Category Laws and regulation

A precautionary tale for vacation rental operators post COVID-19

As a professional Airbnb manager, I’m a member of a lot of Facebook groups filled with other hosts and managers.

Some of them are very helpful and offer a wealth of knowledge; some of them I’m a member of more for the entertainment factor that anything else.

But I’ve been seeing a LOT of hosts lately making comments that concern me. They’re all along the same vein, but here is a paraphrased quote of one of them (I removed all the swearing and typos) :

“I didn’t pay my rent on my Airbnb unit in March, April or May. I’m not planning on paying at all until August at least. That’s the earliest the complex would be able to evict me based on current eviction bans because of the virus. Until then I’m just going to ride the gravy train. Plus the lease isn’t tied to my SSN, so I won’t even have the eviction on my record. Yay, me – I’m so smart!”

Really?

Do people really think this is ok?

There are so many things wrong with this statement. Where do I even start?

The blatant violation of a contractual agreement? The outright stealing? The bragging about said stealing? Comments like this (of which I’ve seen many the last few months) make me physically sick.

Many hosts complain that bad guests are making things difficult for them. But not many of them say anything about how other hosts are also making things difficult for them. If I was a landlord, I sure wouldn’t want to rent to someone who might sublet my place out and then plan on not paying me for 6 months or more!

Many Airbnb hosts jumped on the gravy train when bookings were easy to get, overextending themselves because it was “easy money,” and now they (and everyone they’ve rented or purchased from) are paying the price.

But it’s more than that, too. I’ve seen a consistent trend of Airbnb and other short-term rental hosts proudly exploiting loopholes in the system or even outright violating the rules so that they can operate. They seem to have no regard at all for respecting the rules of the community within which they’re trying to operate.

Thus they operate where they know they’re not allowed, lie to landlords, refuse to pay rent, and all sorts of other illegal or unethical practices.

If this is your business plan, your exit strategy, if you’re even considering doing this or anything like this, let me be clear: you’re not a business person, you’re a con man.

You’re a thief, a common criminal. And you should not be proud of this. You should be ashamed.

That woman entered into a contractual agreement that she is choosing to flagrantly ignore. It’s not even that she doesn’t have the money. She just wants to hold onto it “just in case.” She hasn’t bothered talking to her landlord and working out some sort of deferred payment plan. She’s just giving the middle finger to the person who’s enabled her primary source of income for the last several years.

People, this is not right.

If you want to start a business with Airbnb….make it a business. Make it legitimate and honorable. Do your best to pay your bills and honor your obligations. If you’re unable to do so because of unforeseen circumstances, talk to your creditors. (And yes, a global pandemic that cripples the world economy definitely counts as an unforeseen circumstance.) Be honest with them and tell them what’s going on.

More often than not they’ll be understanding and willing to work with you, as long as you’re upfront with them.

That is the only way to create a business that will survive the long run.

Now I know that if you’re in the situation right now where you have multiple properties and can’t pay the rent or mortgages on many of them, there’s not much that can be done in hindsight to change that, although I’d still recommend you talk to the landlords.

But hopefully this can serve as a precautionary tale for vacation rental operators moving forward.

I know that it can be tempting to just buy, buy, buy (or rent, rent, rent), to expand your empire as quickly as possible and bring in the moolah. But rapid growth like that isn’t healthy. We’ve seen this over and over again throughout history – it’s called an economic bubble, and it always eventually bursts.

I encourage you – I entreat you, I beg you – for your sake as well as all of ours, restrain your growth goals. Don’t gain new properties quicker than you’re able to manage them responsibly. Keep a healthy financial safety net to get you through the unexpected bad times.

There’s no question that COVID-19 threw a nasty and unexpected wrench into vacation rental operators’ plan everywhere. But there’s also no question that if they had been operating their businesses more responsibly and ethically in the first place, a lot of them would be in a much better place than they are now.

Let’s do better next time. Our guests, other hosts, and the landlords or banks who are entrusting their resources to our care deserve it.

