It used to be when you bought a house, you mostly worried about schools and traffic and noisy neighbors.
The explosion of Airbnb has added a new worry/opportunity. In some lodging hotspots, there are so many overnight guests that residents can’t find parking spaces. At the same time, increased demand for property by Airbnb income investors has driven up home prices in some markets, making things harder on families who simply want to buy a house to live in.
Cities have reacted, if belatedly, by passing or contemplating passing new ordinances to rein in Airbnb and competing short-term rental sites such as Vrbo. But cities may have a hard time getting this horse back in the barn.
Cities face pushback from homeowners who need the income from Airbnb rentals to make ends meet. Imagine someone who paid an inflated price for a home, and now is told that they can’t rent it out a few days a month to help cover the mortgage payment.
Bottom line: Airbnb likely isn’t going away. So you better make it part of the equation when considering buying or even renting a home. Here are some resources to help you scope out your neighborhood’s short-term rental situation.
First, go on Airbnb itself and use the map function, with no dates set for your stay, to see how many units are currently for rent in the area you’re considering. Looking at individual listings, while you can’t see the actual address, you can get an idea of what kinds of places are being rented short-term. A walk around the neighborhood, looking for lock boxes hanging off door knobs, provides more clues.
Then, take a gander at AirDNA (airdna.co), a data service around short-term rentals, which examines markets around the country in which “Airbnb arbitrage” is most attractive. In essence, AirDNA posits, people can make good money in these cities by leasing a property month to month and then renting it out by the night on Airbnb. (Many landlords and condo associations forbid this, and some listings on short-term rental sites are in violation of local rules.)
The profit potential suggests, even as cities try to crack down, that in some places more landlords are likely to hop into the short-term lodgings. Perhaps that’s not what you had in mind in looking for a home in a quiet neighborhood.
If, on the other hand, you need or want extra income from renting out your home, Airbnb could be a big plus. The most profitable counties AirDNA identifies are in Hawaii, a big vacation market with high demand for rentals. In Maui County, you can make an average $4,444 gross monthly profit by leasing a property month to month and then re-renting it to guests by the night, the website calculates.
That gross profit calculation is before other costs such as housekeeping, upkeep and possibly higher insurance. Management companies that handle Airbnb properties often charge 25 percent or more of the Airbnb rent as their fee. And there are other risks. So, before buying or renting a house to Airbnb, entirely or on occasion, you’d best investigate the market and legality.
If you want to drill down deeper into the Airbnb effect on cities, your next stop should be Inside Airbnb (insideairbnb.com), which provides detailed data for many U.S. cities. This includes the number of rentals available, average rental rates, and the occupancy rate for Airbnb properties.
In Los Angeles, for example, 55.7 percent of Airbnb hosts have multiple listings. That is a sign they are operating Airbnb as a business, don’t live in the property, and could be in violation of local laws.
Farther up the West Coast, Portland has a substantially higher occupancy rate of 46.9 percent. However, only 37.9 percent of Airbnb hosts have multiple listings. In other words, more of the landlords live in the properties they rent out.