The morality of short term rentals
Boise, ID · Member since 2020 · 84 posts · 87 votes
The morality of short term rentals
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Quote from @Robert Frazier:
This is just a question I’ve been wondering as we deal with a huge housing crisis in our city.
is it moral to convert properties to short term rentals in a city with a deep housing crisis?
if a city has 500 units converted from long term to str, then the average occupancy is 70%, we have lost 54,000 nights of housing per year.
If vacancy is less than 1%, those 500 units of housing could be responsible for a significant amount of upward pressure on housing prices.
with the high cost of management for str, wouldn’t the world be better off with less of them?
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I’m working through it myself.
People can do what they want with their properties, I love helping people invest in properties. But my question is, is it good?
Using Kant’s categorical imperative, you could say clearly no.
We don’t ask enough questions about what is good here, we ask: ‘what’s our highest return?’ Instead. As people we have moral responsibilities to each other, even as soulless real estate investors we have to think about the cost our choices have on others.
So I'm actually going to answer this, Robert. Are short-term rentals good for keeping the cost of local housing markets down? No, as you've clearly demonstrated.
But you can't get to any sort of categorical imperative this way.
1. STR units cost more to manage. Yes. They give local people jobs.
2. STR units encourage overnight tourism versus in-and-out day trips. They give local souvenir sellers money, local restaurants new business, local tour operators expanded client lists.
3. STR units help local businesses by housing short-term local workers in a more cost-effective and desirable alternative than hotels.
4. STR units, when taxed effectively, add more to local tax bases.
5. STR units provide competition to hotels, especially during peak seasons/festivals/major events, which redistributes profits from hotel stakeholders (who are often not local) to locals.
114 Replies
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Alex Breshears:
The lower occupancy and lower nightly rate will eventually make these an unattractive way to run the property, and they will be sold or converted to long term rentals.
Maybe where you live, but not anywhere else I'm seeing or hearing about. A good STR can be rented for weekends only and still make twice what it could as a LTR. Easily.
As long as this trend continues, STRs will continue to take away a good share of the vacation market (over hotels). The STR market is still in it's infancy and has a good many years of growth before it reaches saturation.
- Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes4yAmen, brother Jim!!!!!!!!
Quote from @Jim K.:
Oh my brothers and sisters, let's fast track this thread to where it's going. Someone must have owned the cave/stable/shelter that Mary and Joseph sought refuge in on Christmas Eve. Without a rented roof to be born under, our Lord and Savior would have died of exposure "on a cold winter's night that was so deep." Ergo sum, rent is not evil.
Can I get an amen? Can I get a hallelujah?
- Macon, GA · Member since 2015 · 20 posts · 21 votes4y
Quote from @Robert Frazier:
This is just a question I’ve been wondering as we deal with a huge housing crisis in our city.
is it moral to convert properties to short term rentals in a city with a deep housing crisis?
if a city has 500 units converted from long term to str, then the average occupancy is 70%, we have lost 54,000 nights of housing per year.
If vacancy is less than 1%, those 500 units of housing could be responsible for a significant amount of upward pressure on housing prices.
with the high cost of management for str, wouldn’t the world be better off with less of them?Or supply could be increased. What is preventing additional development for which there is clear demand?
- Rental Property Investor · Chicago, IL · Member since 2021 · 32 posts · 32 votes4y
Personally, I think the real debate is on SFH. Can't say that on this website though as it seems many buy and rent out SFH, instead of MFH.
I will never buy a SFH to rent out, but that's just me.
Renting has value in the market, but not everything should be rented.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Tanner Glenn:
Quote from @Robert Frazier:
This is just a question I’ve been wondering as we deal with a huge housing crisis in our city.
is it moral to convert properties to short term rentals in a city with a deep housing crisis?
if a city has 500 units converted from long term to str, then the average occupancy is 70%, we have lost 54,000 nights of housing per year.
If vacancy is less than 1%, those 500 units of housing could be responsible for a significant amount of upward pressure on housing prices.
with the high cost of management for str, wouldn’t the world be better off with less of them?Or supply could be increased. What is preventing additional development for which there is clear demand?
In most areas, just government regulations......and maybe environmentalists...?
- 4yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Robert Frazier not everyone shares the same moral view points. Best to let the market decide these things. You have to decide what you feel is moral for yourself.
Irish Jones Realty4.947 Reviews - Property Manager · Los Angeles, CA · Member since 2010 · 71 posts · 35 votes4y
@Joe Villeneuve I'm sorry Joe but I believe that that is sophistry. The one really doesn't have that much relevance to the other and it's not a good analogy. But I totally get what Robert is saying.
- Property Manager · Los Angeles, CA · Member since 2010 · 71 posts · 35 votes4y
@Jim K. I'm sorry but you can get a ridiculous. As I recall the store there was no room at the end. Nobody said ever if family was charged for the space in the stable.
