\n<\/p>\n
Airbnb<\/strong><\/a> is looking for a new type of host: renters<\/strong>. With housing costs rising <\/strong>nationwide, homeowners have almost always been able to rent out their properties to make an extra buck. But, until now, renters haven\u2019t had the same opportunity. And, as mortgage rates<\/strong><\/a> rise<\/strong> and rents stay high, many renters are biding their time, hoping to save up enough so that when rates drop, they can snag the home they\u2019ve been dreaming of. Airbnb is trying to make this easier.<\/p>\n Jesse Stein<\/strong>, Global Head of Real Estate at Airbnb, is no stranger to the world of hospitality. His background with hotels made him the perfect candidate to join Airbnb. Jesse comes on the show to talk about the short-term rental industry<\/strong>, where it\u2019s heading, whether or not it\u2019s growing<\/strong>, and a new type of \u201chost\u201d that Airbnb is trying to help create.\u00a0<\/strong><\/p>\n Jesse\u2019s team at Airbnb has partnered with some of the largest apartment communities<\/strong> in the country to offer renters a deal that\u2019s almost too good to pass up: the ability to rent their place while they\u2019re away. Now, high-cash flow <\/strong>house hacking<\/strong><\/a> isn\u2019t just reserved for homeowners<\/strong>, and a move like this could help with the wallet-crushing affordability issues we\u2019ve talked about so many times on the show.<\/p>\n Dave: James: Dave: James: Dave: James: Dave: Jesse: Dave: Jesse: Dave: Jesse: Dave: James: Jesse: Dave: Jesse: James: Jesse: James: Jesse: Dave: Jesse: Dave: Jesse: Dave: Jesse: James: Jesse: Dave: Jesse: Dave: Jesse: Dave: Jesse: James: Jesse: Dave: Jesse: Dave: Jesse: James: Dave: James: Jesse: James: Jesse: Dave: Jesse: Dave: Jesse: Dave: Jesse: Dave: Jesse: Dave: Jesse: Dave: James: Dave: James: Dave: James: Dave: James: Dave: James: Dave: James: Dave: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Hey, everyone. Welcome to On the Market. I\u2019m joined today by James Dainard for the start of short-term rental week. I feel like we need echoey music for that, or some sort of big announcement for our first ever short-term rental week. I\u2019ve talked about this with Henry, James. Are you a short-term rental guy? Staying in one, not investing in them. Do you like staying in short-term rentals? Do you prefer hotels?<\/p>\n
I have no problem staying in them. I\u2019m definitely good staying with them, but I go with whatever\u2019s cheapest is what I go with, especially when I\u2019m traveling for work. Now, if I\u2019m with my wife and kids, they like hotels, the amenities trump it all, and so we do hotels on vacation. But I will do them. If I can find them and they\u2019re cheaper in hotels, I will definitely rent them.<\/p>\n
That is something that we\u2019ll get into throughout this week, but it\u2019s interesting to see how Airbnb and hotel prices compare to one another. Because I think Airbnb started as sort of this cheaper option, but both have gotten so expensive that you never know, depending on what market you\u2019re in, which is actually a better deal.<\/p>\n
Yeah, I feel like for me, I look on both and they seem like they\u2019re about the same. But one thing I have learned, if you plan ahead, it\u2019s way cheaper than hotels. If you\u2019re doing it last minute, it ends up being flush. So, whatever I can do to save a dollar is what I\u2019m chasing.<\/p>\n
Yes, of course. Well, this week we have two excellent episodes for you to talk about short-term rentals. Today, James and I are going to be interviewing Jesse Stein, who is the global head of real estate for Airbnb. So, we\u2019re going to be talking about what\u2019s going on in the short-term rental market. And Jesse\u2019s also going to share with us a couple of strategies, new developments, new products at Airbnb that I think are really interesting, particularly for investors and particularly for people who are just trying to get into short-term rental investing right now. They have a new product line that we\u2019re going to get into.
