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Making It Work
Precious Price ditched her profitable business of renting home stays to tourists to combat the mounting housing crisis.
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By Martha C. White
“Making It Work” is a series is about small-business owners striving to endure hard times.
When Precious Price bought her first home four years ago in Atlanta while working as a marketing consultant, she took advantage of her frequent business trips by renting out her house on Airbnb during her absences. “I knew I wanted to use that as a rental or investment property,” she said. “I began doing that, and it was honestly very lucrative.”
For Ms. Price, 27, and other young entrepreneurs of color, online short-term rental platforms like Airbnb and Vrbo represented a path to building wealth on their own terms. With an excellent credit score and minimal start-up capital — a primary barrier for people in this demographic — a professional Airbnb host could amass a stable of apartments on long-term leases, then turn around and rent those properties on a nightly basis to vacationers.
Some of these entrepreneurs see it as a more equitable alternative to corporate America, with its legacy of institutionalized bias and inflexibility toward caregivers and working parents. Others are motivated by the desire to cater to Black travelers, who say they still face discrimination even after platforms like Airbnb promised to address issues like documented cases of bias.
Ms. Price became an evangelist of sorts, establishing social media channels to teach other would-be entrepreneurs how to follow in her footsteps, and churning out a digital library’s worth of videos, tutorials and advice using the handle @AirbnbMoney.
The irony was not lost on Ms. Price that her grand real estate ambitions were propelled by the 296-square-foot “tiny house” she spent nearly six months building for herself in her backyard. When the coronavirus pandemic slammed the brakes on travel, grounding her road-warrior lifestyle and evaporating her supplemental income stream virtually overnight, her tiny house allowed her to continue renting out her primary home and making a large profit.
She even added to her portfolio, buying a second house and renting several furnished apartments in Atlanta’s popular Midtown neighborhood, and she eventually left her consulting job to manage her rental business full time.
“It was a freeing experience at the time,” she said. “I’m making a ton of money that most of my family has never seen in their lifetime.”
Ms. Price was earning as much as $12,000 a month and deriving a sense of purpose from her work on social media helping her peers achieve financial security. Initially, she said she had no interest in renting to long-term tenants — the profit margin for tourist bookings was so much higher.
“I was adamant about only renting to vacationers,” Ms. Price said. “I was just so heavily into the rat race.”
Then, the distressing messages started to come. First one or two, then too many to ignore: a litany of increasingly distraught calls and emails from people who didn’t want her Airbnbs for a weekend away — they were in desperate need of a place to call home.
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Ms. Price realized she was on the front lines of a housing crisis. By renting property to tourists rather than long-term renters, she and others like her were exacerbating the nation’s housing affordability problem, as she related in a 2022 TEDxAtlanta talk. “I started to realize that conversation began happening across the country,” she said.
The pleas and stories of financial precariousness hit home for Ms. Price, the oldest of five siblings and a first-generation college graduate. She went to business school at Indiana University. “When I started to get these calls from single mothers and students, I started to realize that’s the identity of some of my family members,” she said. “And I’m realizing the connection of how I’m not very far removed at all from that.”
She began to re-examine her values and to walk away from the lucrative vacation-rental business. She stopped listing properties on short-term rental sites, and over the next several months, she shed her rental portfolio. “Everyone has their own ethical compass and for me, mine felt just off with what I was doing,” Ms. Price said.
The few remaining tenants she has now are on long-term leases, and the rent she collects is enough to cover her costs, with maybe “a couple hundred dollars left over,” she said. She supplements that income with freelance consulting and public speaking gigs. Although she is earning a fraction of her former income, she is more fulfilled and no longer feeling burned out, she said.
The housing crisis Ms. Price witnessed in Atlanta is playing out across the nation. The United States is short about 6.5 million single-family homes, according to the National Association of Realtors. For more than a decade, homes were not built fast enough to keep pace with population growth, a trend that was exacerbated by the pandemic. During this time, demand for larger homes grew even as construction slowed, hamstrung first by public health restrictions, then by a labor shortage and supply-chain issues that made everything from copper pipe to carpet scarcer and more expensive.
