the accuracy of listings.
Therefore, Airbnb doesn't really verify addresses at all, and lets people bypass any system that relies on this. This happens in major markets where Airbnb has people on site too: A good chunk of listings in San Francisco's SoMa are doing this.
Thus, I have little faith that any system to prevent breaking local laws based on addresses will go anywhere unless Airbnb does a lot more work to verify the accuracy of listings.
Why do you think that artificially influencing market to influence one group of people (citizens) at expense of another (tourists) is justifiable?
I'm not the GP but I would suppose this comes down to if you have a philosophical objection to cities being engineered or not. I personally think that they should be. If the quality of life of citizens of a city is better served by having limitations on this kind of short-let activity, then I think it's reasonable that city managers should have the ability to impose those limitations.
If you believe in Laissez Faire, or that the market should be allowed free rein to shape or society, you would perhaps disagree.
If you believe in Laissez Faire, or that the market should be allowed free rein to shape or society, you would perhaps disagree.
> quality of life of citizens
While I can agree to some extent to this being the metric optimized, this metric depends on who gets to be a citizen. For example, the situation when the city becomes too expensive for particular class of people and they move out leads to increased in quality of life of remaining citizen, but people (not me) usually express negative views on this.
While I can agree to some extent to this being the metric optimized, this metric depends on who gets to be a citizen. For example, the situation when the city becomes too expensive for particular class of people and they move out leads to increased in quality of life of remaining citizen, but people (not me) usually express negative views on this.
Poor people leaving a city increases the quality of life for (richer) people that remain? That's not the obvious result of gentrification. I didn't say cities should optimise for quality of life, but quality of life should be an important consideration in the generation of policy. Other factors like cultural diversity also need to be taken into account, as well as mixing people with different income levels. I have found apartments in Berlin, for instance, that I was unable to rent because they had maximum income caps (and very low ones).
> Poor people leaving a city increases the quality of life for (richer) people that remain?
That's true, but not what I meant: by changing the group you measure the metric over, you change the value of the metric.
That's true, but not what I meant: by changing the group you measure the metric over, you change the value of the metric.
These groups of people aren't playing on a fair field in the first place.
The citizens, who live and work in attractive city, pay hefty taxes to make the whole thing possible - running the public transport, collecting the garbage, keeping the running water and sewage operating.
Obviously taxation policies and city budgets vary a lot from place to place, but it's very common for these things to be funded by income taxes on the citizens salaries - which is fine with the citizens, but then why should to tourists get to come in and freeload off all the nice things paid for by those taxes?
In a parallel universe where all these services were paid for by taxes on property values or rents, I would agree with you - whoever wants to pay the most per night can have it, but in the real world the market is already skewed to start with.
The citizens, who live and work in attractive city, pay hefty taxes to make the whole thing possible - running the public transport, collecting the garbage, keeping the running water and sewage operating.
Obviously taxation policies and city budgets vary a lot from place to place, but it's very common for these things to be funded by income taxes on the citizens salaries - which is fine with the citizens, but then why should to tourists get to come in and freeload off all the nice things paid for by those taxes?
In a parallel universe where all these services were paid for by taxes on property values or rents, I would agree with you - whoever wants to pay the most per night can have it, but in the real world the market is already skewed to start with.
...why should to tourists get to come in and freeload off all the nice things paid for by those taxes?
For the same reason retirees should not be permitted to move into a city funded by income taxes.
In the US, far more cities are funded by property taxes than income taxes. NYC and Yonkers are the only cities I can think of with an income tax.
For the same reason retirees should not be permitted to move into a city funded by income taxes.
In the US, far more cities are funded by property taxes than income taxes. NYC and Yonkers are the only cities I can think of with an income tax.
Tourists spend out of proportion to local citizens? Most towns welcome tourism, even advertise for it. I'm guessing its because businesses thrive, tax revenues rise, and the community prospers.
Wait, it seems I don't know something here. Do people in US or wherever pay income taxes to local authorities and not to central federal government?