So, that\u2019s what we got for you today. Interview with Jesse Stein. And then, on Friday for our second episode this week we are bringing on Vacasa, which if you don\u2019t know, is one of the largest property management firms for short-term rental industry. And they\u2019re going to be sharing with us some research about the best markets to invest in for short-term rentals. So, we\u2019ll be diving into market data on Friday. So, hopefully these two shows combined will help you understand the state of the short-term rental industry and where the market is going in 2024, and what opportunities might exist. James, are you ready?<\/p>\n
I\u2019m ready. I really do love this concept we\u2019re jumping into. It\u2019s save money, reinvest it. It\u2019s a great way to do it.<\/p>\n
All right. Well, with no further ado then let\u2019s bring on Jesse Stein, Airbnb\u2019s global head of real estate.
Jesse, welcome to On the Market. Thank you for being here.<\/p>\n
Thank you guys for having me. I look forward to the conversation.<\/p>\n
Well, we\u2019re excited about it. So, Jesse, you have a very cool title. You are the global head of real estate for Airbnb. Can you tell us what that means?<\/p>\n
Yeah, it\u2019s a great question. I mean, what does the global head of real estate for an asset-like company actually do? Because we don\u2019t own any real estate.<\/p>\n
I didn\u2019t want to say that, but yes, that\u2019s true.<\/p>\n
But I joined Airbnb from the private equity community. I used to lead investments for a private equity company, investing in hotels. I did that for roughly a decade. I was really brought on to be the conduit between the institutional real estate community and Airbnb. Airbnb has grown from zero to 7 million listings without ever partnering or creating opportunities to partner with large institutional real estate investors. So, I was really brought on to create a team, to come up with new verticals, to bring the institutional real estate community to partner with Airbnb. And that\u2019s kind of been my role for the last couple of years. And my team consists of software engineers, policy individuals, marketing individuals, as well as a go-to-market team. So, across all assets, I\u2019m basically a general manager within Airbnb in the real estate area.<\/p>\n
Very cool.<\/p>\n
That\u2019s pretty vast. That\u2019s the bigger money in the Airbnb space. Hey Jesse, real quick. So, you came from the hotel business. How similar is the hotel business to the Airbnb or is it a totally different game when you\u2019re looking at operating those?<\/p>\n
I would say I have different roles in each different organization. And when I was in the hotel space, I was in charge of investments, so I was really running around the country, looking for opportunities to buy real estate, renovate real estate, stabilize real estate, and sell real estate. So, it was very detail-oriented on a micro market. So, for your consumers, if they\u2019re looking to buy a single family home or they\u2019re looking to buy a duplex, I was basically doing that on behalf of institutional investors, mostly college endowments. So, at Airbnb it\u2019s a little bit different. Airbnb, the overall offering, we are a travel company at this point in time. We are starting to blend into more of a living company, but the majority of our business is travel, which is akin to hotels. But over 50% of our nights booked offer for stays over seven nights at a time across Airbnb.
In our hotels, the hotels we owned, I don\u2019t think we ever had a stay over seven nights in any of our hotels. We were an urban hotel company. The name was Kimpton Hotels. And it was mostly corporate consumers staying for two or three nights, and then we got the leisure consumer on the weekends. At Airbnb, it\u2019s really a different use case for travel and that\u2019s kind of accelerated with COVID. So, similar dynamics and also different, because now I\u2019m overseeing a team which is growing supply, where previously I was leading a team to actually make investments and dispose of real estate, and make returns for our investors.<\/p>\n
Jesse, I do want to jump into what you and your team are doing, but given the name of the show and the focus of the show, I want to just take a step back before we talk about what\u2019s next, and just talk about what\u2019s going on in the short-term rental industry. Is there anything Airbnb and you and your team have uncovered that you think our audience, a lot of whom are short-term rental investors, should know about market trends?<\/p>\n
From a macro perspective, the marketplace has never been stronger. In Q2 of 2023, yes, that\u2019s the year we\u2019re in, I lose track of time sometimes Q2 of 2023, we grew our host base more than we\u2019ve ever grown our host base from a nominal perspective and consumers booked more nights and experiences than ever before. So, the marketplace is strong and we are continuing to grow. So, I would say that the consumer now may have less disposable income than they did historically, but they\u2019re choosing to spend that income on travel and experiences, where during COVID it was more on Home Depot, renovating a house, so on and so forth. Today, the consumer\u2019s strong. The consumer is traveling on Airbnb. And our hosts are looking at the opportunity to host to keep up with the cost of living and the cost of inflation, and it\u2019s really a healthy marketplace at this point in time.<\/p>\n