The number of affordable houses has plunged: Only 10 percent of new homes cost less than $300,000 as of the fourth quarter of 2022, even as mortgage rates have roughly doubled over the past year.
These challenges have a cascading effect that has driven up rents, as well: Moody’s Analytics found that the average renter now spends more than 30 percent of their income on rent.
“If you look at rental vacancy rates, they’re extremely low,” said Whitney Airgood-Obrycki, a senior research associate at the Joint Center for Housing Studies at Harvard University. “It’s really hard for people to find an affordable place to move to. It’s extremely tight, especially for low-income renters.”
As Ms. Price experienced up close, a growing number of municipalities — including Atlanta — have emerged from the pandemic only to find a full-blown housing crisis on their doorsteps. Lawmakers are seeking greater regulation of short-term rentals, with many trying to discourage “professional hosts,” as opposed to homeowners who are renting out part or all of their primary home.
Policies should be nuanced enough to distinguish between the two categories of renters, said Ingrid Gould Ellen, a professor of urban policy and planning at New York University, and faculty director of the university’s Furman Center for Real Estate and Urban Policy.
“Airbnb can be a really useful tool for a lot of people, for homeowners who are maybe struggling to make their mortgage payments, or even renters who want to occasionally make some income and rent their units while they’re away on vacation,” she said. “Those are all forms of usage that don’t actually restrict the long-term supply of housing.”
Ms. Price’s experience with the tiny house in her backyard inspired her to search for another way for people to add housing — and for homeowners to generate rental income. These units, known colloquially as “tiny homes” or “granny flats” and identified formally as accessory dwelling units, can take the form of tiny homes, guest cottages, or apartments that are either stand-alone or attached to the primary house. An increasing number of policymakers are hoping these units can help take some of the pressure off the tight housing market.
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“She’s working on a pressing problem — the lack of housing supply across the U.S.,” said Praveen Ghanta, a technology entrepreneur who began the Emerging Founders program, a start-up incubator for Black, Latino and female founders in Atlanta. Ms. Price, a participant in the program, is working on a start-up she named Landrift, which is intended to be a resource hub so that homeowners — particularly homeowners of color — can increase the value of their properties and generate income by building their own tiny homes. “We can make a meaningful impact, particularly in markets like Atlanta,” Mr. Ghanta said.
“Sometimes I think people get fixated on the notion of affordable housing and that it has to be nonprofit,” he said. “The reality is there’s a lot of both money to be made and housing to be supplied, even within market rate constructs.”
Ms. Price has reoriented her social media platforms away from the management of short-term rental properties and toward the promotion of small-scale development of accessory dwelling units. “At this point I do want to begin acquiring other properties,” she said. She is looking for houses with enough land to accommodate a tiny house while building a second ancillary structure — a guest cottage — on her first property.
“My plan is to get a property I would be able to do some kind of housing on so I’m not just taking housing, but would be able to make more housing,” she said. “The American dream is real estate.”
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FAQs
Did Airbnb cause the housing crisis? ›
However, this has partially contributed to a housing shortage that has impacted the globe, driving up rent prices in almost all major cities. This correlation between the increase of homes that have become dedicated to serving as Airbnbs and the rise in rental rates has been dubbed “The Airbnb Effect”.
What impact does Airbnb have on local housing prices and rents? ›At the median owner-occupancy rate zipcode, we find that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices.
Are airbnbs illegal in NYC? ›In other words, you can only share your space with up to two guests at a time, you can't completely give up your space to them during their stay. Listing an “entire place” on Airbnb for less than 30 days in NYC is illegal. However, that's the most common type of Airbnb you'll find on the platform.
Are short-term rentals illegal in NYC? ›Are short-term rentals legal in New York City? Short-term rental refers to renting out a home or apartment for any period shorter than 30 days. You cannot rent out an entire apartment or home to visitors for less than 30 days, even if you own or live in the building. This applies to all permanent residential buildings.