Yes. It varies (hugely) from on place to another, but typically there is a state income tax, and also sales taxes and property taxes that go variously to the city, county, or possibly state. It's quite possible that a person might pay, say, 1/3 of their taxes to these non-federal entities.
You're assuming that the market is something "natural" and thus fair. GP may not agree with this. It is certainly debatable.
The only unquestionably "natural" thing is the heat death of the universe. The very concept of "naturalness" is extremely artificial and unhelpful.
Well, duh.
Hotels are pretty profitable too. If you take a hotel and remove the requirements for safety regulation, taxes, use of commercial real estate and provision of amenities, it will be more profitable.
Airbnb is great because the company turns a blind eye to many things and makes it easy.
Hotels are pretty profitable too. If you take a hotel and remove the requirements for safety regulation, taxes, use of commercial real estate and provision of amenities, it will be more profitable.
Airbnb is great because the company turns a blind eye to many things and makes it easy.
While this is true, it conviently leaves out the important question: Who pushed for those regulations?
Many of those regulations that affect hotels were pushed by the large hotel groups - regulation is simply the most cost effective way for large multinationals companies to keep out competition.
The regulation act as a floor that essentially ensures that only projects of $X millions of capitalization makes sense to pursue, which by default favors the large hotel chains.
Many of those regulations that affect hotels were pushed by the large hotel groups - regulation is simply the most cost effective way for large multinationals companies to keep out competition.
The regulation act as a floor that essentially ensures that only projects of $X millions of capitalization makes sense to pursue, which by default favors the large hotel chains.
That's a common argument that really doesn't hold any water.
The average mid market hotel (Holiday Inn, Hampton Inn) costs $50-75k per room to build, with the typical project costing $6-8M. Nearly all hotels like this are built from standardized components and are owned by small local or regional operators.
If you go downmarket, that cost goes in half. If you look at older, but still legally compliant hotel property, acquisition cost is probably $5-10k/room in many markets. Obviously big city hotels costs more to build/buy and operate. That's why a NYC hotel is often 2x-3x other places -- and that is being challenged by lower operating cost business models.
The large hotel chains don't own a lot of property. They are brands who license their trademarks and access to their reservation system.
The average mid market hotel (Holiday Inn, Hampton Inn) costs $50-75k per room to build, with the typical project costing $6-8M. Nearly all hotels like this are built from standardized components and are owned by small local or regional operators.
If you go downmarket, that cost goes in half. If you look at older, but still legally compliant hotel property, acquisition cost is probably $5-10k/room in many markets. Obviously big city hotels costs more to build/buy and operate. That's why a NYC hotel is often 2x-3x other places -- and that is being challenged by lower operating cost business models.
The large hotel chains don't own a lot of property. They are brands who license their trademarks and access to their reservation system.
The problem is the hotel regulations went really far. To the extend that many hotels only care to fulfill the requirements and then to squeeze the last cent from the guests (e.g. infamous fridges with expensive beverages) while disregarding whether the place is cozy, pleasant, or friendly. Initially, the temporary rental platforms were challenging this pathological situation.
Given that there don't seem to be any major harms caused by the lack of safety regulation and amenities on AirBnB, it seems like we can conclude that the hotel regulations are unnecessary.
Surely, as people who favor good governance rather than just arbitrary governance, we can all favor eliminating those costly and pointless regulations now? Or do we just favor arbitrary regulations just because we like regulations?
Surely, as people who favor good governance rather than just arbitrary governance, we can all favor eliminating those costly and pointless regulations now? Or do we just favor arbitrary regulations just because we like regulations?
That's right... nobody gets raped in airbnb rooms (http://www.airbnbhell.com/i-was-gang-raped-in-budapest-and-a...), or watched by creepy host (http://www.apartmenttherapy.com/this-is-terrifying-your-airb...), or bait and switched (https://news.ycombinator.com/item?id=8063313), of firetraps (http://www.dailydot.com/via/things-i-learned-airbnb-caught-f...).
The regulatory model around hotels is good governance.
The regulatory model around hotels is good governance.