And I think that\u2019s fairly interesting right now because I think a lot of people\u2019s perception is that it\u2019s not right, because the transactions have slowed down, travel\u2019s slowed down a little bit. And a lot of that\u2019s sometimes just all mental where people are like, \u201cOkay, this is going bad. I\u2019m going to shift out,\u201d and it kind of becomes this trend or in the headlines. They put the rainy day out on all these investments. Have you seen many hosts pull out recently because of changes? Even though it\u2019s strong, I feel like we\u2019ve been seeing some operators selling off their properties over the last six, 12 months, wanting to get out of the space, which really contradicts\u2026 If it\u2019s strong, you\u2019d almost want to keep your money there with the inflation and the other economic factors going on.<\/p>\n
Yeah, when I speak to it, I speak more on a global perspective. And at the end of the day, more hosts were added in Q2 2023 than ever before from a global perspective. Now, consumer trends are shifting. So, consumers are starting to travel to different places. So, what may have been a good investment a couple of years ago may not look like a good investment today because consumers are looking to go to different places. So, I would say from a macro perspective, the marketplace is really strong, consumers are doing really well, hosts are doing really well. From a micro perspective, it just depends on where your investment may be. And the old rule of real estate, location, location, location, it really, really matters. So, some individuals may have bought homes in X, Y, Z market, and that specific market may be down a little bit year over year, but other markets are up year over year. So, from a macro perspective, the marketplace is strong. And obviously, there\u2019s pockets that are doing better than others.<\/p>\n
Do you feel like right now since travel\u2019s increased a lot globally that the US local market is slowing down compared to\u2026 You\u2019re seeing some markets are doing better than others. Is it more of an international presence that\u2019s still growing, or is it also locally still staying strong? I\u2019ve definitely noticed when I travel overseas, the planes are packed and everything\u2019s packed, but then when I travel throughout the US, it\u2019s actually a little bit less busy in a lot of cities.<\/p>\n
Oh, really? That\u2019s interesting because every time I fly, James, there\u2019s never a seat left on the plane. I don\u2019t know about you. Domestic or international, I always somehow end up in 42B on Southwest because I\u2019m in section C, to be honest. So, we are seeing it strong across the board. And as we announced in our last earnings call, the US is still growing. So, it may be growing in different pockets than it was during COVID, but from a macro perspective in the US, it is still growing. And obviously, some other places were later to open up after COVID, international, for example. People feeling more comfortable going cross border. So, that is doing really well. But I would say domestic is also doing well.<\/p>\n
Jesse, there are some pundits, me, who loudly believed this year that there is going to be risk of oversupply in the short-term rental market just because we saw it, like you said, really rapid acceleration of owners. And I get that total revenue is probably up, but on a per property basis, are there declines in occupancy rates?<\/p>\n
What I really would like to speak about is more so Airbnb-friendly apartments and where we\u2019re seeing occupancy in adoption of that space. So, when it comes to broader Airbnb, I think we\u2019ve kind of disclosed in our earnings call how we\u2019re doing, and I\u2019ll stick to that data and I would say it\u2019s strong. Obviously, some markets may be oversupplied. But where there\u2019s supply, usually demand follows. So, that\u2019s the greatest thing about the marketplace, supply and demand are kind of in balance to a certain degree. And obviously, during times of compression, things are more occupied than not.
But when it comes to Airbnb-friendly marketplaces, and maybe we can shift to that conversation, it\u2019s really providing an opportunity for renters that haven\u2019t historically had the opportunity to host to get their feet wet. I was looking at BiggerPockets today, actually, and one of the questions I kept on seeing is, \u201cHow do I get started? How do I get started? How do I get started? How do I get started?\u201d And Airbnb\u2019s never made it easier to get started in your journey and Airbnb-friendly apartments is really part of that opportunity to grow because you can now host your primary home part-time on Airbnb.<\/p>\n
Okay, cool. Well, so that is something we did want to talk about. So, can you just explain this to us? This is Airbnb-friendly apartments, and this is for primary residences exclusively? Is it a different product offering?<\/p>\n
It\u2019s a totally different product offering to a certain degree. It\u2019s really getting back to our roots of Airbnb. When Brian Chesky started Airbnb in 2008, he started it to really pay his rent. Airbnb has been so successful, Airbnb has now basically been banned in 45 million rentals across the US. That\u2019s the overall rental stock in the US. So, we wanted to create a product that allowed consumers, like Brian, when he was 28, to get started in their journey to keep up with the cost of living. So, we partnered with some of the largest landlords in the country, Greystar, Equity Residential, UDR, household names, Starwood Capital, Brookfield, so on and so forth. And we now market their buildings to our consumers for 12 month unfurnished rentals.
