For years, Cheryl Dopp considered the ding on her phone from a new Airbnb Inc. booking to be the sound of what she called “magical money.” A property she rented out in Jersey City, N.J., on Airbnb could gross more than $8,000 a month, she said, double what long-term tenants would pay.
Now, Ms. Dopp associates the dings with cancellations and financial misery. The 54-year-old information-technology contractor said she had about $10,000 in bookings evaporate overnight in March. She has $22,000 in monthly expenses for a largely Airbnb portfolio, she said, that included another Jersey City home and a house in Miami.
In her mind, the promise of more rental income offset the growing debt, she said. “I made a bargain with the devil.”
Smaller players have spent hundreds of thousands of dollars each buying homes for short-term rentals. Jennifer Kelleher-Hazlett of Clawson, Mich., spent about $380,000 to buy two Michigan properties in 2018. She said she and her husband cashed out their financial investments and borrowed $100,000 from employers to furnish them.
The 47-year-old expected to net up to $7,000 a month from Airbnb after mortgage payments, supplementing her income as a part-time pharmacist and her husband’s as a schoolteacher. Before the virus struck, the couple was considering buying more homes. Now, they can’t make mortgage payments because no one is booking, she said. “We’re either borrowing more or defaulting.”
Many Airbnb hosts are desperate to sell properties, say real-estate brokers like Greg Hague, who runs a Phoenix real-estate firm and helped state lawmakers draft short-term-rental legislation. "There’s been a flood of people. You have people coming to us saying, ‘I’m a month or two away from foreclosure. What’s it going to take to get it sold now?’ " he said. That has diminished overall property values, he said.
Anyone owning 120 units in SF is not SOL
The master lease guy probably. But he should have cashed some reserves for the bad times while making bank when hotel rooms were $700/night
That means your friend does not own 120 units. The bank owns 120 units. W Buffett / C Munger - “There are three ways to go broke. Liquor, Ladies, and Leverage. And of those 3, I made the first two up.”
W Buffett / C Munger - “There are three ways to go broke. Liquor, Ladies, and Leverage. And of those 3, I made the first two up.”