The Rise and Fall of a Multimillion-Dollar Airbnb Scheme
nytimes.com
nytimes.com
There are a lot of positive externalities to families and larger groups coming to a city and spending their money.
When I need 3 adjoining bedrooms and a space that will take dogs, a hotel is going to cost an absolute fortune in comparison or be actually impossible to find.
Here’s to hoping there’s a happy medium to be found with the right combination of technology and regulation.
For example, what about a condo bylaws which granted the right to rent a unit but with a 20% per night fee which goes to reducing condo fees for the rest of the building. There’s a reasonable number which covers the externality.
As far as housing stock is concerned, that’s perhaps a trickier problem. I think it’s probably easier to quantify how many units are not available for a local rental and harder to quantify the economic positive value of the rental to locals, and so it’s an easy scapegoat for property prices which were probably overly high to begin with.
I am generally very liberal with what I think homeowners should be allowed to do. But an apartment or condo next to, or above mine with a rotating crew of guests? I shouldn't need to put up with that unless I agree to it in writing before starting my lease.
There IS existing space marked out for hotels. If it were a profitable business, why has no one starting build hotel 'houses' to rent for visitors?
The reason is IMO price, it would be very expensive to rent out a hotel "house". The reason the AirBnB is cheap is that you are making others eat your negative externalities (i.e. the guys under you get to deal with 2am stomping).
First one to scale wins.
Board your dogs at home.
It's impossible to penalize dog owners for not cleaning up after themselves when they're skipping town in a few days.
This is why zoning laws prohibit renting in residential areas - because you can't threaten people who don't live there into good behavior, because they're not around long enough to actually be punished.
Whether it’s not cleaning up after a dog, or playing music too loud, or being rude in the hallway, or littering in the street.
So what’s the solution — other than pervasive tracking — that allows good people behaving well (e.g. a middle class family) to be able to find a place to stay in a nice city?
Maybe the people who actually live in these cities you want to visit have decided they don't want more tourists, and their zoning laws reflect that.
You don't, like, have a "right" to affordable lodging in a city you don't pay taxes in.
You'd figure AirBnb would remember their days of being a rebellious teenager and provide legal assistance to these enterprising disruptors. Then again, maybe there's an AirBnb shell corp legal defense fund.
So you’re only a criminal if the haul is large?
Losing 14M a year on a market could be a problem eventually. Especially if the fines increase with recurring issues.
Eevenue is a useful measurement of how large the operation was.
There is some information about profit in the article:
>The rent for one apartment was $3,225, but it was on Airbnb for $250 a night. Hypothetically, Mr. Beckman could cover a month’s rent by filling it with tourists for about two weeks. In just a few months, Mr. Beckman had booked more than 500 guests and generated about $84,000 from the building at 78 East 119th Street, according to the city’s lawsuit.
AirBnb needs to go into the trash. They consume resources and push costs onto the community and neighbors, while making millions.
But people already buy places and rent them out as income property. This puts a burden on renters and increases the incentives for builders to only construct larger apartments and homes. It raises the price for everyone and poor single people suffer the most.
Im not following how airbnb is worse than individuals who have profited off the community and neighbors since forever?
The guests do, though, which means when you call the cops again next week, it's a new person getting their first noise warning.
Nor do they really want to do all that work - evictions cost money, and are hard! - just to have another AirBnBer sign the replacement lease.
Alas, we can only dream that such a technology. https://en.wikipedia.org/wiki/Steel_frame
Can you expand on what the software solution would look like here? I'm curious why the hotel lobby doesn't scrape Airbnb and report all the properties that are breaking regulation.
Or just do a tiny bit of host/property verification. Again, too much money to be made from illegal/unzoned hotels.
I still think it'd be straight forward to scrape reviews off Airbnb that have telltale signs of the host not being present e.g. lockbox mentions. Filing complaints/lawsuits against even a small minority should create a chilling effect for everyone else who's running illegal hotels.
There are hundreds if not thousands of other business schemes just like this one going on right now on Airbnb.
> “It’s been 3 a.m. and I’ve had people ringing my buzzer to get in,” said Ziograin Correa, 40, who lives in the building with his wife and six children. “They don’t have a key, so they ring my buzzer.”
The other residents in the buildings can't leave an AirBnB review.
The residents have something even better: they can complain to the landlord.
Those are all, by and large, "bad things".
There will be fines involved, because NYC wants their cut of the profits.
I still don't consider what they did as 'bad things'.
First: You don't know that. In fact the neighbours would disagree.
Second: laws are intended to be preventative. Some of them are to prevent the bad outcome (manslaughter is illegal), some of them to prevent things that commonly lead to a bad outcome (campfires in my bedroom are illegal). If I build a campfire in my room and this time it doesn't destroy my building, that doesn't excuse me in law or ethics. I still did a dangerous thing, knowingly and recklessly.
> There will be fines involved, because NYC wants their cut of the profits.
There are fines involved because NYC operates, even its own gloriously half-arsed way, under the rule of law.
You don't know either. So I guess we are both speculating.
"Second: laws are intended to be preventative. "
Do you agree with all laws on the books? I sure don't.
"I build a campfire in my room and this time it doesn't destroy my building, that doesn't excuse me in law or ethics. I still did a dangerous thing, knowingly and recklessly."
Can you explain to me how having a legitimate business where nobody was scammed and the outcome was a happy customer is reckless? In addition to this, there were multiple jobs added to the economy as a result of their business venture.