How to survive COVID-19 as a STR host – webinar replay

Are you freaking out because of the uncertainty that COVID-19 is throwing into your life? Are you struggling to find a new equilibrium for your STR?

You’re not alone.

Across the globe, hosts everywhere are struggling with the challenges that the virus has thrown their way. Many of them are having a hard time.

That’s why at the end of April I hosted a live webinar – How To Survive COVID-19 As A STR Host – with my friend Katie Adkins.

Katie is a leadership development coach, and the founder of Adkins Talent Solutions. She excels at helping people to think creatively to maximize their full potential.

So on the webinar, we did a little coaching session with me as her subject. My hope was that the insights she pulled out of me as an STR host could help other STR hosts think creatively and get out of their ruts, as well.

It was a great hour! In fact, I had so many people follow up and ask me about it that I decided to make the recording available to everyone. Enjoy!

If you have more questions, you can always follow up with either me or Katie.

3 reasons I’m looking forward to increased short-term rental legislation

Last week I led a debate with my ESL students about the pros and cons of allowing increased immigration. It was a lively discussion, and I enjoyed it so much. It’s amazing to see people grow and flourish, especially in a language that isn’t their native tongue. 

But I digress. 

A similar debate is happening in states and cities all across the country. And it may affect you a whole lot more than the immigration debate would.

What am I talking about?

The short-term rental debate. 

For the past few years, local governments have had their hands full dealing with Airbnbs that cause problems and create unhappy neighbors. Many cities have considered banning short-term rentals altogether (some actually have). 

It’s an unsettled (and sometimes unsettling) time to be an Airbnb host. But I’m really not worried about it. 

In fact, I’m excited about it. 

Here are 3 reasons why I think increased regulation around short-term rentals is a good thing:

Increased revenue for cities

A lot of people have expressed concern that legislation would be bad for Airbnbs, because it opens the door for short-term rentals to be banned completely. And it’s true that some areas of the country and world have done just that.

But local governments are starting to see the benefit to them of allowing short-term rentals with restrictions – increased tax revenue.

If they allow STRs with restrictions – annual permit fee, percentage of bookings remitted to the government, etc – they’ll get a piece of the pie. If they outlaw them completely, they get nothing.

Most governments are starting to realize that they want a piece of that pie.

In my own city of Atlanta, one of the local city governments recently banned all versions of STRs, no exceptions…only to do an about-face a few months later.

Our world is changing and local governments are starting to realize that they need to get on board, or get left behind.

Legitimacy and stability

That brings me to my second point – legitimacy. Defined, codified guidelines about what’s allowed and what isn’t allowed brings an air of legitimacy and stability to your STR that has previously been absent.

What does that mean in practice?

It means that when you call the cops on your guest who won’t leave they’ll have something they can legally do to help you.

It means that when a neighbor gets angry about an unauthorized party they’ll be able to report it and actually expect local law enforcement to have the teeth to back them up.

It means that you’ll get a lot less “not my problem, figure it out yourself” when you’re trying to get help from cops or other local government officials.

I don’t know about you, but that sounds really amazing to me.

More barriers to entry

I was trained in economics in college, so using this term is definitely the econ nerd in me escaping. But the principle is important, even if you don’t know the actual phrase.

A barrier to entry is anything that would keep you from entering into a certain industry. It can be required certifications, start-up investment capital needed, zoning restrictions or other governmental regulations, etc.

Right now there are almost no barriers to entry for starting a STR. Whether you have a house, a spare room, or just a tent in your back yard, you can be up and running with an Airbnb listing in less than an hour.

This means that in many areas of the world, the market is getting flooded.

Hosts, like local governments, all want a piece of the pie.

But oversaturation of the market is making it harder and harder to make decent money. I’m looking forward to increased legislation because it will make it harder to become a host…which also means that if you are still able to get into the market, you’ll find it a lot less crowded than it currently is.

So there you have it. Three reasons I’m looking forward to increased regulations in my market.

What about you? Do you have other reasons you think this will be good in the long run? Do you think I’ve lost my marbles? Let me know your thoughts in the comments!