Attempting a summary since this article was dripping with SV BS. As far as I can tell, they plan to launch some kind of modular prefab home that could scale from adding a backyard cottage to your home, all the way to a multi-family dwelling. There's an indirect hint that they may be considering including some level of space saving furnishing or some other kind of batteries included prefab home.
This is cool, but selfishly speaking, the area I'd really like to see Airbnb sink their teeth into is the apartment rental market. I've rented a few long-term (~3 month) sublets on Airbnb, and the process was light years better than dealing with landlords.
For example--I've avoided credit cards and loans in the past because I've been lucky enough to have sufficient savings and wanted to keep things simple. This means I have a sparse credit history. I've always had a steady income though, and have rented for many years without ever being so much as a single day late on a payment. Despite this, I get treated like I'm from outer space just because I haven't needed to put myself into debt.
It's just such an utterly stupid evaluation criteria. I'm provably a great tenant, but can easily get passed over in favor of someone who has a much worse record, but keeps their credit score high. With Airbnb, I am judged by my actual relevant track record--a lessor can see that again and again I fulfill my obligations and make a good impression. And of course, there's more accountability on the other side too since tenants can leave reviews.
There's just so much inefficiency they could clean up here.
Society operates on credit and you're only hurting yourself by not engaging in the benefits of having a credit card. Use it like a debit card and you'll earn cash back and you will build your credit.
'With Airbnb, I am judged by my actual relevant track record..'
Your credit record is based on your actual payment record. Your Airbnb reputation can be easily manipulated since you can have multiple accounts and play the review game.
I would recommend to get a few credit cards so you have a credit rating. Just don't use them for credit. Make a few purchases, pay them off and life is much easier.
For Airbnb this is a very smart move. Airbnb knows demand and supply extremely well and is poised to be able to offer some very highly leveraged financial products to fund the buildout.
This is in my opinion the most significant initiative being done by any SV or YC company. By significant I mean that it promises to end a lot of market failures and disrupt a lot of big players.
At the risk of making this comment too long for casual readers, I'll elaborate:
Consider the incentives for developers. They buy and develop plots of land or existing distressed properties with the goal of bundling as many profitable sales into the same heavily subsidized financing event.
When the developer sells a property for $500K there may be $250K in the land, $100K in the structure, and another $150K in things like appliances, furnishing, HVAC, etc.
The sale is largely emotional and is driven by the way it is legal to bundle all those add-ons into the subsidized financing. This fact alone explains much about the housing bubble. The $150K worth of bundled items are worth $75K after they have been used for a week.
The buyer consents to this because it's the cheapest way to finance a luxurious lifestyle, even though it's marked up significantly. As long as the market keeps going up, the buyer doesn't get bitten by it.
Airbnb knows which parts of the financing bundle make sense for long term value and which can be most profitably leveraged when the unit is used as an Airbnb listing.
If you think of a rental property simply as an asset, you want the kitchen renovated periodically to maximize the market value of the listing. Landlords with 12 month leases, mortgage companies with 30 year mortgages, and most notably real estate brokers with <30 day commissions have no incentive to maximize any of those elements, and have plenty of incentive simply to maximize the amount financed.
Airbnb's interests align perfectly with home buyers on this, in a way that the incumbents' do not.
If this takes off at scale it will reduce profits for realtors, builders, developers, and interior decorators/furniture sellers. It's a pretty amazing opportunity that uniquely maximizes the value of Airbnb's data. Wow.
I guess they need to pivot a bit. Since they jacked up fees to booking.com levels they are just a booking.com equivalent in my eyes, the prices are not cheaper anymore.
I like paying hotel level prices on airbnb yet, at the same time, be expected to put up with stuff as if I'm staying over at a friend's house for free. And, if I don't give a 5 star review, I'm a jerk?
Tbh that still constitutes a significant ahift in societal norms primarily executed by a single company; if they accomplish just that much, they’ve accomplished quite a bit (ofc, it's also a naturally goes hand-in-hand with things like uber).
In a hundred years, architects/urban planners will easily point to this decade as the age of... something (particularly because with any change in societal values will come changes elsewhere; if this sticks, we’ll inevitably start seeing changes in house design and city planning to support it)
There's a startup called Cover that's already making homes and ADUs exactly as Airbnb says they hope to make them. Their vision is to build homes like Tesla builds cars. If you live in the LA area, you can order one online and get it delivered in 6 months.
