Airbnb Hosts - "A Bargain with the Devil"
Anyone see the article in the WSJ - ["A Bargain with the Devil"] -. Apparently Airbnb hosts are having a rough time right now making mortgage payments with no rental income (understandable given Covid19). The ones that are the worst hit are the superhosts who have created mini empires of rentals. I know that my neighborhood in particular hates Airbnb hosts and would be happy to see this happen but what do you guys think are the larger ramifications for this? Retraction in number of rentals, crashing of housing prices, obscenely low rents, maybe even a crushing blow to the Airbnb valuation? Lets hear some thoughts
Link fail, article here "https://www.wsj.com/articles/a-bargain-with-the-devilbill-comes-due-for…"
Do you not see what is happening to legitimate hotel chains right now..?
Who cares about what happens to Airbnb. If you structured your investment portfolio around Airbnb, you deserve to lose money.
"Legitimate hotel chains"? Why is a hotel any more legitimate than the bed and breakfast providers? The fact that they're better capitalized or better known has nothing to do with "legitimacy".
Airbnb "hosts" are all probably committing mortgage fraud, and even so, people who over-extend themselves and can't cover operating costs for a few months deserve to go out of business. We should be applauding the fact that over-aggressive business owners are going to go belly up - if you take big risks you'll get hurt when the market turns. Same goes for hotel operators, FYI.
The entire hospitality industry is getting wrecked right now. AirBNB is no exception.
Unfortunately for those who own short term rentals, risk is part of the game. This is the downside of that risk.
absolutely this. nothing new here folks, travel & hospitality slows with every recession. I remember in the beach town near where I went to college, pre crisis was nearly 100% short term rentals commanding handsome freight. after GFC? landlords begged college kids to live there 9 months out of the year, just to make ends meet. this is what happens when you buy something that occasionally has income when the economy is good but always has debt service.
tfdritkfh ignore my useless comment
People thinking they found a money printing machine and are buying at best naked call options
I would also stake everything I own that most people doing this are committing mortgage fraud by not disclosing they are buying these homes as investment properties.
Womp womp. Buying up a ton of homes for the sole use of renting out on airbnb is a dumb idea. The people that made this into a full-time job, or made it a large part of their investment portfolio, are morons.
That's just the name of the game, a lot of these owners probably made significantly more doing short term rentals than they would have just leasing out the properties as normal rentals. High Return High Risk.
There’s inherent risk in combining 0% diversification, Airbnb, tourism, entrepreneurship & going high leverage on residential assets thinking they’re bulletproof.
Pivot or begone. The market welcomes your distressed assets.
I think we will finally learn the lesson that an individual should not put their entire net worth in a single speculative asset. Man, if only we had basic economics to teach us these lessons.
But here you have it: A mortgage is a very long term loan. Insanely long term. If you use it to rent to a local worker then you can be safe in that the person who lives in your rental property really needs to be there and is likely to stay there for the duration of your mortgage (or at least will be easily replaced by other workers in the area). But if you decide to instead go for luxury rentals for foreigners and travellers then you must actually be clinically insane to think that for the period of your mortgage you will be able to sustain continuous demand. If it wasn't COVID it would be some other event which has a near 100% probability of ocurring at least once during the duration of your mortgage. If you actually went all out to create a little empire out of AirBnB rentals then you were betting on going bankrupt eventually.
AirBnB layoffs are brutal right now. I read all offers have been rescinded.
It’s a risky business. People based their risk assumptions off of the previous 7-8 years of going up up and up. I will concede very few people saw COVID coming though.
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