So, now consumers can go to Airbnb, find their next 12-month unfurnished rental that embraces and encourages them to host part-time. And once they move in, then they can start their hosting journey. And we\u2019ve built all the tools to ensure it\u2019s actually a primary residence, not an individual looking to rent a place and run a dedicated Airbnb in there. It\u2019s really meant for the individual trying to keep up with the cost of living and get their feet wet in their investment journey. When I was 28 years old, when I was 35 years old, I lived in an apartment and I was struggling to pay my bills. If I had the opportunity to Airbnb it when I was traveling, or when there was a event in town, I could have paid the majority of my rent for that month by hosting one weekend. So, it\u2019s a really new opportunity and it\u2019s really catered to primary home individuals that want to host part-time.<\/p>\n
Okay. So, I just want to make sure I understand this. So, normal Airbnb people can and still do rent out their primary residence, but this new product is basically if you\u2019re signing a new lease, you can sign a lease with a landlord who has maybe pre-approved you or is inclined to allow you to sublet or allow short-term rentals within your unit right from the get-go. Is that correct?<\/p>\n
Yeah, exactly. So, it\u2019s really creating a quality across asset classes. Most homeowners have the ability to Airbnb or sublet their home if they own it. If you rent it, most leases have a do-not-sublet clause in them. And there\u2019s 45 million rentals in the US, which is 35% of the overall housing stock. So, if you\u2019re a renter today, for the most part, you don\u2019t have the same opportunity to capitalize on the benefits of Airbnb that a homeowner would. And so, this product is really catered toward the renter that wants the ability to make some extra income when they travel, which is the same as a homeowner today that has that opportunity. So, it\u2019s really opening up and democratizing the idea of Airbnb and rentals that exist today in owned assets.<\/p>\n
When people are looking at this and they\u2019re looking at this kind of product, have you seen any developers or just specific buildings really marketing for this to that they\u2019re friendly\u2026 I kind of hear this as it\u2019s for owner-occupieds, so a lot of owner-occupied are people living there as their primary, as a renter, they don\u2019t want tenants coming in and out around them, but I guess if it\u2019s one big community that\u2019s all doing it, they\u2019re way more open to it. Is this entire buildings or is this just more located throughout specific cities?<\/p>\n
So, high level, all of our partners are starting to market the ability to Airbnb your home part-time on their websites. So, if you go to Airbnbfriendly.com, and you were to look at one of our partners\u2019 buildings, there\u2019s a link to their website. So, if you look at an Equity Residential building in Denver called the Theo, they are actively marketing the ability to Airbnb it part-time. With that being said, not everybody in the building does it. It only works for a certain percentage of the building. So, what we\u2019re really, really focused on is ensuring that the people that are not doing it are having just as good of as an experience in the community as the people that are doing it.