Ehh...you'd need to prove that the regulations on hotels reduce the amount of these incidents, and then also make an argument that reducing these incidents is worth the amount of regulation. Anecdotes don't cover 1) (unless you want me to show counter-anecdotes of people being raped in hotels, etc..), but let's assume you've provided statistical information that hotel regulations provide a 50% decrease in such incidents. You still haven't articulated why you think the regulations are worth the extra safety. As a counter-argument, here's a reductio ad absurdum - it would make hotels even safer if they installed cameras in each room and hired enough security to monitor all video feeds.
Your ignorance doesn't put a burden on me. Spend 15 minutes to do some googling.
Fire safety is the most obvious example. A modern hotel is engineered to slow down the spread of fire and preserve life. Sprinklers, fire resistant doors and walls, etc.
Airbnb is an awesome thing when it does what it initially did -- handle house rentals. When that business model failed to provide growth, they pivoted to the current model where they've become the eBay of real estate by turning a blind eye to obvious fraud and abuse.
Fire safety is the most obvious example. A modern hotel is engineered to slow down the spread of fire and preserve life. Sprinklers, fire resistant doors and walls, etc.
Airbnb is an awesome thing when it does what it initially did -- handle house rentals. When that business model failed to provide growth, they pivoted to the current model where they've become the eBay of real estate by turning a blind eye to obvious fraud and abuse.
I'm confused, why do short term rentals require a higher level of fire safety than long term ones? Is a long term renter burning to death acceptable for some reason?
Your home is your castle and you cannot force someone to fix their house, absent a modification.
If you legally convert your property to a hotel, that use change triggers a need to become code compliant.
Also, accidents are more likely to happen with short term rentals. People tend to take care of their stuff better than someone else's.
If you legally convert your property to a hotel, that use change triggers a need to become code compliant.
Also, accidents are more likely to happen with short term rentals. People tend to take care of their stuff better than someone else's.
Your home is your castle and you cannot force someone to fix their house, absent a modification.
That's what the law currently says. Since you are so worried that people might burn to death, why shouldn't we change this law?
That's what the law currently says. Since you are so worried that people might burn to death, why shouldn't we change this law?
It is probably true that hotels are somewhat safer than rando's apartments. Is the increased safety of hotels worth their cost in terms of barriers to entry in the short-term leasing market?
If people get raped, spied or burned to death on in ordinary residences, does that mean we should impose hotel-like regulation on residential flats as well?
If not, why not?
If not, why not?
We do.
It's called building codes. We don't allow balloon frame houses anymore, for example.
With commercial property rules can be applied differently. Airbnb just dumps responsibility on others.
Unfortunately that means if you're in a wheelchair, are a victim of a crime due to lax judgement/practice by the property owner, or die in a fire because there's no lit sign pointing to the stairs, you as a "guest" and the "host" are fucked.
It's called building codes. We don't allow balloon frame houses anymore, for example.
With commercial property rules can be applied differently. Airbnb just dumps responsibility on others.
Unfortunately that means if you're in a wheelchair, are a victim of a crime due to lax judgement/practice by the property owner, or die in a fire because there's no lit sign pointing to the stairs, you as a "guest" and the "host" are fucked.
Why are you so confident there hasn't been any harm?
Mainly because the critics seem unable to cite anything beyond "I saw strangers coming out of my neighbor's bedroom" and occasionally "some strangers were making noise in my neighbor's bedroom".
agree. Also the media tends to sensationalize anything bad that involves AirBNB and also Uber, but ignores problems that occur with hotels and taxis.
Property is a fascinating asset-class. Is there anything else where amateur investors are so encouraged to take the plunge? Just look at TV shows about it: https://www.google.co.uk/search?q=tv+show+house+renovation
The story I've heard is that if you look at the possible large investments available to a normal person, buying real estate involves the most local knowledge and least technical skills. This means that unsophisticated investors are much more competitive at real estate than they are at, say, investing in auto-repair shops.
I also wouldn't discount the trivially available 5X (or higher) leverage and tax benefits.
If SaaS businesses were like houses you could buy ~$30k in MRR for $200k down with the other $800k at 2% APR fixed over 30 years... a proposition which would not be untempting to many people on HN.
