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Discussion – 


Discussion – 


EP190: This Week in the World of Airbnb

Take a walk down the yellow brick road of Airbnb news this week for stories of brains, courage and heart, and learn about the brilliant idea behind a new startup in the ecosystem, the resolve behind the mandatory host registration in Paris, and the love story of a host in Philadelphia—who fell for one of her Airbnb guests!

Jasper is discussing these stories and your questions with Nicole Prentice Williams, VP of Strategic Partnerships at Hostfully. They get into the details of Loftium, the new Seattle startup that provides aspiring home buyers with up to $50K for a down payment, pending they agree to list a spare room on Airbnb and share the profits. Jasper and Nicole also cover the latest developments in the affordable housing crisis as Paris attempts to enforce its 120-day rule, and an Airbnb romance resulting from a mutual attraction between an American host and her European guest.

Last but not least, Jasper and Nicole answer listener questions around Airbnb deductions and the pros and cons of back-to-back bookings. Listen in for their advice about who to contact with tax questions and why it is more lucrative to hire a cleaning service and fill your Airbnb calendar.

Topics Covered

Article #1: A Down Payment with a Catch: You Must Be an Airbnb Host

  • Startup founded by 29-year-old Harvard grad, Yifan Zhang
  • Bought Seattle townhouse, rented spare bedroom on Airbnb
  • Realized income covered mortgage
  • Founded Loftium to help home buyers with down payment (up to $50K)
  • Must be willing to list spare bedroom on Airbnb for 12-36 months
  • Loftium collects portion of Airbnb profits
  • Strict guidelines (only eight ‘freebie’ days/year)
  • Partnership with mortgage lender Fannie Mae
  • Pilot program in Seattle with intention to expand
  • Clearbanc provides similar service for seasoned hosts with proven success

Article #2: You’ll Soon Need to Register Before Renting Out Your Paris Home on Airbnb, Le Figaro Reports

  • Mandatory registration opens October 2nd
  • Aimed at curbing city housing shortage
  • Rules limit homeowners to rentals of 120 days/year
  • Hosts have two months to comply
  • Similar policies in San Francisco
  • May be reaction to UN global housing study
  • Enforcement difficult with limited resources

Article #3: Experience: I Fell in Love Through Airbnb

  • Reluctant host accepted same-day booking
  • Drawn to guest right away
  • Spent time together, mutual attraction
  • Pursuing long-distance relationship
  • Brings up issues of professionalism, awkwardness

Q1: Can I only list my home on Airbnb, or do I need to actually have rentals before the end of the year to claim deductions for this year? Can I claim deductions next year for improvements and spending that occurred this year?

Q2: Does having a day before and after each booking really hurt me? I like to be able to clean the space myself.

  • Will miss out on bookings
  • Consider hiring cleaning service
  • Cost 10-20% of potential revenue

Resources Mentioned

Article #1: https://www.nytimes.com/2017/09/18/your-money/mortgages/loftium-airbnb-down-payment.html


Fannie Mae


Article #2: bloomberg.com/news/articles/2017-09-16/airbnb-paris-rental-agents-to-register-from-oct-2-figaro-says

UN Study: Global Housing Crisis

Article #3: theguardian.com/lifeandstyle/2017/sep/15/experience-i-fell-in-love-through-airbnb

Shared Economy CPA

Airbnb News Facebook Group


Connect with Jasper

Email: jasper@getpaidforyourpad.com

Twitter: @GetPaidForUrPad

Instagram: @GetPaidForYourPad 

Facebook: www.facebook.com/getpaidforyourpad

This episode is sponsored by Aviva IQ. Aviva IQ automates messages to your Airbnb guests. It's also free!

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Complete Transcript for Get Paid for Your Pad Episode 190

Jasper: Welcome to Get Paid for Your Pad, a definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing as well as real life experiences from Airbnb hosts all over the world. Welcome.