What is the biggest issue with Airbnb? ›My colleagues aren't alone. A 2021 study of more than 125,000 Airbnb complaints on Twitter found that 72% of the issues were related to poor customer service and 22% were related to scams.
What are the issues with Airbnb property? ›The most common problems vacation rental hosts deal with are regulations, local laws, parties, excessive turnovers, unmanageable guests, not knowing your market and finding better guests.
What is the negative impact of Airbnb on local economy? ›“What we found is that people invest more in developing residential properties when demand for Airbnbs increases, and that restricting Airbnbs directly leads to less residential development, less growth in home prices, and that can lead to less tax revenue for cities,” he said.
What are the new terms and conditions for Airbnb 2023? ›Come Spring 2023, Airbnb will require all users booking reservations on its platform to verify their identity to book a reservation, further expanding a program that asks for credentials like a photo of a valid government-issued ID or a legal name and address.
What is the new Airbnb policy? ›The restrictions include a ban on one-night bookings of entire home listings if a guest has neither a positive account history nor any previous bookings on the platform. Those same guests will also have a harder time booking a two- or three-night stay, especially if it's a local booking.
Can I sue my landlord for renting an illegal apartment NYC? ›The landlord will be required to evict the tenant from the illegal unit. If this is the case, the tenant will have the right to sue the landlord for violating the terms of the rental agreement.
What a landlord Cannot do in New York? ›
Discrimination is a big deal in NYC law, and landlords cannot turn people away based on race, religion, age, disability, sexual orientation, gender, or creed. You must talk to a lawyer if you believe you are a victim of discrimination. Without a written court order, they cannot force you to leave your home.
What is the new law for AirBnb in New York? ›A new law, passed by the city in 2021, sought to prevent illegal short-term rentals by requiring hosts to register with the city.
What is the bad side of Airbnb? ›Lack of safety and security regulations
Consistent standards and regulations are lacking across Airbnb rentals as they are basically private properties. Due to this hosts don't have to follow the same strict regulations that hotels do like fire, security and safety.
Instead, market analysts say many U.S. Airbnbs are sitting empty because so many wealthier people and investors listed short-term rentals on the site, in the wake of a pandemic-fueled boom. The number of available short-term rental listings in the U.S. skyrocketed to 1.38 million in September.
Why do people not like Airbnb? ›Travelers piled on, too, sharing their own reasons for abandoning Airbnb: high prices, steep cleaning fees and a lack of service that stands in stark contrast to hotels. Travel agent Cierra Chesir is among the disenchanted.
What's the longest you can rent an Airbnb? ›Payments for stays longer than 28 nights or longer work in a different way. Airbnb automatically collects from guests 1 month upfront and at the beginning of each 30 day period. Learn more about payouts for monthly stays. Stays longer than 28 nights and longer are subject to your chosen long-term cancellation policy.
Is owning an Airbnb risky? ›Even if the potential rewards of owning a short-term rental are exciting, there's always risk involved. One is property damage. Normal wear and tear is expected, but many owners worry their guests will do more severe damage to the property — from breaking furniture to causing water damage.
What to do if you find a cockroach in Airbnb? ›Apologize & Refund
The first thing a vacation rental host should do upon being confronted by a guest with complaints about bed bugs or other insects is to apologize and give a full refund for the room.
If they can show some proof of tenancy to the police such as utility bills – whether true or falsified – the authorities won't remove them. You may have to start a formal eviction process. In the home-sharing economy, short-term guests don't hold leases.
Why is Airbnb getting sued? ›Airbnb sued after toddler dies of fentanyl at Florida vacation rental.
What type of property is best for Airbnb? ›
The best type of property to invest in on Airbnb is one that gives more income and a higher occupancy rate. But it all depends on the chosen location and your target guests. For example, if you want to buy Airbnb property in a busy city, you'd probably want to invest in a small apartment or condo.
What is unfair advantage in Airbnb? ›She described an unfair advantage as a skill or asset that you have that no one else has, or very few others might have in a specific niche. It's your competitive edge, and whatever that edge may be, it's your job to use it to your advantage as much as possible as you shape and create your business.