I think this is what you’re saying but does “delivered” include everything including permitting, built (on a foundation on the site of your choice) and a certificate of occupancy issued from the city?
“Order today and have one permitted, built and ready to move into or lease in 6 months” sounds great. Even better if somehow an agreement with the city to expedite Cover’s builds could cut that timeframe in half because guessing the fabrication of the structure itself is very fast relative to the entitlements. Hopefully they’ve figured out a way to streamline with the city.
It's interesting to note that California has some incentives in place to help increase housing and Accessory Dwellings are one that frequently are easy to get permission to build. I know here in Berkeley we have new laws in place making this process way easier.
While the state of California and some cities have been making it legal to construct accessory dwelling units, cities commonly prohibit short-term rentals in these accessory dwelling units. (Reference: Berkeley’s BMC 23C.22.020.D [1], and San Francisco’s Planning Code 207(c)(4)(D) [2]). In such cities, it seems that the law discourages you from adding an ADU with kitchen if you want to rent it out on Airbnb (or if you want to rent it out long-term, for that matter, if rent control would apply). It’s less restrictive to add bedrooms without the kitchen. I don’t think Airbnb will be able to build test homes in these restrictive cities either.
That's good to hear. In my town (Grand Rapids, MI) they've been on the radar for a few years, but some NIMBY neighborhood organizations keep killing reform. While the Grand Rapids housing market is far from the craziness of much of California, we are experiencing a significant housing crunch, and costs are rising rapidly—especially relative to wages.
We're actually in the process of building one right now (detached garage with ADU above), and we had to go through the Special Land Use process, which entailed paying a $2000 fee and presenting at a Planning Commission meeting. Most of the other items on the agenda were for things like a nonprofit building office space in a residential neighborhood, a large proposed housing development, and the like. Our little $185k project required the same paperwork and fee as those multi-million dollar endeavors.
IMHO, ADUs have a ton of upsides for communities with few downsides: they increase density with minimal impact to the character of the neighborhood (while we demolished a 80-year-old garage, our 102-year-old house is being left alone), enable small-scale upper-middle-class landlords, and activate underutilized space (such as replacing old functionally obsolete detached garages).
I wonder if there's a market for investors to fund ADU projects, similar to how Solar City and the like sell PV installations: the investor pays for the construction of an ADU, under the condition that they are entitled (via a deed rider) to the majority of rental earnings until the loan is paid off. This would be more complicated (and probably more risky) than the PV business—with PV you don't have to worry about vacancies, managing tenants, and the like—but I think it could work in certain markets, as long as enlightened municipalities remove unnecessary roadblocks.
Well, guess this is a way to add small units to extra space people have which could then be served as Airbnb's.
Overall, Airbnb experience is not the same. The prices are equivalent or in certain cases more than what Hotels charge. And in most cases, you don't get the same kind of privacy/facilities that hotels provide. I stopped even looking for Airbnb unless it's a really nice place which offers some kind of experience which hotels doesn't.
"The prices are equivalent or in certain cases more than what Hotels charge"
You conveniently ignore the huge number of cases where its cheaper than a hotel (especially a suite for a family) and the fact that it contains a kitchen and many other time/money saving amenities
I'm pretty sick of celebrating AirBnB. They create so many classic externalities problems and are doing basically nothing to address them despite simple solutions being available, like allowing people to look up addresses and file complaints without being a customer (ie: neighbors of AirBnB owners that are adversely affected). It's obvious why they don't do this: they know there are tons of illegal listings that would immediately be identified and pulled down, and they know that's a significant amount of their business.
This doesn't even begin to address the legalities of subleasing, the negative real estate market effects for residents, etc. all of which AirBnB chooses to paper over with ads about how they are helping poor people get additional sources of income.
We should be careful trusting them in having a significant role in our real estate system. As a company they behave irrationally and their values, outside of growth at all costs, are shallow, and as a country real estate provides a huge amount of our economic backbone. We're all still really mad at the bankers about the last economic recession, do we want to blame the next one on the tech companies?
AirBnB: fix your existing marketplace and show that you can run a proper, legal business before expanding.
like allowing people to look up addresses and file complaints without being a customer
Complain to who, and for what purpose?