"There are fines involved because NYC operates, even its own gloriously half-arsed way, under the rule of law."
The hotel lobby has lots of influence in NYC. It's a very similar situation to the taxicab unions. Some laws should be bent and broken..because they need to be changed.
In other words not only was the neighborhood losing access to housing inventory, but other landlords were losing access to qualified tenants who didn’t want to live in a building with a bunch of Airbnb rentals in it.
> New York regulations are supposed to keep apartments from being pulled out of an already-tight rental market to cater to the tourist trade. They specify that it is illegal to rent an entire apartment in most buildings for fewer than 30 days unless the permanent tenant is present while the renter is there.
For one guy to make millions there are many city inhabitants that have to face ever increasing rents. And this harms the city because it increases unrest and puts off people from moving in.
And the issue is also on a more "micro" scale. Imagine living in a building where several apartments are dedicated to Airbnb style renting full time. You would probably not enjoy renting or owning the other apartments there.
The article also states that these apartments were in upscale areas, so it isn't really preventing anyone from moving in.
"You would probably not enjoy renting or owning the other apartments there"
If the inhabitants of those apartments are causing problems, the landlord should have the final say.
This all really should be up to the landlord and not the government.
Of course it's preventing them. It's one less apartment in an already airtight market. For every apartment not available for renting, all the other rents go up another bit. Or a big bit since you can easily charge double via Airbnb. This means without any regulation the rents could surge to at least 80% of what you can get via Airbnb. And since this would seriously hurt the city the government gets involved.
> should be up to the landlord and not the government
It's the government's duty to protect its citizens from abuse. "The government" is behind every law and regulation. So every time I hear this I wonder if the people who say it realize what it implies. How easily it turns into "it's up to the [person who shafted you] not the government". I'm sure you are protected by so many of them you don't even realize. Just because renting in NY is not an issue for you doesn't mean it's not an issue.
There are more people involved in the transaction than just the renter and the rentee.
Hotels have hundreds of people coming in and out of the building on a daily basis. At most of these apartments you would have at most 3 or 4 people. The difference is scale.
The only reason NYC even cares at all is because the hotel lobby is powerful and the city wants their tax money.
They should just tax it and leave it up to the landlords/property owners.
Actions -- or inactions -- speak louder than words.
There are other issues as well of course, that Airbnb guests (and the owners) who are running a hotel don't care at all if their guests bother the neighbors, leave trash outside, etc.
It might be New York City, but it's also a community deciding how things are laid out and work, how they gather taxes, and etc in their city.
The choice of a community does not necessarily mean that it is the right choice.
AirBnb definitely solves a problem and generally at a much cheaper price. We need to update our laws to let it do that in a sustainable manner.
Edit: Corrected rentable to short-term rentable
I'm not really sure there is a "problem" here. It's the locals who get to decide if their laws need updating or not. I'm willing to be a ton of Airbnb guests is not what the locals want.
Simply false. These are the steps involved in "declaring" your property to be rentable:
Step 1a: If you rent your place, ask your landlord for permission. Step 1b: If you live in a condo building, ask your condo association for permission. Step 1c: If you own your own house, ask your spouse for permission.
Step 2: Put an ad on Craigslist advertising your rental.
Step 3: There is no step 3.
Declaring a property to be rentable is literally a trivial exercise unless you're going for short-term (aka "transient" or "hotel") rentals.
For example, if I own a single-family home, my ability to rent it out is restricted by zoning rules. I would have to look up the Certificate of Occupancy and potentially make changes if I intended to rent my place out. It could even mean involving an architect because the building would have to meet the structural requirements for a rooming house. There are lots of redtapes.
Like NY Taxi Medallions. Before Uber, Lyft or other ride-sharing apps, there was only 13,587 yellow cabs in the city of 8.5 million people. Currently, there are an estimated 100,000 cabs in the city which resulted in a drop of medallion prices from $1.4 million in 2014 to just $140,000 now. It was an artificial bubble created by the taxi drivers community (and government) to keep the medallion price inflated. It is easy to see why they were against ride-sharing apps.
Or California housing zones. We all know that California has a housing crisis and one of the potential solution is to have multi-story buildings. For that, we need easy rezoning of residential zones to allow multi-story building redevelopment. However, most of the community members refuse to allow for that since it would bring down the rent and property prices. So the community is not interested in allowing easy development of multi-story buildings.
Breaking the law for a buck is a very different thing.
Before Uber, yellow medallion cabs were certainly not the only taxis available in NYC - they're just the only ones that can be legally hailed from the street. There have always been lots of car service companies in NYC that you can call to request a taxi. Some of these even offer online booking.
I get what you're getting at but I'm not sure I see a good way around that. Folks who can't vote on local taxes, tax free? Everyone would just shop the next town or state over....
I think that's just too expansive of a view on taxation and representation to make sense.
Immigrants, even permanent residents, pay all the taxes and have none of the representation. Felons too (while in prison and up to 2 years after).
I have a feeling “taxation without representation” stopped being an applicable argument as soon as USA won the independence war.
Congresspeople represent all the residents of their district, not just the citizens. While non-citizens are not allowed to vote on their choice of representative, they are allowed to call their local congressperson and express their opinions on upcoming legislation, and can volunteer in political campaigns. Permanent residents are also allowed to donate money to political campaigns.
At least in CA and NY, non-citizens do regularly take advantage of their rights within the US political system.