What makes a good Airbnb property? ›Detail. Successful hosts are all about details. In addition to stocking the place with necessities, you should consider having board games, books, movies and entertainment options for your guests. Additionally, be sure the kitchen has condiments, coffee, and tea.
Why do cities not like Airbnb? ›Some localities have outlawed or put restrictions on Airbnb hosting for several reasons. One is that it takes away tax revenues normally paid to lodgers (although now Airbnb works with cities to collect such taxes), or takes away business from traditional hotels or bed-and-breakfast inns.
Why do people rent Airbnb? ›Airbnb offers people an easy, relatively stress-free way to earn some income from their property. Guests often find that Airbnb rentals are cheaper, have more character, and are homier than hotels. Airbnb makes the bulk of its revenue by charging a service fee for each booking.
Why is Airbnb bad for communities? ›Most Airbnb listings are located in residential areas. Because tourists go on vacation to have a good time and party, they may affect the quality of life for permanent residents. Complaints regarding litter, illegal parking, and noise disturbances are often higher in communities with Airbnb-style rentals.
Is Airbnb still profitable in 2023? ›According to the latest reports, the short-term rental industry will witness unprecedented growth in the coming years. This means that Airbnb rentals will also be profitable and prove to be a good investment for real estate investors.
Is Airbnb still a good investment in 2023? ›Wall Street is certainly optimistic about Airbnb's prospects. Analysts expect the business to post year-over-year revenue and diluted EPS growth of 14.3% and 22%, respectively, in 2023.
Can I live long term at Airbnb? ›Monthly Rentals on Airbnb
Fully furnished rentals include a kitchen and the amenities you need to live comfortably for a month or longer. It's the perfect alternative to a sublet.
This means a property can't be let out on Airbnb for more than 90 days of occupied nights per year. Once your limit has been reached, Airbnb will automatically close bookings for your property until the end of the calendar year. The 90-day limit applies to both 90 consecutive days or 90 days spread throughout the year.
What state uses Airbnb the most? ›
Florida: Airbnb's Hot Spot
1 with more than 3,400 Airbnb listings per 50,000 people.
According to data shared by Mashvisor, one of the top Airbnb host calculators, Nashville in Indiana is one of the US cities that offer the highest short-term rental cash on cash returns. Hosts can expect a monthly short-term rental income of about $5,000, with daily rates averaging at $260.
What is the 1% rule on Airbnb? ›A successful Airbnb investor is one who knows what's Airbnb legal and acts accordingly. For those living in cities with high home price to rent ratios, it's impossible to meet the 1% or 2% rule. This rule states the minimum rent should be equal to or greater than 1% of the purchase price.
Is Airbnb changing the rules? ›Airbnb has moved to make a permanent change on listings worldwide after trialling a ban on parties and events during the pandemic.
What is Airbnb Rule 25? ›Airbnb To Restrict Users Under Age 25 From Booking Homes In Their Local Areas In Hopes To Reduce Parties. LOS ANGELES (CBSLA) — In hopes to reduce unauthorized parties, Airbnb is now restricting guests under the age of 25 from booking full homes in their local area, the company announced Thursday.
Can I sue my landlord for emotional distress in New York State? ›Suing for infliction of emotional distress is possible in most US states, including New York. Two types of claims are possible: Intentional infliction of emotional distress; and. Negligent infliction of emotional distress.
Can you be evicted from illegal apartment in New York? ›Conclusion. Illegal occupancies abound here in NYC, especially in Queens and Brooklyn. That being said, if you are a landlord and want to evict a tenant but not sure because you have someone living in an illegal basement, the answer is that you can.
Is it legal to have a kitchen in the basement NYC? ›A basement can be utilized as a residence and has habitable space in residential zoning districts. As long as they meet all other code standards, basements can have usable space such as bedrooms, kitchens, living rooms, and bathrooms.