If your neighbor is breaking the law or violating the terms of their lease, complain to the city or to the property owner. Why are you dragging this platform into it?
I don't really want to live in a world where anyone on the internet can destroy my income via anonymous complaint. That seems really ripe for abuse.
Occasional reminder that AirBnB was originally "growth-hacked" with a campaign of deceiptful and TOS-violating Craiglist spam, and your forum host and YC founder specifically looks to fund for founders who break rules (including laws) "that don't matter" (to the rulebreaker), on the advice of YC's current president.
I also noticed they're talking about these new dwellings being smart/connected. I told my roommate if he ever got an Amazon Echo/Google Home device, I'd shatter it with a hammer and throw it in the trash.
Sears sold kit homes at the turn of the century (which arrived in train box cars and took 3 ~ 6 months to assemble), some which are still around today. I'd rather have something like that, which people can put together, without AirBNB doing a Google/Facebook style collection operation (I'm pretty sure they'll collect data they can sell to reduce the costs and gain a long tail profit).
[+] [-] dougmwne|7 years ago|reply
[+] [-] danenania|7 years ago|reply
For example--I've avoided credit cards and loans in the past because I've been lucky enough to have sufficient savings and wanted to keep things simple. This means I have a sparse credit history. I've always had a steady income though, and have rented for many years without ever being so much as a single day late on a payment. Despite this, I get treated like I'm from outer space just because I haven't needed to put myself into debt.
It's just such an utterly stupid evaluation criteria. I'm provably a great tenant, but can easily get passed over in favor of someone who has a much worse record, but keeps their credit score high. With Airbnb, I am judged by my actual relevant track record--a lessor can see that again and again I fulfill my obligations and make a good impression. And of course, there's more accountability on the other side too since tenants can leave reviews.
There's just so much inefficiency they could clean up here.
[+] [-] codegoblins|7 years ago|reply
[+] [-] matchbok|7 years ago|reply
[+] [-] dazc|7 years ago|reply
Your credit record is based on your actual payment record. Your Airbnb reputation can be easily manipulated since you can have multiple accounts and play the review game.
[+] [-] maxxxxx|7 years ago|reply
[+] [-] resters|7 years ago|reply
This is in my opinion the most significant initiative being done by any SV or YC company. By significant I mean that it promises to end a lot of market failures and disrupt a lot of big players.
At the risk of making this comment too long for casual readers, I'll elaborate:
Consider the incentives for developers. They buy and develop plots of land or existing distressed properties with the goal of bundling as many profitable sales into the same heavily subsidized financing event.
When the developer sells a property for $500K there may be $250K in the land, $100K in the structure, and another $150K in things like appliances, furnishing, HVAC, etc.
The sale is largely emotional and is driven by the way it is legal to bundle all those add-ons into the subsidized financing. This fact alone explains much about the housing bubble. The $150K worth of bundled items are worth $75K after they have been used for a week.
The buyer consents to this because it's the cheapest way to finance a luxurious lifestyle, even though it's marked up significantly. As long as the market keeps going up, the buyer doesn't get bitten by it.
Airbnb knows which parts of the financing bundle make sense for long term value and which can be most profitably leveraged when the unit is used as an Airbnb listing.
If you think of a rental property simply as an asset, you want the kitchen renovated periodically to maximize the market value of the listing. Landlords with 12 month leases, mortgage companies with 30 year mortgages, and most notably real estate brokers with <30 day commissions have no incentive to maximize any of those elements, and have plenty of incentive simply to maximize the amount financed.
Airbnb's interests align perfectly with home buyers on this, in a way that the incumbents' do not.
If this takes off at scale it will reduce profits for realtors, builders, developers, and interior decorators/furniture sellers. It's a pretty amazing opportunity that uniquely maximizes the value of Airbnb's data. Wow.
