Airbnb is expanding short-term rentals, but can hosts take advantage?

Airbnbs’ lax enforcement in Los Angeles has led to a wave of illegal short term rentals – even four years after the city passed a regulation to suppress such practices. But what if the hosts lived in a building that hosted Airbnb guests and short-term rentals?

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That’s the idea behind Airbnb’s new push to expand short-term rental offerings. The company has partnered with a number of business owners who have agreed to offer “Airbnb-friendly” apartment buildings, reported The Wall Street Journal last week. According to the report, the new service will include more than 175 buildings managed by Equity Residential, Greystar Real Estate Partners LLC and 10 other companies that have agreed to release more than 175 properties nationwide for short-term rentals.

But potential hosts in Los Angeles who decide to rent apartments from Airbnb’s listing of more than one about ten “friendly” buildings in town likely won’t earn enough to break even due to a combination of high rents, taxes and municipal restrictions on short-term rentals. Rents for one-bedroom apartments in most listed partner buildings have soared above $3,000 per month. Only a few studios were available in the $2,000 price range. If a host were to rent a one-bedroom apartment with a monthly rent of $2,635 (which equals $31,656 per year), they would have to charge far more than the $194 average price per night for Los Angeles (which amounts to $23,280 per year) according to analytics platform AllTheRooms.

Either way, residents renting one of these Airbnb-friendly apartments should always ask for a permit across the city of Los Angeles to host on Airbnb.

“[..Airbnb-friendly buildings] seems like a good initiative. However, at first glance, it seems that given the rent, Airbnb’s income would not be enough to cover all the expenses if the host followed the city’s policy,” says Davide Proserpio, assistant professor of marketing at the USC Marshall School of Business.

Additionally, since Los Angeles’ 120-day cap on short-term rentals still applies to buildings on Airbnb’s listing platform, this significantly limits the number of longer-term guests. that a resident can accommodate. Not to mention that some of the buildings listed by Airbnb have even shorter boundaries – Milan Lofts at DTLA for example only allows residents to stay 90 nights a year.

Airbnb’s calculations of host income can also be very misleading, since the estimate does not include host expenses, taxes, cleaning fees, or individual building restrictions. For example, Airbnb estimates that a resident of a $3,699 one-bedroom apartment at Vinz in Hollywood who hosts 7 nights a month can expect $1,108 in income per month if they host the entire year. But the Vinz only allows hosts to rent for 90 days a year, which severely limits the potential for subletters and a steady stream of income.

Also keep in mind that since the apartment will need to serve as the host’s “primary residence”, the hosts will need to live there. six months out of the year. All this to say that it’s unclear how renting an apartment in an “Airbnb-friendly” building makes accommodations easier – especially in a city where illegal short-term rentals are already seems to be the norm.