'A bargain with the devil': Bill comes due for overextended Airbnb hosts

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 seen any of these AirBnB forced sales?

If they were planning to buy more homes, their savings should be pretty decent. Should be able to last the storm for a while.

They should do forbearance on their mortgages …

My friend owns 120 units in SF. It is master leased to an AirBnB host. They are both SOL

Anyone owning 120 units in SF is not SOL :smiley:
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

Let me be SOL with 120 units in effing San Francisco…


He is SOL without mortgage forbearance.

That means your friend does not own 120 units. The bank owns 120 units. :slight_smile: 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.”

I am the only one on this forum that does not believe in leverage. It is the essence of RE investing. But live by the sword, die by the sword.

WC Fields is my hero. Curmudgeon who hated working in the movies with dogs and children, because they upstage you
My friend looks just like him.


I’m with you on this sentiment. I stay away from leverage.

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@elt1, @aalj

Different age groups? Didn’t you guys use leverage when you are younger?

If you don’t like leverage you can’t buy REIT. Every REIT uses leverage to juice returns.

Of course. Leverage is key to accumulating wealth. Make money with other people’s money. But it is also a quick to loose money in hard times.


The multiplicative factor of leverage during UP times, produces same multiplicative downward pressure when the leveraged assets are down.