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Jasper: Welcome everybody, another episode of Get Paid for Your Pad. Today I’m co-hosting with Nichole Williams, the VP of strategic partnerships of Hostfully. Nicole, Welcome.

Nicole Williams: Hey Jasper, thanks so much for having me back. It’s always good to talk to you.

Jasper: Is it early for you in San Francisco?

Nicole: I’m in LA, and no, it’s 9:30, I’m like a quarter of the way through my day.

Jasper: Already a quarter?

Nicole: It was a very early start.

Jasper: A very early start indeed. Awesome. Let’s talk about what’s going on in the world of Airbnb. I wanted to start with a new start-up. I think they just launched, it’s a start-up, the founder is a 29-year-old entrepreneur. She bought a town-house in Seattle and figured she could rent out the spare room on Airbnb to get extra income. She didn’t expect to pay for her mortgage, so that gave her the idea that if you’re going to buy a house and you’re looking to rent out a room, that’s going to help you pay the mortgage. She figured there’d be a business model behind this, her entrepreneurial instincts kicked in. Why not give people money to buy a house and collect some of their Airbnb income as well? Pretty smart idea.

Nicole:  Let’s give a little more background in that this is a Harvard University Graduate. This is not her first start-up, I think it’s about her third. Great idea, I loved it. We chatted about it in Hostfully as well. It helps a lot of people who may not have the option to buy that first property.

Jasper: What a great security blanket for the lender. I’m sure there’s a lot of people who want to buy a house, but after what happened in 2008 with the housing market. I think banks have gotten stricter on giving people mortgages. So, for those who don’t have a down payment of 20-30,000 dollars. They can go get 50,000 for a conventional Fanny May Mortgage. Have you heard of them?

Nicole: yes, absolutely. A long-time institution. You need to commit to renting an extra bedroom for 1-2 years. There are only 8 days where you can have the whole property to yourself.

Jasper: I think they’re starting in Seattle, but they’ll expand. They start with this bank, I think they’re called Umpqua, have you heard of them?

Nicole: No, I haven’t.

Jasper: You have to put 1 percent down toward the down payment. Loftium will then estimate income potential of renting the spare bedroom and then offer the lump sum pre-payment toward the remaining down payment. In exchange, you have to have a bedroom on Airbnb for a fixed period of time ranging from 12-36 months. Depending on the situation, you receive 10-14 percent of the income each month, depending on the money you borrow and on the rate, you charge for your room. I think it’s pretty cool. It will help a lot of people become a homeowner.

Nicole: It sounds great in theory. They’re going to see how demand grows. The pilot with Fanny is just in Seattle. If people are following their contracts, renting the 357 days out of the year and paying their mortgages on time. You have to make sure that part goes well before you start expanding.

Jasper: Mhm, absolutely. In the New York Times, they’ve created nice overview as an example. Imagine Loftium provides 50,000 dollars. You then buy a home. The rental fee is 150, you resume a 75 percent occupancy, meaning the expected is 120,000 dollars. The homeowner gets to keep 36,000, Loftium shares 50,000, the repayment, and they make about 34,000. The profit is being split

Nicole:  to me, the nightly rental fee seems $150, considering you’re just renting a room in the apartment, I don’t know if that’s realistic or not.

Jasper: If you put $50,000 down, I don’t know how much you have to put down in the US, 10-20 percent?

Nicole: yeah, 20 percent typically.  That’s the standard

Jasper: So, if it’s 20 percent and you could buy a 250,000 home with the 50,000-down payment, so yeah, it definitely seems like a lot.

Nicole: It seems high

Jasper: Yeah, I think so too. For 250, I don’t know the prices is Seattle, the places you can charge 250 a night, that’s downtown New York and Santa Monica. I think this is a little optimistic.

Nicole: I think if you have the budget to pay 150 a night, why not pay a little more to have your own place, or pay less to have your own place?

