All Forum Posts by: Kevin Lefeuvre

Thanks Valerie for digging further. I had not seen that...
This is still not the right way.
Why don't they just take the deposit at the time of the booking? Which host is pleased to see their dates blocked for weeks and then 3 days before check-in get cancellation because there is not enough credit on the guest's credit card? I don't know why these idiots try to reinvent the wheel. All airbnb or VRBO needs to do is to copy the other one on things which work since years. Don't try to be smart guys, just copy what works .... Is it that hard?
Or is it a way to discourage the hosts from having a security deposit at all? ... 

Those of you here since a while have read my rants about Airbnb practically not having any security deposit, and how this has been abused by some irresponsible guests. 

I believe (and my 4 years STR experience supports it) that the simple existence of the security deposit, without even having to use it, forces the guests to take better care of the property and to respect house rules.

It looks like they got the message from the hosts. Here's the email I received today from airbnb:

Update about security deposits

How this affects you

Because one or more of your listings require a security deposit, please review the amount you require. It’s important to do this since it may be displayed more prominently and will need to be authorized on each guest’s payment method 48 hours before check-in.

This is still not as strong as the VRBO system where the host can hold the deposit in full or partially and the burden of the dispute is on the tenant, just like in a traditional long term rental. Airbnb will still be the judge in case of dispute.

Anyone else receiving this message today?

 Well you got 5 answers from 5 agents telling you are crazy. But you are not.

I am an investor who purchased an aggregate of over $3M RE properties in SoCal in the past few years, without any agent,  saving near $100k, a lot of time and a lot of unnecessary back and forth by not using an agent. If you know what you are doing, removing the buyer agent is not beneficial just for saving commissions but also mostly because you negotiate better and you don't mind walking away from a deal while agents do mind.

We are in 2019 and many industries have cut the middle man and it's gonna happen in RE as well, soon or late. The worse part is that in RE there are traditionally 2 middle men. And as you certainly figured, the so called "buyer agent" "defending" you is of course BS. Everyone just wants their share of the cake. And guess who is paying for the cake? You. Funny thing is that they tell you seller pays for the commissions. I am not sure if they really don't get it, or play it that way but that's the dumbest statement. The buyer is the only one bringing money, and ultimately it's the buyer paying the seller, the seller's agent, the buyer's agent, escrow, title, inspection, .... every one. The buyer is the one who pays EVERYONE!

Also no one is able to tell you why it's a percentage and not a flat fee. They have the same work for a 200k house in Corona as a 2M house in Corona del Mar, but they want 10 times more commission from the house in Corona del Mar. Why? There is no reason.

Anyway, yes it is absolutely possible to buy without a buyer's agent. You need to get access to PDF contracts and be able to write them up and negotiate. I am sure you know all this. The trickiest part is the seller agent not cooperating most of the time. He/she would want to double commission when they see there is no buyer agent involved and they think they'll have more work to do. 
If you have not done already , and you are new to all this, maybe for your first purchase, find a smart buyer agent who would accept to work for 1% (or 0.5% if your property is above $1M). Don't ask him/her to search for you or to do extensive showings... find it yourself and use the agent for the paperwork only. Ask them to copy you on all communications. This way you will learn more about the process. Then do the next one by yourself or just repeat the same plan.

Good luck!

 There is a huge gap between $1600 and $2200, but even at 1600, your gross cap rate is 7% which is well above any place in SoCal. But you may wait months before renting? I have no clue. If vacancy is not an issue and there is a good rental market there for this size of house then it's a deal. 
Do you know if short term rentals are allowed there?

Of course it's about the hotel lobbies. BTW some of them are very welcoming ( pun intended 😊).

Larger city laws have been custom tailored each locally , all in the recent years , to prevent investors from scaling their str business.  And since there's absolutely no proof anywhere that the hotels do this better than str investors, and the development of tourism and even the City TOT is benefiting from it,  why voting these laws if not under the influence of the lobbies? Why should Hilton be allowed to build as many hotels as they want in a city but not a str investor? They are voting these laws in different cities in a quite unstable way, since many of them have been reverted and amended and keep changing.

And this started with big cities and coming to smaller ones as we speak.

I'm certainly not defending what the guy did. There is a similar guy in LA who will get caught too, soon or late, I hope.

And very true that dishonest guys are harmful to us.

The point is that they won't let you scale too much in any given location. It's not because the guy was dishonest. It's because he got too big IMHO. 

The key to scaling in this business is to be present on different geographic markets which makes it hard.

Hotel Lobby counter attacks when you become big:

https://www.nytimes.com/2019/02/23/nyregion/airbnb-nyc-law.html

I'm far from being off airbnb at this point, but heading that direction.

I do emailings with specials on former clients to push for the low season . I have about 3% booking rate with each emailing. 50% open rate, 30% click rate, 3% which is huge for those who are email marketers. It's because I only keep about 70% of former guests emails. Only those I liked and who posted 5 stars. so there is a good connection.

I only email twice a year, nice professional but fun email.

Also I've my facebook page which forwards to VRBO for the calendar check and tells them to run the quote on VRBO but to contact me directly to waive VRBO fees. That's about 10% in their pocket. That;s new and has not brought deals yet, so I may start running facebook ads there.

I believe in this type of sale, whether turnkey or just the combined sale of the "real estate" plus "business" with each having their appraisal values.

My question is: how is the sale contract structured?

 You got it right. Airbnb s security deposit is pure BS. More and more guests know this and more and more they act irresponsibly. Google "Airbnb s security deposit is a joke" and you will see. 

As you said it correctly, the point is not about taking the guests money but that the guests' behavior is very different for the majority of them if they have some money hold on the side that the HOST CONTROLS ON HIS OWN DISCRETION. The burden of the claim should be on the tenant just like LTR. Why should it be different here?

I don't want to waste time placing a claim and just have the insurance of maybe getting my money back if damage. I want the guests to behave as carefully as they do in their own house, so that I never have a claim to start with. Only a good deposit makes that happen.

I have increased my Airbnb pricing significantly and with the last minute discount I use Airbnb to fill in the upcoming weeks holes. In one year I moved from 60% from-Airbnb income to 30% and really wish I could unlist from Airbnb some time soon.