And in a certain building, maybe 5% or 10% or 15% of the residents host on Airbnb. We need to make sure it\u2019s a great experience for the other 95%, 90% or 85% of residents that do not do it. So, there are no dedicated buildings per se that 100% of the people are doing it. It\u2019s just providing an amenity to the residents that live there that they\u2019re now allowed to do it if they so choose.<\/p>\n
Jesse, this is a very interesting concept, very clever. And I want to ask you more about it, but I did want to ask you about if and how you ensure that it\u2019s actually the person\u2019s primary residence. Because you\u2019ve probably heard of this concept of short-term rental arbitrage, where people sign leases and then are subletting out, and are doing this all over the place. Is there any controls against that?<\/p>\n
Yeah, 100%. So, our partners enforce night limits. So, let\u2019s take San Francisco at the moment. Currently, you\u2019re allowed to host your primary home 90 nights a year in San Francisco. So, our landlords enforce those night limits on the residence, and it\u2019s virtually impossible to have a rental arbitrage business if you\u2019re only occupied 90 nights a year. It can help really offset the cost of living by hosting 90 nights a year, but the opportunity is really for the landlords to enforce these night limits on the residents to ensure individuals are not doing the rental arbitrage game that you mentioned, Dave.<\/p>\n
Smart.<\/p>\n
The economics just don\u2019t prove out.<\/p>\n
Yeah. Awesome. So, who should consider doing this? Obviously, people who want to supplement their income, to offset some of their rent payments to, like you said, begin your journey. If you\u2019re interested in becoming a short-term rental investor, this sounds like a good first step. But what makes a successful host? If people are not currently short-term rental hosts, who should consider this line of business?<\/p>\n
It\u2019s interesting. I always thought it was for the 28-year-old that was traveling a lot and living a flexible lifestyle. We have a single mother of three in one of our buildings that is hosting on the weekends every so often to help fund her vacations with her kids. So, the use cases are up and down the spectrum. From the consumers of Bigger podcast, you\u2019re thinking about getting into the real estate investing game in the STR space, there\u2019s no better way to test it than doing it on your primary home. So, that\u2019s obviously one use case. Another use case is somebody that travels for work a lot, or if you live in a market like Denver and there\u2019s a big convention in town, you can go up to the mountains and pay for the entire trip. So, it\u2019s across the board the use cases of individuals that do this. From the single mother of three, we have a active duty military in San Diego, she\u2019s hosting to pay off her student loans and actually use the money to create a new business. She created a fitness studio for herself and she\u2019s now doing it.
So, it\u2019s up and down the spectrum. And to get started, it\u2019s actually really, really easy. Airbnb has launched a bunch of new features and tools called Airbnb Setup and other things. And you can easily get started in these buildings. And our partners in these buildings help the residents get started with hosting. And you kind of learn what works and doesn\u2019t work because not every market is the same. Consumers want different things for different markets. So, getting started is number one and using Airbnb Setup to do that. And then, you learn, you iterate, and things come up over time depending on the demand use of your unit.<\/p>\n
This is a very interesting concept and I\u2019ve heard this touched on over the years, but it\u2019s kind of like the pre-house hack. What a lot of people do, especially with the short-term rental, was they were optimizing these first-time home buyer loans. They can get into a property with 3%, 3.5% down, or sometimes even zero down State Farm programs. So, that allowed a lot of access for investors or new people to become investors over the last four years. But then, as rates have gone up, the mortgage payment won\u2019t work, and I know the cost of rent\u2019s a lot lower in major metro cities than the cost of purchase.
And so, are you seeing more of a trend right now because A, traditional short-term rentals just don\u2019t mathematically work out? And B, I mean if you think about the average condo, let\u2019s say, in Seattle is going to be like 600 grand, your down payment on that even with a low down is going to be $18,000 to $25,000, whereas you can probably rent that with first last and deposit and get into the deal for 6,000, which will increase the cash on cash return. Is that where you\u2019re seeing some demand for this jump up because you just can\u2019t traditionally do it with the FHA loan in a lot of metro markets right now?<\/p>\n
I would say demand is coming from a lot of sources. Right now, it is basically cheaper to rent in almost every market in the US than it is to buy because of where interest rates are and down payments. And so, this is an opportunity for renters that aren\u2019t able to buy yet to try to save some incremental money to get them into their home in the future. We\u2019ve had a few of our hosts that started this way, and then they use the extra money they earned to actually buy a home, that they also host by the way.