By the way I have not taken original question in terms of our rentals good or bad and I don't think too much that way. The question was the effect of STRs on markets. Truly a serious question, not a flippant one
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesIf you mean my "buggy whip" biz, then you're right about it not being a good analogy...it's a GREAT one. The fact that you don't see it, well,...
Quote from @Julie Falen:
@Joe Villeneuve I'm sorry Joe but I believe that that is sophistry. The one really doesn't have that much relevance to the other and it's not a good analogy. But I totally get what Robert is saying.
- Property Manager · Los Angeles, CA · Member since 2010 · 71 posts · 35 votes4y
@Joe S. The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise. It was also founded by indentured servants, escapees from same, soldiers & deserters & people who believed in community, helping one another, ( think of community House raising/barn raising as just want example). .A founding father created concept of free libraries e.g. Capitalism as a concept, from Adam Smith, was based on enlightened self interest. Which in philosophy states that persons who act to further the interests of others (or the interests of the group or groups to which they belong, ultimately serve their own self-interest.
That is why cities from their beginning have had rules and zoning and boundaries for certain activities. It's why we have zoning now and need to update and adapt. It has nothing to do with socialism or communism. Rather it has to do with work to create communities that will serve our best self-interest by being better communities in general.
Quote from @Julie Falen:
@Joe S. The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise. It was also founded by indentured servants, escapees from same, soldiers & deserters & people who believed in community, helping one another, ( think of community House raising/barn raising as just want example). .A founding father created concept of free libraries e.g. Capitalism as a concept, from Adam Smith, was based on enlightened self interest. Which in philosophy states that persons who act to further the interests of others (or the interests of the group or groups to which they belong, ultimately serve their own self-interest.
That is why cities from their beginning have had rules and zoning and boundaries for certain activities. It's why we have zoning now and need to update and adapt. It has nothing to do with socialism or communism. Rather it has to do with work to create communities that will serve our best self-interest by being better communities in general.
Glad to see you making use of the commotion the original poster started. Hope you get some loans processed and I hope he sells some Turnkey houses. Maybe you can fund the Loans for his turnkey buyers. Hopefully no one will shut you down because you made more loans than the other loan officers, but if you was Restricted for your ambition it would be for the good of the community of course. Since it wouldn’t be right for you to hog all the money while the other loan officers that are sitting on the couch doing drugs and wanting free rent are making so little.
- Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes4y
Yes. And it is immoral to dictate how another should use their property
- Member since 2020 · 671 posts · 937 votes4y
LOL. I was typing my response to a guy that actively takes low income housing off of the market to turn into rentals for out of state investors while blaming STR investors for homelessness in that same area when I caught myself. The virtue signaling on this website sometimes...
@Frank McGovern So, single mothers that can't save up enough for a down payment on a house don't deserve a yard for their kids, I guess?
The willful inability to see two sides of a coin is going to be the end of this country.
Quote from @Chris John:
LOL. I was typing my response to a guy that actively takes low income housing off of the market to turn into rentals for out of state investors while blaming STR investors for homelessness in that same area when I caught myself. The virtue signaling on this website sometimes...
@Frank McGovern So, single mothers that can't save up enough for a down payment on a house don't deserve a yard for their kids, I guess?
The willful inability to see two sides of a coin is going to be the end of this country.
The single mothers should have been more careful about picking the guys they spread their legs for. Single mothers share quite a bit of responsibility for how they ended up and the positions they put their kids in. They didn't fall under the spell of the midnight magnolias and slumbered whilst dastardly cuckoo inseminators sneakily did their business...
The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise…
@Julie Falen does the above statement sound like an oxymoron? 😂😂😂
Quote from @Joe S.:
The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise…
@Julie Falen High possibility you’re smarter than me, But does the above statement sound like an oxymoron? 😂😂😂
The US was founded squarely on two monumental crimes against humanity: the genocide of the Native Americans and the African slave trade. Let's not be coy.
- Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes4y
I think this is just an opportunity for virtue signaling. As someone who consistently see's "eat the rich" associated with the morality of all RE investing; I'm over it.
The truth is, we have 3 major issues. 1) People not being able to afford the specific areas and/or types of properties they want. 2) People underpaid - minimum wage jobs honestly should be automated. In the short run this will cost low skill workers their jobs, but with support an retraining we can begin to see a household average income closer to what in needs to be in the 21st century. 3) The trades have been dying off. I work in the power industry for the largest clean energy company. I know for a fact, that we don't have enough tradesmen. We aren't getting enough into the union training programs. Or even into local builder association programs for non-union states. Instead we have seen my generation (millennials) and all those after them gain crippling debts by pursuing college education (often times a useless degree) that is federally backed; so it keeps magically increasing in costs.
So OP we have a lot bigger underlying fundamental issues that are directly correlated to the housing affordability issues in our country that have nothing to do with anyone on this site.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Chris John:
So, single mothers that can't save up enough for a down payment on a house don't deserve a yard for their kids, I guess?