If SaaS businesses were like houses you could buy ~$30k in MRR for $200k down with the other $800k at 2% APR fixed over 30 years... a proposition which would not be untempting to many people on HN.
The least skills? Sounds like they should get minimum wage. My landlord works for about 10 hours a year.
Parasites need land value taxing.
Parasites need land value taxing.
Land value taxes will end up being paid by the tenant. The landlord will only handle the money.
The tenant, as the one "consuming" the land for that term is the one who ought to pay the tax for the value of the land. It's only when the land is unoccupied that the owner/landlord will pay (which is also perfectly fair).
With apologies to Henry Ford: https://www.brainyquote.com/quotes/quotes/h/henryford122318....
The tenant, as the one "consuming" the land for that term is the one who ought to pay the tax for the value of the land. It's only when the land is unoccupied that the owner/landlord will pay (which is also perfectly fair).
With apologies to Henry Ford: https://www.brainyquote.com/quotes/quotes/h/henryford122318....
Totally wrong. You can't pass on land value tax, prices are set by the ability to pay and taxing the landlord does not increase the ability of the tenant to pay.
You don't know how prices are set.
You don't know how prices are set.
You're making the claim that demand for housing is infinitely inelastic, which just isn't the case. If something causes the price of all housing to rise, people will be forced to devote a larger fraction of their income to housing.
Yes. Especially if the thing that causes rental house prices to rise also causes alternatives to rental housing to rise...
No you are wrong, that's not how prices are set. Supply in urban centres is already below demand leading to bidding, setting the price by affordability.
We just had this in the UK. The government put up costs for landlords who all said rents would rise. They fell because people have less money due to inflation in other cost areas.
We just had this in the UK. The government put up costs for landlords who all said rents would rise. They fell because people have less money due to inflation in other cost areas.
Who do you think pays the real estate taxes now in an occupied rental? Where does the money come from? Why are those answers different (or the same)?
branchless(1)
Real estate is one of the best ways to make long-term wealth. Homes in many regions of California have increased 3-4x since 1996. Unless you bought at a really bad time (2005-2007) almost anyone who holds real estate comes out ahead in 10 years vs. renting. Renting is a really lousy deal in the long-run and as possibly the short-run due to the very high deposits required on some properties, which lock the renter for very long periods and the rent increase always exceeds inflation.
Avoid foreign real estate though unless you are very careful
Avoid foreign real estate though unless you are very careful
It is a bit more nuanced than that. Buying a house is a highly leveraged (if you have a mortgage), undiversified and relatively illiquid investment.
House prices have indeed gone up, but there is no guarantee that they will continue to climb. There is a limit to how high they can climb relative to income. You also picked one of the hottest real estates markets as a point of reference. The returns in many other places are much lower. As a comparison, the S&P 500 with dividends reinvested over that same period (january 1996 to january 2017) has returned 440%.
When buying a house, timing is crucial for the return. Renting and monthly investing in the stock market has the advantage that your investment is spread out in time.
For most people, the biggest advantage of buying a house with a mortgage is that it imposes a discipline: you have to pay off the monthly instalment. If you rent you might be tempted to spend the rest of your income instead of investing it.
[1] https://dqydj.com/sp-500-return-calculator/
House prices have indeed gone up, but there is no guarantee that they will continue to climb. There is a limit to how high they can climb relative to income. You also picked one of the hottest real estates markets as a point of reference. The returns in many other places are much lower. As a comparison, the S&P 500 with dividends reinvested over that same period (january 1996 to january 2017) has returned 440%.
When buying a house, timing is crucial for the return. Renting and monthly investing in the stock market has the advantage that your investment is spread out in time.
For most people, the biggest advantage of buying a house with a mortgage is that it imposes a discipline: you have to pay off the monthly instalment. If you rent you might be tempted to spend the rest of your income instead of investing it.
[1] https://dqydj.com/sp-500-return-calculator/
assuming you buy the home outright, the returns can be boosted by renting it-or-on the money you saved by not renting. If you put all your $ in stocks, you still need somewhere to live.