The house hack, it\u2019s 100%. I wish this was around in 2010 when I was struggling to save money for a down payment on a home. It was so hard. And I was blessed with low interest rate environment when I bought a home in 2015. It\u2019s so hard to save money for a down payment, and this is a great way to kind of house hack that. And you can use the money to potentially get into that ownership, but that is definitely helping adoption of the program is the imbalances right now in the cost to own versus the cost to rent across the US.<\/p>\n
All right. Jesse, I only have one short-term rental, but the way I can mentally deal with it is that it\u2019s not my stuff in the house. So, how do people deal with this? If it\u2019s their primary residence and they\u2019re living there, how do people protect themselves or rent out something that they\u2019re also living in?<\/p>\n
Yeah, that\u2019s always a question we get. So, from a host perspective, a lot of our hosts store their special belongings, whatever that may be. And our partners have storage lockers, so our partners do offer storage lockers in a lot of buildings to the hosts, or our hosts lock a closet. So, small simple things can really enhance your security. And if something were to go wrong, which by the way, UDR is a large partner of ours [inaudible 00:23:36]. They\u2019ve had over 10,000 nights in their portfolio so far it with zero issues. So, it\u2019s kind of like the boogeyman in the closet kind of concern. We do have protections if for, on some forsaken reasons, something happens, like AirCover, where we protect our hosts in situations like that.<\/p>\n
Jesse, I mean it sounds like a very interesting strategy and hopefully it creates mutual benefit between guests and hosts. How much of this is a reaction to some of the regulations around short-term rentals that are mostly focusing on allowing primary residence rentals and in many places, not everywhere, obviously, disallowing or discouraging the investor driven short-term rental, taking up all the supply, I guess?<\/p>\n
I wouldn\u2019t say it\u2019s reactive. I would say it\u2019s proactive. Where regulation seems to be going with some of this primary home thing that is beneficial to the program to a certain degree, because that\u2019s the nuance of the program, but really the integrity of it with or without regulation because our partners still have enforced night limits in markets that do not have night limits, they still do that, is really to create affordability for renters in today\u2019s market. Because even though it\u2019s cheaper to rent than it is to buy, it\u2019s still really expensive to rent and that really has to do with just the lack of overall housing and we just need to build more housing. But it is really helping these renters afford their homes, and we\u2019re really focused on that at Airbnb.<\/p>\n
And Dave, sometimes you just got to use the cashflow to buy new things. You\u2019re saving a ton of money-<\/p>\n
That\u2019s honestly what I do. I\u2019m just like, \u201cThis is not my house. This is purely an investment. I\u2019m just going to take the cashflow and I\u2019m going to buy a new shovel because someone decided they wanted my snow shovel.\u201d I don\u2019t know.<\/p>\n
Jesse, as you guys are expanding this out, what regions are you guys really focusing on, or is there certain areas where this doesn\u2019t really make sense? Every asset class, it can work in every market, but sometimes you avoid different markets. Like flipping, for me, I avoid different types of markets just because of certain things that impact the deal, and I could do it there, but it\u2019s just not worth it. Do you feel this is going to be more affordable housing areas or more mostly focused on those metro expensive areas where that $100,000 a year to $150,000 a year renter is trying to subsidize it, right? Because back in the day, if you were making 100 grand a year in college, or at least when I was in college, I thought I was rich. Now you need four roommates. And so, do you see this more growing in the metro areas or every type of region?<\/p>\n
You know what\u2019s really interesting about that is it is totally different than house flipping? And I want to make that clear because house flipping is so localized. Here, it really does work everywhere. I think the question is what is success? And so, we have buildings in Addison, Texas, which is suburban Dallas, and there\u2019s roughly 30 hosts in one of these buildings, and they\u2019re making pretty good money relative to their rent. We also have buildings right in the heart of the Gaslamp District in San Diego, roughly the same amount of hosts. But what\u2019s interesting is rents also kind of ebb and flow based on urban location, city center, suburban, so on and so forth. So, the percentage of money one can make is kind of relative to the location they\u2019re in. So, it really works everywhere. We have hosts in Addison, Texas. We have hosts in Downtown Miami. We have hosts in Downtown San Francisco and we have hosts in Cleveland. So, it\u2019s across the board. And it\u2019s not really a flip, if you will. It\u2019s trying to make incremental income to go buy a shovel, like Dave\u2019s doing for his Airbnb.<\/p>\n
Yeah, I was more talking about different asset classes. Sometimes it\u2019s just not worth it as much. I\u2019m a firm believer, Airbnb\u2019s location, location, location. If you\u2019re going to start a short-term rental business in itself, it should be in an area that has demand or a reason people are coming there, not just to do it to do it. Because we have seen that over the last four years, people just went and bought a property because they could. But this is also not just subsidizing your rental, this is an investment strategy. Build up cashflow so you can build up some extra cash to go buy your next house. I think it\u2019s a great pre-step for house hacking, but depending on how fast you want to move and depending on what you rate as success, that\u2019s going to tell you where to go.