Sure they do, they can rent a house with a yard.....this is easy :-)
- Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes4y
@Robert Frazier I think in any business these are good questions to ask. That we get defensive says more about us than anything else.
That said, I think these kinds of things need to be handled by local regulation. And maybe more affordable housing isn't the answer. Maybe people need to move away.
- Member since 2020 · 671 posts · 937 votes4y
@Bruce Woodruff and @Jim K. My comment was in response to an earlier post that posited the idea that SFRs should not be for rent, only MFRs. As if renting out a SFH is only a negative to society and has no benefits to anyone beyond the owner. I used single mothers in my example, but it's really irrelevant who the tenant might be. In the end, not every tenant wants to own a home or live in a MFR based on my anecdotal, personal experience.
- Westerville, OH · Member since 2018 · 11 posts · 11 votes4y
In my primary market, Columbus, OH, we have an ever growing housing shortage. We have some areas that prohibit STR's and others that do not. While we're not a major tourist destination, between business travel and the attractions we do have, new hotels and STRs continue to be added. The affordable housing here tends to be in areas with less attractions and more crime. STRs tend to be in higher priced, attraction rich areas here.
Developers try to build in Columbus and the neighboring areas, but wherever they go the community comes out to decry the percieved hardships schools and city services will face due to more homes of any kind (SF, small MF, and large MF). They also almost always complain they want the original character of the neighborhood homes built many decades ago to be maintained in any new construction. Think brick, stone, wood siding, and other costly aesthetic requirements.
Even some low income/elevated crime parts of the city have revised their building requirements to ban vinyl siding. It's like anywhere an individual or developer attempts to add housing it's defeated by the community or made so expensive and legally cumbersome that the investors cannot afford to sell/rent at the desired affordable price point.
For anyone who feels compelled to ease the housing struggles in markets they see great need, why not find like minded investors to work with you to bring more affordable housing to these places? Your motivation to alleviate this hardship may be the difference maker in communities that would otherwise not be supportive.
Quote from @Lauren Sennet:
In my primary market, Columbus, OH, we have an ever growing housing shortage. We have some areas that prohibit STR's and others that do not. While we're not a major tourist destination, between business travel and the attractions we do have, new hotels and STRs continue to be added. The affordable housing here tends to be in areas with less attractions and more crime. STRs tend to be in higher priced, attraction rich areas here.
Developers try to build in Columbus and the neighboring areas, but wherever they go the community comes out to decry the percieved hardships schools and city services will face due to more homes of any kind (SF, small MF, and large MF). They also almost always complain they want the original character of the neighborhood homes built many decades ago to be maintained in any new construction. Think brick, stone, wood siding, and other costly aesthetic requirements.
Even some low income/elevated crime parts of the city have revised their building requirements to ban vinyl siding. It's like anywhere an individual or developer attempts to add housing it's defeated by the community or made so expensive and legally cumbersome that the investors cannot afford to sell/rent at the desired affordable price point.
For anyone who feels compelled to ease the housing struggles in markets they see great need, why not find like minded investors to work with you to bring more affordable housing to these places? Your motivation to alleviate this hardship may be the difference maker in communities that would otherwise not be supportive.
You and @Brian Wilson wrote such good post I feel Humbled by comparison.
- Real Estate Agent · Galveston, TX · Member since 2019 · 100 posts · 16 votes4y
@Robert Frazier It is business. Morality and business so not work together. We are facing a local housing shortage here in Galveston, Texas where I am a Realtor BUT so many have been so blessed with increased equity and a chance to grow their retirement.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes4y
Quote from @Jim K.:
Quote from @Joe S.:
The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise…
@Julie Falen High possibility you’re smarter than me, But does the above statement sound like an oxymoron? 😂😂😂
The US was founded squarely on two monumental crimes against humanity: the genocide of the Native Americans and the African slave trade. Let's not be coy.
Over 600k mostly white men died in the Civil War over 350k for the Union. And just as many of our founding fathers predicted God would demand rivers of young mens blood to reconcile for that evil institution. On this Memorial Day I for one will be great full that America didn't have a bunch of "soy boys" back then. God help the future generations this is pathetic.
FYI America and our Constitution is about a hell of a lot more than slaves and genocide.
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesYou mean the US was founded after the Civil War? Wow! Here I thought it was a few years before that.
Quote from @Jim K.:
Quote from @Joe S.:
The US was founded on ideas of freedom from religious persecution and the idea that individuals could own property & get the rewards of their own efforts. It was not "founded" on capitalism or free enterprise…
@Julie Falen High possibility you’re smarter than me, But does the above statement sound like an oxymoron? 😂😂😂
The US was founded squarely on two monumental crimes against humanity: the genocide of the Native Americans and the African slave trade. Let's not be coy.
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