Post by High Priestess on Mar 25, 2020 19:34:11 GMT
From the beginning, I've felt that hosting and vacation rentals were for people who either owned property, or were able to take in guests into a rented apartment where they themselves lived. I've felt uneasy with people who buy more and more investment properties to turn into short term rentals, or who rent apartments or houses, just for the purpose of turning them around to rent out again at a profit on Airbnb as short term rentals. The latter is termed "rental arbitrage", and it's viewed as a questionable "get-rich-quick" scheme by the author of this article:
www.vrmempire.com/post/housing-bubble-2-0-coronavirus-is-popping-the-rental-arbitrage-bubble-on-100-000s
I tend to agree that rental arbitrage is a questionable business. In many cases, as mentioned by the author of this article, those engaging in this business are doing illegal business on a large scale, as they are operating in places like New York City, where it's illegal to do short term rentals with a property that is not your primary residence. Even if not strictly illegal in other areas, I think this kind of business is risky, because if regulations change in those municipalities, it could become illegal, yet the individual renting them to run as STRs may be locked into a long term lease. People who own properties have many options for ways they can use them. Those doing rental arbitrage have fewer, because of their need to profiteer on someone else's property. There's no point of renting the property if you discover that you can't make a profit and rent it out for more than you're paying for it. Thus, you can't turn to doing standard long term rentals if for whatever reason you're no longer able to do short term rentals.
As well, as pointed out by quotes in the article, many of those doing rental arbitrage have little savings and are not able to weather losses the way normal property owners can. Many of these have suffered the worst of the fallout from Airbnb's use of Extenuating Circumstances to override cancellation policies and fully refund guests, and are likely to pull off Airbnb and never do business with them again.
This could actually be a boon to the "regular" hosts, the homeowners, vacation rental owners, and tenants having guests in their own apartment, who in my view should have been the only ones doing the hosting in the first place. In the longer term, this departure of the rental arbitrage players from Airbnb and perhaps many from the whole STR business should bring more business and opportunity to those property owners who are in a legitimate position to engage in this business, which in my opinion, the rental arbitrage players are not.
www.vrmempire.com/post/housing-bubble-2-0-coronavirus-is-popping-the-rental-arbitrage-bubble-on-100-000s
I tend to agree that rental arbitrage is a questionable business. In many cases, as mentioned by the author of this article, those engaging in this business are doing illegal business on a large scale, as they are operating in places like New York City, where it's illegal to do short term rentals with a property that is not your primary residence. Even if not strictly illegal in other areas, I think this kind of business is risky, because if regulations change in those municipalities, it could become illegal, yet the individual renting them to run as STRs may be locked into a long term lease. People who own properties have many options for ways they can use them. Those doing rental arbitrage have fewer, because of their need to profiteer on someone else's property. There's no point of renting the property if you discover that you can't make a profit and rent it out for more than you're paying for it. Thus, you can't turn to doing standard long term rentals if for whatever reason you're no longer able to do short term rentals.
As well, as pointed out by quotes in the article, many of those doing rental arbitrage have little savings and are not able to weather losses the way normal property owners can. Many of these have suffered the worst of the fallout from Airbnb's use of Extenuating Circumstances to override cancellation policies and fully refund guests, and are likely to pull off Airbnb and never do business with them again.
This could actually be a boon to the "regular" hosts, the homeowners, vacation rental owners, and tenants having guests in their own apartment, who in my view should have been the only ones doing the hosting in the first place. In the longer term, this departure of the rental arbitrage players from Airbnb and perhaps many from the whole STR business should bring more business and opportunity to those property owners who are in a legitimate position to engage in this business, which in my opinion, the rental arbitrage players are not.