HOT TAKES – What Can Investors Learn from the Recent Airbnb Crackdowns?

What’s up, guys? I’ve got some hot takes today. So today we’re gonna be talking about the recent Airbnb crackdown in New York City, then effectively banning all short term rentals and all the short term rental properties in New York having to close up their doors, leaving millions and millions and millions of dollars out of the pockets of Wait, no, wait, didn’t this happen? years ago? Didn’t New York City ban short term rentals years ago? And didn’t they not enforce it forever? And didn’t people just continue operating? If that’s what you were thinking? The answer is yes. And let’s talk about it. So, if you haven’t seen in the headlines recently, New York City has recently banned all short term rentals from offering this effectively, they have said that if you aren’t present at the property, then you can’t rent it out on Airbnb. So sure, if you’re just renting out a spare bedroom in your place, you can do that. But you can’t actually just rent out a property as an Airbnb and have it be an investment property. The problem with the headlines, though, is that it didn’t happen recently. And even two years ago, this is something that’s been the case for a very, very long time in New York City, I’m not quite sure why it’s just now bubbling up again, as a headline. But your guess is as good as mine. The reality is with this type of regulation, it’s just really, really difficult to enforce. Which is why despite there being a ban on short term rentals in New York City, there’s been over 10,000 listings in the city for years and years and years now. So let’s talk about this. Let’s talk about what you as an investor can learn and what people are generally doing about this in New York. So to start with, there’s a ban, you’re just not allowed to do it. You’re not allowed to rent your place short term on Airbnb, how does that actually work? Well, it means that the city is in charge of enforcing it. And they do it on a complaint basis. There’s a code people that work for the city that are in charge of taking complaints from residents of the city that, hey, my neighbor has an Airbnb, someone’s got a short term rental near me. And they’re in charge of policing the entire city of New York. And so that’s obviously catastrophic, it costs a lot of money, to have the infrastructure to be able to actually effectively enforce a regulation like that in a city as large as New York. And so it’s just been chronically under infrastructure, they just haven’t had the infrastructure to actually enforce it, which is why you see 10,000 15,000 listings in New York that just kind of slide under the radar. So why is it happening? Why do they even bother doing that? Well, they do it because it’s generally a very politically popular thing to do in a major Metro City, like New York, rents are at an all time high, right? So probably sounds similar to a lot of people watching from Toronto, rents are super, super high. And there are hotel companies that have a lot of money and pay a lot of money to lobby the government. And so it’s a pretty politically popular thing to go and say, hey, look, we’re going to fix the problem, we’re going to lower rents by adding more inventory be and we’re going to do that by taking properties off of Airbnb, we’re going to stop these greedy capitalists from exploiting their real estate and making more money than they should. And we’re going to give that real estate back into the hands of people that want affordable housing, and we’re gonna make housing way, way more affordable. And while they’re doing that, they also get to make happy the big hotel companies in the area. And there’s only a few investors who are upset by this. So everybody wins, right? Well, in fact, no one really wins. But that’s politics for you. And that’s the way that it works generally in government in politics. Because ultimately, what happens is that now there’s a huge burden on the system of having to enforce this, it doesn’t end up getting enforced, it doesn’t actually accomplish the goal of having housing become more affordable. But you get to the have the political view on UB, that you did something that made a difference, when in reality, the real problem with affordable housing is oftentimes bigger issues like the amount of red tape and bureaucracy involved with creating new housing, creating new inventory building, it becomes extremely expensive, it’s hard to do, there’s a lot of permanent you need to do. And so there’s all these much more impactful things that they could do to solve that problem. But they’re a lot more complicated. And so the easy low hanging fruit is to just paint Airbnb as the villain and knock it out and just carry on. So from there, what’s an investor to do? Well, for starters, if you’re an investor in New York City, what most investors are doing and have been doing for years and years is just ignoring the regulation completely. That being said, I just don’t recommend it. I don’t recommend going into a city investing $100,000 $200,000 Whatever it might be into a property where now you’re, you’re technically the only way to actually make it give you a return on your investment is to break the law. It’s just a very precarious situation to be in because if you you are unlucky enough to be one of the few people that they do actually enforce the regulations are. And either the building that you’re in, or the local government comes in, shuts you down. Now you’re in a really bad place with that investment. It’s just an unnecessary risk, in my opinion to take on when you could go and invest elsewhere and be able to make a really great return on your investment and do so completely above board. So what do you do? Because, you know, obviously, as an investor, you don’t have a crystal ball that allows you to predict the future, how do you avoid investing in areas where they are going to do things like New York City has done and crackdown on Airbnb is entirely? Well, again, you got to look at why they do this in the first place. I just explained that reason that they generally will do this kind of thing is always because it’s politically popular. It’s politics, you know, any policy is being put in place by the lawmakers. That’s a political party, a political group that is making a decision that they think is best for their Paulette political campaign. Right. And so oftentimes, you want to look at what are the politics behind making a decision like that, in New York City, where there’s a huge housing crisis, people are paying ungodly amounts for rent in that city. And there’s a whole bunch of hotel companies that have lots of money deep pockets, and they want Airbnb gone. So they have less competition, it becomes politically popular to ban Airbnb. But what if you look at a ritzy, high end neighborhood in an area where there’s, you know, lots of luxury properties, and they don’t want Airbnb there and the local economy doesn’t need it, well, probably going to be the same thing. So if you look at really upscale bougie, areas, where there’s lots of high end properties, then generally either the HOA there, or the local government is going to ban or severely restrict short term rentals, because again, it’s unpopular for them to allow them. Whereas if you look at a market, like a cottage type market, so for example, we invest into cottage markets outside of Toronto, and those markets, they tend to be more moderate, we don’t go super luxury, super high end, there’s some cottage areas that are super luxury and high end. And they tend to, like I said, clamped down more on short term rentals, because they just don’t really need them. And it’s a lot less popular with people that have these multimillion dollar properties and are paying a lot of property taxes. So we need to keep those people happy. But what about these smaller areas that are smaller neighborhoods, that the local businesses, the local economy depends on tourism that goes up there. So you get the restaurants, the Home Hardware, you know, the different little shops up there, they