How much time does a landlord have to give a tenant to move out in NY? ›In New York 5 Page 9 City, 30 days' notice is required, rather than one month. Landlords do not need to explain why the tenancy is being terminated, they only need to provide notice that it is, and that refusal to vacate will lead to eviction proceedings.
Do I need a permit to host Airbnb in NYC? ›The Short-Term Rental Registration Law requires short-term rental hosts to register with the Mayor's Office of Special Enforcement (OSE). Booking platforms (such as Airbnb, VRBO, Booking.com, and many others) are prohibited from allowing transactions for unregistered short-term rentals.
Are airbnbs still illegal in NYC? ›
In other words, you can only share your space with up to two guests at a time, you can't completely give up your space to them during their stay. Listing an “entire place” on Airbnb for less than 30 days in NYC is illegal. However, that's the most common type of Airbnb you'll find on the platform.
What is Airbnb house rules? ›Airbnb House Rules: The Dos and Don'ts
No loud noise after 11 pm. No food or drinks in bedrooms. No parties or events. No smoking. No pets / Pets allowed.
Some localities have outlawed or put restrictions on Airbnb hosting for several reasons. One is that it takes away tax revenues normally paid to lodgers (although now Airbnb works with cities to collect such taxes), or takes away business from traditional hotels or bed-and-breakfast inns.
What industry did Airbnb disrupt? ›Before Airbnb, consumers had two options for lodging in cities around the United States: hotel or motel. Often, the difference between the two was cost and quality.
Why did Airbnb host decline? ›Find out more about checking the status of your reservation. If your reservation request is declined and the listing for the stay shows that it's still available, the host's calendar may not be up-to-date or they may want reservations of a different length or time.
How does Airbnb affect the economy? ›“What we found is that people invest more in developing residential properties when demand for Airbnbs increases, and that restricting Airbnbs directly leads to less residential development, less growth in home prices, and that can lead to less tax revenue for cities,” he said.
Why cities don t like Airbnb? ›Most Airbnb listings are located in residential areas. Because tourists go on vacation to have a good time and party, they may affect the quality of life for permanent residents. Complaints regarding litter, illegal parking, and noise disturbances are often higher in communities with Airbnb-style rentals.
What is the controversy around Airbnb? ›Airbnb can have negative impacts on locals' quality of life. This is one of the lesser-known Airbnb problems. Tourists hiring a place on Airbnb to enjoy a “cheaper” holiday actually pushes rent prices up for locals who need to live in the city. Tourists are visitors competing with locals for accommodation.
Is Airbnb getting over saturated? ›Many people saw short-term rentals as a way to make money during the pandemic. Now an oversaturation of hosts has led to more Airbnbs, leading to booking slowdowns in some areas.
How many people fail at Airbnb? ›Airbnb says that fewer than 0.1% of stays result in a reported safety issue, but with more than 200 million bookings a year, that's still a lot of trips with bad endings. Only the most serious problems are transferred to the internal safety team.
Is Airbnb still booming? ›
Airbnb, by far the smaller business, just reported first-quarter 2023 year-over-year revenue growth of 20%. Not bad, given consumers are feeling the pinch from inflation. For the second quarter, though, management predicted revenue will increase just 14% year over year (at the midpoint of guidance).
What is the downside of owning Airbnb? ›There are many expenses that come with having an Airbnb. For instance, you will have utility bills that may be higher than usual since guests don't really care how much electricity they use. You will also have cleaning expenses if you are not willing to do it on your own.
What are the disadvantages of Airbnb? ›The pros of Airbnb include affordability, local experience, more amenities than a standard hotel room, access to unique spaces, and the ability to connect with helpful hosts. The cons of Airbnb include a lack of standards, risky situations, no hotel services, paying in advance, and varying cancellation policies.
Is Airbnb becoming less popular? ›“Demand is still rising every month, and so are Airbnb's bookings and revenue,” says Lane. “Although hosts in some markets are seeing a correction after a pandemic-driven boom, on the whole, demand remains very strong and we aren't yet seeing an 'Airbnb bust.