New York, NY – October 8, 2013 – (RealEstateRama) — New York Attorney General Eric Schneiderman has given popular web rental service AirBed and Breakfast an ultimatum: provide user data on all 225,000 New Yorkers using the site by the end of the day, or risk legal action. As cities continue to crack down on unlicensed Airbnb sublet rentals, renters are taking a new tactic: maintaining their apartments but purchasing homes specifically to use as legal Airbnb rentals.
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Homeowners have long purchased second homes for the sole purpose of creating sources of rental income. However, online “rent-a-room” service AirBed and Breakfast, commonly called “Airbnb,” has prompted a new type of homeowner: the person who buys a second home to rent it, every night, to a different Airbnb traveler.
The way Airbnb works is simple. Users post images of their home online, along with a nightly rate. Travelers browse the listings and select places to stay as if shopping for hotels. Although Airbnb has multiple safeguards in place to protect both the renter and the rentee, most parties do not meet each other until the traveler has arrived, bags in hand — and often not even then. Many Airbnb renters simply give the traveler a code to a keypad lock, allowing guests to spend the night at the home without ever meeting the home’s owner.
It’s not surprising that many apartment complexes are pushing back on tenants who post their apartments on Airbnb. Lawmakers in several states, including housing-crunched New York City, are working to create legislation to regulate the service; Attorney General Schneiderman has issued this new subpoena to force the issue and push Airbnb to accept necessary regulation.
Homes, on the other hand, are less closely regulated than apartments, prompting some Airbnb users to take the next step and buy a home specifically to use for Airbnb rentals.
Financial news site The Billfold cites “Jackson White,” a man who has earned enough money from renting his San Francisco apartment on Airbnb to purchase a house, which he is not planning to live in but is instead planning to rent out to Airbnb travelers.
White, who chose to remain anonymous for the Billfold interview due to the “unspoken understanding” with his landlord about the outside-the-lease sublet, is looking forward to running a legal rental, as are other Airbnb fans who have had success with the service but don’t want to run afoul of increasingly harsh regulations. A quick glance of Airbnb shows many people renting out these homes, either as an entire unit or room by room, like an old-fashioned boarding house. Meanwhile, the owners live elsewhere.
What’s the advantage to renting via Airbnb vs. renting to traditional tenants? Renters can make a lot more money on nightly Airbnb rentals, even if the home sits empty a few nights every month. Airbnb travelers are also unlikely to want to repaint the interior or demand upgrades to the plumbing. The majority of Airbnb travelers are simply looking for a quiet, clean place to spend the night, and renters don’t have to invest much to do that.
If you’re working with a client who’s looking to buy a home specifically for an Airbnb rental, here are some options to consider. A few home additions, such as adding an ensuite bath to each bedroom, will make the unit appear more attractive to travelers. All in-home services, from washers and dryers to toilets, must be ready to take a lot of wear and tear. Have a list of construction companies, such as ZMG Construction, to help clients upgrade their homes for nightly guests. Yep, they may need major overhauls.
If you’re working with a client who is looking to buy a home but hasn’t yet considered Airbnb possibilities, talk to that person about investing in a slightly larger home. Homes should include one with a separate mother-in-law suite or living area, and renting out the extra room to Airbnb travelers. Often, two or three nights of renting covers a monthly mortgage payment; extra renting helps people pay down homes more quickly. Unlike a formal rental, all you have to do to stop renting to Airbnb travelers is temporarily remove your home from the website’s search listings.
Successful real-estate agents need to understand how people are using their homes, and renting them to Airbnb guests is a newer trend in the real-estate industry. Do some research so that you can include Airbnb in your real-estate strategy.