Because if you want to get out of the renter pool, but you want to be in the best possible area you want to focus on\u2026 If I was a tenant right now going, \u201cHey, I want to subsidize this and buy in two years,\u201d from your guys\u2019 analytics is being in those metro, it doesn\u2019t matter or is it more like those metro areas are more attractive because rents are a little bit lower versus purchasing power, or there\u2019s a bigger gap between there they can cashflow a little bit better and save more money versus affordable\u2026 A lot of the affordable markets, cost of rent and cost a buyer are very similar, so there\u2019s not as much spread. Whereas I\u2019m looking as the rent is the spread on this.<\/p>\n
What\u2019s actually really interesting is we\u2019ve built a custom calculator for this program. So, we\u2019ve kind of outlined what rents are for each one of the buildings and what you could make by hosting part-time. So, a consumer can go to a market\u2026 Because a consumer might not move from Dallas to Miami to potentially make an extra 500 bucks a month or whatever it may be, just making up locations. A consumer lives where a consumer lives. So, he or she can go to Airbnb-friendly apartments and look at our custom calculator and then kind of determine which building is right for them. So, obviously if you live next to American Airlines Arena in Dallas, you\u2019ll probably make more money than you do in Addison, Texas, but then you have to take into account the cost of the rent in that building as well, which may be higher.
So, this custom calculator really helps our consumers understand what the underlying 12-month unfurnished rent is and what they could potentially make by hosting on Airbnb. So, I would just recommend that consumers of the show go and play with it and kind of see what the data is telling them because the data doesn\u2019t lie. The data is based on historical demand in the market and we\u2019re pulling in the actual rents from our partners PMS feeds. So, it\u2019s really interesting. I mean personally\u2026 It also depends on their lifestyle. Do they want to be closer to the family? Do they want to be next to the convention center, X, Y, z?<\/p>\n
Awesome. Jesse, well, thank you for telling us all about this. I have to ask, with your very broad job, is there anything else interesting coming down the pike that our audience should know about in addition to the Airbnb-friendly apartments?<\/p>\n
There\u2019s definitely other verticals we\u2019re looking at. We did our first ever Airbnb-branded condominium in Miami with The Related Group, where consumers can go and buy a condo, a second home, and Airbnb it so they know upfront that this condominium or vacation rental allows Airbnb and encourages Airbnb. So, that\u2019s something we\u2019ve already done. We\u2019ve done a couple of those developments in Miami. And there\u2019s a lot more under the hood that we\u2019re going to announce that can\u2019t announce it right now as a public company, but we are definitely expanding the concept. And Dave, hopefully I can come back on the show and we could talk about what we announced.<\/p>\n
All right, fine. We\u2019re going to drip it out slowly. And so=<\/p>\n
I apologize.<\/p>\n
\u2026 we would love to have you back, but we won\u2019t force you into any SEC violations.<\/p>\n
Thank you. My comms team really appreciates that, Dave.<\/p>\n
Yes. So, Jesse, is there somewhere people should find out about it? Do you just go on Airbnb and you can look for these places like you look for a traditional apartment?<\/p>\n
You can go on Airbnb and you can go to the host landing page and find Airbnb-friendly apartments. The easiest way to find it is honestly just a Google Airbnb-friendly apartments, and it pops up at the top of the page and you can learn more. If you\u2019re a consumer, you can look for your next rental that allows you to host. Or if you\u2019re a building owner, you can get in contact with my team through Airbnb-friendly apartments, and we can discuss how it could benefit your program.<\/p>\n
All right. Jesse Stein, thank you so much for joining us.<\/p>\n
Thank you.<\/p>\n
All right. Well, big thanks to Jesse. James, I have some questions for you. But before that, I just want to clarify. I asked Jesse a question about occupancy rates because it\u2019s something I always want to know, and he explained after we were done recording that he can\u2019t tell us that because literally today, within a few hours of recording this, is Airbnb\u2019s investor relations call. So, he can\u2019t disclose that information before the investor call. It is an SEC rule, so that\u2019s why he was not able to answer that question. We will put a link to the transcript to Airbnb\u2019s earnings call, so you can check that out. I will just tell you that anecdotally, we do see some evidence that occupancy per unit is down, but revenue is still doing pretty well. So, it\u2019ll be interesting to see what Airbnb records this week.