[+] [-] pingec|7 years ago|reply
[+] [-] dazc|7 years ago|reply
[+] [-] cbhl|7 years ago|reply
[+] [-] setr|7 years ago|reply
In a hundred years, architects/urban planners will easily point to this decade as the age of... something (particularly because with any change in societal values will come changes elsewhere; if this sticks, we’ll inevitably start seeing changes in house design and city planning to support it)
[+] [-] sethbannon|7 years ago|reply
https://www.cover.build
[+] [-] blcArmadillo|7 years ago|reply
From Cover's FAQ page (https://www.cover.build/faq):
Seems expensive to me. Isn't part of the promise of prefab lower costs?[+] [-] harmmonica|7 years ago|reply
“Order today and have one permitted, built and ready to move into or lease in 6 months” sounds great. Even better if somehow an agreement with the city to expedite Cover’s builds could cut that timeframe in half because guessing the fabrication of the structure itself is very fast relative to the entitlements. Hopefully they’ve figured out a way to streamline with the city.
[+] [-] yellowapple|7 years ago|reply
So... with severe delays and rising costs?
[+] [-] mikeryan|7 years ago|reply
https://www.berkeleyside.com/2017/03/20/new-laws-make-even-e...
[+] [-] yonran|7 years ago|reply
[1]: https://www.codepublishing.com/CA/Berkeley/html/Berkeley23C/...
[2]: http://library.amlegal.com/nxt/gateway.dll/California/planni...
[+] [-] organsnyder|7 years ago|reply
We're actually in the process of building one right now (detached garage with ADU above), and we had to go through the Special Land Use process, which entailed paying a $2000 fee and presenting at a Planning Commission meeting. Most of the other items on the agenda were for things like a nonprofit building office space in a residential neighborhood, a large proposed housing development, and the like. Our little $185k project required the same paperwork and fee as those multi-million dollar endeavors.
IMHO, ADUs have a ton of upsides for communities with few downsides: they increase density with minimal impact to the character of the neighborhood (while we demolished a 80-year-old garage, our 102-year-old house is being left alone), enable small-scale upper-middle-class landlords, and activate underutilized space (such as replacing old functionally obsolete detached garages).
I wonder if there's a market for investors to fund ADU projects, similar to how Solar City and the like sell PV installations: the investor pays for the construction of an ADU, under the condition that they are entitled (via a deed rider) to the majority of rental earnings until the loan is paid off. This would be more complicated (and probably more risky) than the PV business—with PV you don't have to worry about vacancies, managing tenants, and the like—but I think it could work in certain markets, as long as enlightened municipalities remove unnecessary roadblocks.
[+] [-] vthallam|7 years ago|reply
Overall, Airbnb experience is not the same. The prices are equivalent or in certain cases more than what Hotels charge. And in most cases, you don't get the same kind of privacy/facilities that hotels provide. I stopped even looking for Airbnb unless it's a really nice place which offers some kind of experience which hotels doesn't.
[+] [-] mrgordon|7 years ago|reply
You conveniently ignore the huge number of cases where its cheaper than a hotel (especially a suite for a family) and the fact that it contains a kitchen and many other time/money saving amenities
[+] [-] wdewind|7 years ago|reply
This doesn't even begin to address the legalities of subleasing, the negative real estate market effects for residents, etc. all of which AirBnB chooses to paper over with ads about how they are helping poor people get additional sources of income.
We should be careful trusting them in having a significant role in our real estate system. As a company they behave irrationally and their values, outside of growth at all costs, are shallow, and as a country real estate provides a huge amount of our economic backbone. We're all still really mad at the bankers about the last economic recession, do we want to blame the next one on the tech companies?
AirBnB: fix your existing marketplace and show that you can run a proper, legal business before expanding.
[+] [-] mullingitover|7 years ago|reply
I could do without the economy depending on real estate being a good investment.
[+] [-] ryanwaggoner|7 years ago|reply
Complain to who, and for what purpose?
If your neighbor is breaking the law or violating the terms of their lease, complain to the city or to the property owner. Why are you dragging this platform into it?
I don't really want to live in a world where anyone on the internet can destroy my income via anonymous complaint. That seems really ripe for abuse.
[+] [-] gowld|7 years ago|reply
[+] [-] ryanwaggoner|7 years ago|reply
[+] [-] djsumdog|7 years ago|reply
Sears sold kit homes at the turn of the century (which arrived in train box cars and took 3 ~ 6 months to assemble), some which are still around today. I'd rather have something like that, which people can put together, without AirBNB doing a Google/Facebook style collection operation (I'm pretty sure they'll collect data they can sell to reduce the costs and gain a long tail profit).
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