Sure. And taxes complicate the situation further (lots of countries have tax incentives for home owners). But as a homeowner you're on the hook for maintenance and repairs. You're also a lot less flexible: when you rent, it is easier to move for a job or if your family expands/contracts.
Both have advantages and drawbacks. I just don't think it is the no-brainer you make it out to be.
Both have advantages and drawbacks. I just don't think it is the no-brainer you make it out to be.
Real estate is one of the few ways to make substantial wealth gains with little starting wealth (because of the large leverage that is possible and the norm on the transaction). That's why you hear so many stories of middle class people making $500K+ on their house over a decade.
That doesn't necessarily make it one of the best ways overall, but it is a very good way if you're starting with little because it's basically your only option. Trying to scale that up (into real estate beyond your personal residence, rental properties, etc) is pretty close to buying yourself another job. If you work at that job diligently, you will do better in rental property than in your own residence, but it's work.
For those with some capital (say 1+ million USD) and a full-time job, real estate as a second job is not a particularly good fit IMO. The un-levered returns you can get in the stock market are better and the time commitment is largely optional and can be at a time of your choosing.
That doesn't necessarily make it one of the best ways overall, but it is a very good way if you're starting with little because it's basically your only option. Trying to scale that up (into real estate beyond your personal residence, rental properties, etc) is pretty close to buying yourself another job. If you work at that job diligently, you will do better in rental property than in your own residence, but it's work.
For those with some capital (say 1+ million USD) and a full-time job, real estate as a second job is not a particularly good fit IMO. The un-levered returns you can get in the stock market are better and the time commitment is largely optional and can be at a time of your choosing.
>Real estate is one of the best ways to make long-term wealth
The long-run real returns to real estate are essentially zero. TINSTAAFL.
The only reason it's "profitable" for the average person is because the financial system allows for easy leverage (home mortgages). Take away that subsidization and real estate is just another asset class with no advantages.
>Homes in many regions of California have increased 3-4x since 1996
And many random stocks have increased 3-4x since 1996. So what?
The long-run real returns to real estate are essentially zero. TINSTAAFL.
The only reason it's "profitable" for the average person is because the financial system allows for easy leverage (home mortgages). Take away that subsidization and real estate is just another asset class with no advantages.
>Homes in many regions of California have increased 3-4x since 1996
And many random stocks have increased 3-4x since 1996. So what?
If the long-run real returns are zero, they will also be zero with leverage (assuming you can borrow at a zero real intrest rate).
Leverage is only an advantage if your return is higher than your cost of borrowing.
Leverage is only an advantage if your return is higher than your cost of borrowing.
>Leverage is only an advantage if your return is higher than your cost of borrowing.
Which it is for housing, and many other investments. Only the bank won't lend you $500,000, backed by the government, to buy stocks.
My qualm with the OP was the implication that real-estate has outsized returns. Unless you're taking advantage of a home mortgage, there's nothing significant about real-estate returns. Of course most of us here are of the generation that saw nothing but rising house price (except for that one time where they didn't, but that's an anomaly, right?)
Which it is for housing, and many other investments. Only the bank won't lend you $500,000, backed by the government, to buy stocks.
My qualm with the OP was the implication that real-estate has outsized returns. Unless you're taking advantage of a home mortgage, there's nothing significant about real-estate returns. Of course most of us here are of the generation that saw nothing but rising house price (except for that one time where they didn't, but that's an anomaly, right?)
Lending against land is how we create money. The entire system sees all productivity gains flow to land owners. It's killing the West.
> In 2012, Jon Wheatley bought a $40,000 apartment in Las Vegas so that he could rent it out on Airbnb.
Investment advice: Get something for a fraction of the actual price.
Doesn't matter what happens next, you are already making a profit.
Investment advice: Get something for a fraction of the actual price.
Doesn't matter what happens next, you are already making a profit.
As the saying goes, you don't make money selling well, you make money buying well.
The American dream: something for almost nothing. Is this "business"? Who is doing the actual work once we set aside our paper heroes?
Buying something for a dollar and selling it for two is the second oldest business model in the world. Most businesses boil down to one or the other.