need this flow of tourism coming to the area from people going and staying up a cottages and short term rental properties. But there aren’t hotel companies in the area. So not only does that mean that there aren’t hotels lobbying to get rid of competition, but it also means that if there aren’t hotels, then how are people going to travel up there? If you outlaw restrict or ban short term rental properties? Well, the answer is they’re not they can’t really reasonably do that. And so they do that. And that means that all the local businesses suffer and the local economy suffers tremendously. Then now we’re looking at a different equation for what’s politically popular to do, it becomes a lot more politically popular to keep Airbnb and keep a thriving short term rental economy in that area, because it’s actually really beneficial to local area to have that going on. Guys just want to take a quick break here to say that for those of you watching, who want to build cashflow, and long term wealth by purchasing Airbnb ease and short term rental properties, there’s a link in the description right down below for a free training that will walk you through my exact strategy for investing successfully in Airbnb ease. Now, if you’re not ready to actually buy properties, and you want to get started managing other people’s properties on Airbnb the same way I got started and build a full time income managing other people’s properties, there’s actually another free training linked in the description down below as well, that will be a really great fit for you. So whether you want to invest in short term rental properties and actually build amazing cash flow and long term wealth by acquiring the assets, buying the properties themselves, or you’re looking to earn a full time income, managing other people’s properties on Airbnb, we’ve got some awesome trainings that are linked in the description down below. That’ll definitely help you out. When you sign up for the trainings, we’re also going to send you a few other tools and resources completely for free just to help you get started. Again, the links to sign up are in the description down below. And both trainings and all the tools are completely free. So make sure to register for the trainings, links in the description down below. Now that being said, it can also mean that it’s very beneficial for that local government to do things like taxing short term rental properties, because that is a net benefit to them. Or they could do things like restrict in moderate ways how you use your short term rental property to make sure that you’re not doing things like disturbing your neighbors having great big huge parties are violating fire codes and jamming a whole bunch of people in there. But those things are generally really great for us. I personally don’t mind if they restrict the way that you use your short term rental property in a reasonable way, saying things like you can’t have 16 people in your three bedroom property, or that you have to adhere to noise, you know, quiet hours, things like that, I think that’s actually really, really good. Because not only does it mean that you’re allowed to operate your short term rental, and then it gives the same set of rules to everyone. So it eliminates some of those bad actors and gets everyone on an even playing field. But it also means that it’s just going to be much nicer for the members of that community, it’s going to keep the local sentiment toward short term rentals a lot more favorable by eliminating those bad actors. Because you’ve all heard the people say that Airbnb is a third party houses, and they have terrible guests. And it’s horrible to live next to them. And the reality is, that’s the 1% of people that are beside these terrible party houses. And they’re the loudest, they tend to be the ones that complain a bunch and that make sure their voices are heard. Because if everything’s good, you don’t really care if people hear about it. But if everything’s bad, and you’re plagued by a terrible neighbor, then you want that problem solved. So I think those types of restrictions are actually really nice, because it keeps the local sentiment favorable to short term rental, and it just keeps it to be a better environment for all of us. Taxation also means that there’s something to lose for the government directly, if they were to more severely restrict or ban short term rentals in that area, because of the government is making tax income from the properties. That gives them reason to want those properties to stay operational, it gives them an incentive to keep those properties running, so they can have that additional income coming in from the taxes. So that’s what I think we can take away from and learn from this, I always recommend doing research into the regulations in a market. And then beyond that, researching into the regulations, that’s just going to tell you where things are at presently. But beyond that, you also want to look into what the economy looks like up there, you know, what the what the general consensus is or what the general sentiment is toward short term rentals in that area. So you know what the long term future is going to be not just right now, but what things are going to look like regulation wise for your property a year from now, five years from now, 10 years from now, in addition to that, I also recommend always having a good backup plan, whether that be moving to mid term rentals or long term rentals, it’s always nice to have a backup plan in your pocket. Or maybe it’s just building a backup plan from day one where you do a value add renovation to the property, you buy a bit of a fixer upper. So you know that if you need to, you can always sell the property for a big profit down the road. There’s all kinds of different ways that you can strategically give yourself multiple exit strategies, or multiple different backup plans and plans B’s for your property. And I always stress with the investors that we work with that having a really good solid downside protection is even more important than just trying to maximize your upside. So that’s what I think we can all learn from this. I don’t think there’s anything new here going on. I know the headlines immediately want to make you think there’s something crazy going on. But there really isn’t anything new here. It’s just a few different takeaways that we can take from what’s already been happening for a very long, long time. So with that being said, let me know your thoughts in the comment section down below, hit the like button if you want to stay up to date with these. Or sorry, hit the like button. If you just liked this video, hit the subscribe button. If you want to stay up to date with these videos two different things. Subscribe button is going to help you to stay up to date with the two new videos we post every single week here on the channel, which you really don’t want to miss the like button is just going to make me happy, it’s just really going to get helped me to grow this channel and get these videos in front of more people. And so it really doesn’t mean a whole lot to me, those of you do hit that like button. I really, really appreciate it. I know it only takes a half a second your time. But it really does make a really big impact on me and being able to grow this channel and grow my impact and get in front of more people and help them with their short term rental investing and property management. So if you’re one of those kind of people that does hit the like button and thank you so much for doing so. With all that said, thank you so much for watching, and I’ll see you in the next video.