Jasper: I think the corporation Fanny is important and it states that it’s not going to expand. They just launched, it’s a trial. I looked at their website and started chatting, you know they have those chat boxes, I chatted with someone from customer support and I mentioned podcast. The co-founder came on the chat, so, I’m talking to her tomorrow to interview her to find out the details about how everything works. On Monday, that will be published. I’ll ask her some questions. I wonder what happens when they give you the money and buy you the house, what if for whatever reason you stop renting? What if you’re pregnant and have a kid and don’t want to rent? What if there’s legal reasons you have to stop renting?

Nicole: Neighbors start complaining?

Jasper: Yeah, exactly. What happens if you haven’t paid back what they borrow plus some extra they want to make, they’d be losing out. I’m interested to know how that happens. I’m sure they have conditions. You have to pay everything back, how are they going to go after people to get the money back? They probably make a pretty good margin, so hopefully they can use profits to cover the losses. But we’ll find out. I’ll ask.

Nicole:  Great, can’t wait to hear that one.

Jasper: It’s actually the second start-up in this space. There’s a startup called Clear Bank and they do a similar thing. They’re trying to help entrepreneurs grow their businesses. Clear Bank with a C, they’re ad Canadian company, I’ve spoken to them as well. They can give you money, but only provide money for people who have already showed they’re successful on Airbnb. If you’re a seasoned host, and you have a lot of reviews, they can provide you with up to 100,000 dollars. They take a percentage of the profits for a certain amount of time.

Nicole: It’s for renovations, right? Not for actually purchasing properties? That was my understanding, but they could have changed that.

Jasper: I think that was initially their intention, but checking out their website right now, it says, what you can do with a cash advance, new furniture, new property and renovation and there’s 2 testimonials. One bought a bunch of furniture. One bought a new property. So, yeah. Pretty cool. Let’s see, there’s some news regarding regulations in Paris.

Nicole: Yeah, I thought that was interesting. You have to register now with the city if you’re a host with Airbnb, because they’re monitoring their corporate rentals, which many cities do right now have a housing crisis. They only let short-term rentals in 180 days of the year. It’s about working around those four months around hospitality and guidebooks and stuff.

Jasper: Do you have to register as well if you rent out just a room?

Nicole:  I don’t know if that would affect the housing crises your talking about? Perhaps it would, people looking for roommates might be affected. That’s a good question

Jasper: It states that it’s for homes, that authorities would make it mandatory for all homes. I guess it’s for entire apartments, that makes sense because the 120-day rule is just for entire places, not just for rooms.

Nicole:  It says for owners, not for someone renting.

Jasper: The registration website opens on Oct. 2 and they have two months to comply.

Nicole: I believe so. I’m not sure what the compliance rate is. I don’t know how you make people comply. The UN actually released a study this year about a global housing crisis. They kind of demanded the government needs to hold the housing market accountable. I’m not sure if this comes on the tails of that? The UN has basically called n these governments to avoid a global crisis and act. It states a lot of real estate is about investment than about housing, which is a basic human necessity. It was an interesting study released, you see what Paris and San Francisco has done.

Jasper: It’s kind of a trend, right? The question is what they’re going to do in terms of enforcement. You can create regulations, but if you don’t enforce it, you’re sort of implicitly allowing it. Right?

Nicole: Right, exactly. I mean, they don’t have the resources to enforce it but it’s like, in New York, where the fines can be exorbitant, they want to make an example and they don’t have the manpower to go around cracking down on people

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Jasper: There’s another article, an Airbnb love story. Isn’t that nice?

Nicole:  That was a cute story, right? A woman who found love sharing her room on Airbnb. It was really sweet, don’t you think?

Jasper: It’s very cute

Nicole: It reminds me of that Sleepless in Seattle when people were finding each other online, decades ago, you were a baby at the time, where people were falling in love on Airbnb, through Airbnb.