Rental property is buy an asset, break it into manageable and consumable chunks (nights, months, or a year of tenancy) and sell those chunks for more than you paid for them.
Airlines buy (or lease) entire airplanes and sell individual seat-routes. They're somewhat less successful at turning a profit than real estate, though.
Rental property is buy an asset, break it into manageable and consumable chunks (nights, months, or a year of tenancy) and sell those chunks for more than you paid for them.
Airlines buy (or lease) entire airplanes and sell individual seat-routes. They're somewhat less successful at turning a profit than real estate, though.
Here's the original article by Jon Wheatley: http://needwant.com/p/buying-apartment-airbnb/
I wouldn't consider him a "professional Airbnb Investor"; he just did it once.
I wouldn't consider him a "professional Airbnb Investor"; he just did it once.
I love AirBNB, but as one of my friends who owns 8 properties tells me, the returns are higher on VRBO and HomeAway.
Sorry, I have a vile hatred of AirBNB. Housing is a basic human right. Call me a dangerous socialist if you like. Can any of its employees rationally convince me it provides economic value to ALL of my city including the lower end of workers as opposed to funneling out profits to multiple owners and HQ?
Housing is a service, and landlords, who provide this service, take principal risk as well as pay for maintenance, taxes, and other costs. Why should those who provide such a service, such as housing, not earn rent for their efforts and risk? Developers buy properties in bad neighborhoods in the hope of improving and renting them, but without profit, where is the incentive to invest? It's a two sided-equation: for services to exist, there must be an incentive for the other side to provide said service, and that incentive is profit.
Regular apartment rentals often lock renters for multi-month contracts (due to difficulty, length, and expense of the eviction process, in which landlords lose money during the lengthy eviction process, when a renter rents for a single month and does not leave after not paying); air BNB, although it's more expensive per night, doesn't have such long time commitments for renters.
Regular apartment rentals often lock renters for multi-month contracts (due to difficulty, length, and expense of the eviction process, in which landlords lose money during the lengthy eviction process, when a renter rents for a single month and does not leave after not paying); air BNB, although it's more expensive per night, doesn't have such long time commitments for renters.
>Housing is a service, and landlords, who provide this service, take principal risk as well as pay for maintenance, taxes, and other costs.
You gloss over "other costs". Many anti-AirBnB people's concerns are precisely about those other costs.
It's evident in this discussion who are the people pushing the externalities onto others, and who are the people having to deal with them.
You gloss over "other costs". Many anti-AirBnB people's concerns are precisely about those other costs.
It's evident in this discussion who are the people pushing the externalities onto others, and who are the people having to deal with them.
Can you give an example of an externality unique to AirBnB landlords that is pushed onto others and the others are unable to force the landlord into accepting responsibility for it?
"Developers buy properties in bad neighborhoods in the hope of improving and renting them, but without profit, where is the incentive to invest?*"
Precisely, there should be no profit incentive. Society doesn't need lazy landlords speculating on gentrification. I don't give a fuck if you're disincentivised to own 8 homes which you can rent out while you holiday in the carribean. Productive societies needs affordable housing for all classes of people. Property is not an asset for speculation or a VC-backed venture return model. Feel free to invest your spare cash in innovation and businesses seeking growth.
Precisely, there should be no profit incentive. Society doesn't need lazy landlords speculating on gentrification. I don't give a fuck if you're disincentivised to own 8 homes which you can rent out while you holiday in the carribean. Productive societies needs affordable housing for all classes of people. Property is not an asset for speculation or a VC-backed venture return model. Feel free to invest your spare cash in innovation and businesses seeking growth.
My experience was that subletting allowed otherwise hungry poverty line individuals live well when work was hard to come by. Adding to that the volume of extra tourist money in the cities is net positive for local businesses, which in turn creates more work too. The answer to airbnb is not to limit it but simply to build more apartments. This is not good for the existing wealthy property owners as it could bring down the value of their assets so we get hardcore regulation instead.
Me too. Hacker news loves usury and rentiers though. They think these people are running a business.