James, what do you think of this concept of Airbnb-friendly apartments?<\/p>\n
I really do like it because as we go through different phases, because we\u2019ve been hearing for the last 12, 18 months, I think I\u2019ve probably said it, that Airbnb is really tough to get done right now with the rates as high as they are and the pricing has not came down. Median home prices creeping up, rates are up, it\u2019s hard to do. So, this is just a way for if you want to get going and saving on your housing costs, that traditional house hacking method is you can get in and have a lower payment. The lower payment, which is your rent, is going to allow you to actually cashflow it to make it work. So, I do like it. It\u2019s about adjusting how you do the investment to continue for it to grow. Airbnb is not dying, it\u2019s just being changed right now as rates are too high.<\/p>\n
I think it\u2019s a great idea because a lot of the STR regulations right now are in response to really high rent and the lack of affordable housing and housing shortage. And just to be clear, even with the increase of supply in the market, Airbnbs and short-term rentals make up about 1% of housing units in the United States. So, that obviously impacts people and some markets more than other, but it\u2019s not dominating the housing market. But this seems like a really interesting and good balance. It helps maintain supply of Airbnbs, which obviously there\u2019s demand for. People want to stay at Airbnbs, so having them go away altogether wouldn\u2019t be good because that would probably just sense hotel rates skyrocketing. But at the same time, you\u2019re not taking a potential rental away from someone else. So, this just seems like a really interesting way to adapt to ongoing regulation changes.<\/p>\n
Yeah, and people want more affordability in their lives, and so giving them that option of bringing\u2026 I mean credit card debts are at all times high. Everybody\u2019s still spending a lot and things are crunching them. So, I think this is a great concept and it\u2019s a matter of making sure\u2026 I will be curious to see what big buildings will think of this. Is there going to be more regulation sweeping through because tenants will complain?<\/p>\n
That\u2019s interesting. Yeah, so you\u2019re in a building with 100 units. If 20 or 30 people do this, are the 70 people who aren\u2019t doing it going to be annoyed by all the short-term rentals?<\/p>\n
Will that building have a higher vacancy rate, which then they\u2019re going to say, \u201cNo\u2026\u201d But there\u2019s always a season. It could work for 24 months and then things change, then you got to pivot again.<\/p>\n
I just think this would work really well, and I have very limited short-term rental experience, just one. But a big problem in a lot of vacation towns is the lack of affordable housing. For people who work in the tourism industry, for example, this could work really well for places like that. So, I bet it\u2019ll catch on. But yeah, I guess it will be a market-by-market, building-by-building experiment.<\/p>\n
Well, you know what, Dave? I have my first short-term rental coming live. I haven\u2019t had one in seven, eight years. Mine\u2019s coming live in two weeks.<\/p>\n
I was going to say, I was going to ask you, because you own a real estate business in every strategy, in every sector of real estate investing, but I\u2019ve never heard you talk about short-term rental.<\/p>\n
It\u2019s a lot more work, and I believe in it\u2026 It\u2019s kind of like when people are like, \u201cI don\u2019t want to flip because it\u2019s a lot of work.\u201d We have a lot of doors, and so we just manage it in a traditional way. But there is a purpose. I\u2019m going to be doing it. I bought a duplex in Bellevue. I travel a lot. I\u2019ll probably be in there 12 nights a month, and the other nights I\u2019m renting out. I mean, hotels are all-time highs right now there, and I think I can get 200, 300 bucks a night.<\/p>\n
Wait, dude, you can\u2019t do this. You can\u2019t do it. This was the only part of real estate investing where I was more experienced than you because I had one and you had zero. Now, if you get one, we\u2019re going to be even and I have nothing on you.<\/p>\n
But that means I still have to operate it in an effective way, so I need to be coached first.<\/p>\n
All right. Well, good luck with that. I mean, it sounds great. Obviously, you\u2019re traveling back and forth. It\u2019s a perfect way to do it.
All right. Well, thank you all so much for listening. Hopefully this was helpful. And remember to join us again for our second episode this week where we\u2019re going to be joined by Vacasa to talk about some of the best markets to buy a short-term rental in for the following year 2024. James, thank you for joining us, and thank you all for listening. We\u2019ll see you next time.
On The Market was created by me, Dave Meyer, and Kailyn Bennett. The show is produced by Kailyn Bennett, with editing by Exodus Media. Copywriting is by Calico Content. And we want to extend a big thank you to everyone at BiggerPockets for making this show possible.<\/p>\n