Air BnB, and Interesting Times
After nearly 3 hours up Wittenburg Mountain outside of Phoenicia for one of the best views around, this is what we ran into - a view into endless nothingness instead of across the Ashokan Reservoir and multiple peaks. I'm sure someone could wax poetic about the symbolism - a 'it's the journey not the destination' type of thing - but it ain't me babe. Not tonight, election night 2022. Especially here in Pennsylvania which somehow became the new Florida in terms of close races and pundit attention. I don't remember it being that way when I was growing up and all the Republican candidates would come to Lancaster as a showcase of American self-determination stemming from hard work, god-fearing and general neighborly industriousness.
Interesting article I read in Time Magazine about the glut in Airbnb's, many of the thoughts mirror/mirrored my own. Glut in Airbnb's brought on by all the purchases of 2nd homes and recreation homes over the pandemic years and the desire of those people to monetize their investment while not using it. I hear it all the time, this desire to 'rent' the home - I'm not a big fan of it for several reasons. 1, who wants someone in their home, 2, it's not easy to make money, 3, if its a home you use too I don't think you get to depreciate it, which is a big deal for the ultimate profit and loss of the venture, 4, the standards and expectations of the guests has increased to hotel level the last couple of years, 5, at least in the Catskills, it's hard to find services for the timely turnovers needed between guests.
I'm sure I'm missing some, but in the end, it's just not an easy gig. I guess if you are looking to pay your taxes (though that's a pretty tall task in NY), maybe it makes sense, but to turn a true profit of any interesting level, not an easy task at all.
I guess if you want to live/use the home sometimes, it might make some sense, but if it's solely an investment vehicle, I like longer term. You get to know and serve your tenants, you are currently helping with a large need in housing, the wear and tear is less, and the administrative work is less. I think I have 5 or 6 now, rental homes. 4 in Phoenixville, 1 in New Paltz, 1 in Rhinebeck. Thankfully they aren't fully leverage with variable interest rates right now, right?!
For years I was shocked at how hard it was to make money in the rental home game. Taxes, fees, vacancies, loan interest, repairs, upkeep. But my accountant told me most of the big boys aren't looking for profit - cash flow, long term appreciation, depreciation tax benefits, an easy vehicle to allocate other expenses. That was eye opening, to learn I wasn't doing anything wrong. And eye opening in how it's a pretty tough gig no matter how you slice it. You make money on volume of houses for rent, but with each house comes risk in terms of cash flow, and if a slew of bad luck runs your way, you can really find yourself in a pickle pretty quick, especially if debt is involved.
Too Many Rich People bought Airbnbs...