Jasper: Exactly, this host was hesitant in the beginning to accept guests. She never accepted same day guests, but this particular man, his picture looked dorky, so she thought he was harmless. She made an exception, which shows that if you give people the benefit of the doubt sometimes, beautiful things can happen. He let himself into the house and when she found him when she got home he was on the couch with both of her cats. So, it showed that he can, she’s a cat lover, when she saw him on the couch with the cats, that was probably a plus. He asked her if she liked crepes, I think he ended up making her crepes as well, and having a long conversation. An interesting part was, she felt very attracted to this man, and he probably thought I don’t know if it’s appropriate. Then, he came off passive, and finally she gave him some motivation, she said, “I really want to kiss you, but I don’t want to make you uncomfortable.” And he said, I want to kiss you too. I imagine they kissed. It doesn’t state. That’s an interesting love story. He ended up going back to Europe and they had a long-distance relationship. But it brings up an interesting point. What if you’re an Airbnb host and you have a guest that you’re attracted to. Would you as a host hook up with that person, or would you say no, this is a business relationship don’t combine those two?

Nicole: We really want to hear from the get paid for your pad followers. I think it’s totally awkward and I don’t think it’s a very common thing. It’s a surprising ending for them, I think.

Jasper: I think it depends on if you’re sharing that space with them. I’ve had attractive women stay in my apartment, but if I meet them, it’s only for check-in. I’ve spent some time with a few guests, go for coffee or maybe a drink or something. I would be very hesitant to try and hook up with a guest, just because, you don’t know how that’s going to end, and then it might not be good for business. If you meet someone through Airbnb and you stay in touch, that’s different. From the perspective of a guest, for most of the time I don’t have much interaction with a host. I went to coffee with a girl once.

Nicole: Yeah, ha-ha.

Jasper: I do know that on Couch Surfing, people hook up quite a lot.

Nicole:  Really?

Jasper: I’ve been told. I’ve never used it. I’ve been told people who are lonely and they go on couch surfing and they try to find attractive hosts, it’s accommodation, but it’s an easy way to get to know somebody.

Nicole:  I wouldn’t recommend it.

Jasper: There’s a few questions form listeners we can discuss. There’s some about taxes. Someone asks, “do I only list my home on Airbnb, or do I need to have rentals before the end of the year to claim deductions for this year?  Can I claim deductions for next year that occurred this year?” I’m not so familiar with that. Do you have any thoughts?

Nicole: I would say contact your CPA for sure. I don’t want to give any wrong tax advice.

Jasper: Yeah, me neither. What I will say is, there’s a website, shared economy CPA. It’s run by Derik, someone I know, and I know he has good advice on these matters. He specializes in taxes for Airbnb hosts. What else do we have? Does having a day before and after each booking hurt me? I like to be able to clean myself. There’s a host that doesn’t accept back to back bookings. The question is, is that going to hurt your Airbnb business. From my perspective, obviously you’ll miss out on bookings, the question is, are you okay with giving up that income? How important do you feel it is to clean the apartment yourself. If you can pay someone to clean, you’re still making money. I used to have 5-6 bookings per month, that would be like 5 days out of 30, so like 20 percent. It will probably cost you between 10-20 percent of potential revenue. I wouldn’t want to give that up.

Nicole: I agree. And save yourself the trouble. Hire someone to do it and save yourself the trouble.

Jasper: Well, we agree.

Nicole: Save yourself the hassle.

Jasper: Save time, make more money, who doesn’t want that. All right, we’ve been talking for 25 minutes, it always goes by so fast.

Nicole:  Good topics today.

Jasper: Thank you, thanks for joining Nicole.

Nicole: Thanks for having me. It’s always fun.

Jasper: For all the listeners, don’t miss the episode coming Monday, because I’ll be interviewing the CEO and co-founder of Loftium, so you’ll want to hear all about that of course.

Nicole: Awesome.  Can’t wait to hear that.