0:00
What’s up guys in today’s video, I’m going to be reacting to a video from another YouTuber by the name of Leeja Miller. I saw this video come from my feed and I started watching it and figured, hey, I really actually want to do a reaction video share my thoughts with the with my audience here. It’s a video from her it’s a rant on why mass ownership of rental property shouldn’t be illegal. So I’ve only watched a couple minutes of the video, this is my first time actually watching it all the way through. And I just want to share my thoughts on this because she brings up some different points about Airbnb and short term rentals and the impact that it has on housing costs. And I just want to share my thoughts on this video as well is the first video I’ve seen of Leeja Miller’s. And it’s my first time watching this one through. So let’s go ahead and watch it together and see what we think.

0:46
So I’m not sure if you’ve noticed, but the housing shortage in the United States is worse than it’s ever been. We’re about 3 million homes short of the demand from home buyers. And this is due in part to COVID supply chain issues. I know I’ve personally had contractors come into my home to give me estimates on work here that were eye watering. And they say that supply costs have increased by like 30% Since the start of COVID, not to mention the delays and getting the actual supplies once you order them. The lack of housing supply is also due in part to a slowdown of building after the 2008 recession, workers found other jobs outside of construction during that time and then never came back to the industry. And Millennials the largest generation started buying houses since then, especially with unemployment as low as it is right now there’s a huge demand for construction workers and they just can’t keep up with building houses at the pace necessary to fill demand. Another problem overly restrictive zoning laws throughout the country, which don’t allow you to buy a piece of land and build, for example, multiple townhouses on the land and divide it up, you have to build one house with a big giant yard. So the market needs

1:51
Yeah, and this is honestly like in a lot of metro areas, especially Toronto, this is a huge, huge issue is that it’s just prohibitively expensive for builders to build, right? It’s just in order to build a new construction or to take a an existing apartment and build up and make it bigger and add more housing the supply, it’s just prohibitively expensive because of all the bureaucratic red tape around it. And so that more than anything in a lot of cities, is what’s holding back supply from being built. And then that ends up driving up costs, not to mention other issues like the blind bidding process in real estate, there’s all kinds of issues with this system, which is I think, I do like that Leeja is is obviously like encompassing a fair number of these different issues. Because the the ultimate thing that I think a lot of people fail to realise is that it is a multi pronged issue is there’s no one size fits all solution, there’s no one solution, that’s going to make everything better. And it’s not to say that we should just do away with any one element, we shouldn’t just get rid of all zoning to solve the issue anymore, that we should get rid of all short term rentals, or mass ownership of rental property, which I’m sure we’re gonna get to more in the in the video. It’s not about doing away with it. It’s about balancing those different things. But anyway, let’s let’s carry on and see what else he has to say.

3:10
So the market needs smaller homes that first time homebuyers can actually afford but regulations get in the way of that. And then there’s the private equity firms buying up massive amounts of apartments and single family homes cutting costs and upping rents and then selling them at a profit not to mention the smaller house flippers who buy fixer uppers flip them by purchasing shoddy materials and cutting major corners that the new owners will only discover after they purchased the homes. Believe me, I’ve seen the tiktoks basically housing is a playground.

3:37
And again, like I think it’s important to realise as well that like flippers are really great when they do a great job and not all flippers do a bad job and do shoddy work, like we is portraying in this video. And I don’t know that she was necessarily saying that all flippers are bad. But I do think it’s an important distinction to make that yeah, sure there are plumbers out there that do shoddy work. But that doesn’t mean that we should just do away with all plumbers, there are some flippers that build beautiful homes and take rundown eyesores in a neighbourhood and beautify them and that appreciates property values and the whole neighbourhood helps everyone out and makes the neighbourhood a lot nicer. And there are others that just cut corners and do shoddy work so that they can make a quick buck. So there’s good and bad in that bucket as well.

4:17
Specifically Airbnb full disclosure, I have an Airbnb listing the house that I purchased in 2021. This very one is a duplex, I bought it with the intention of renting half of it to help pay for my mortgage. Frankly, the only way I was able to afford this home was if I rent it out half of it to pay for half my mortgage. And in fact, it made more economic sense for me to do it this way. Because if you have some rental income coming in to cover half the mortgage, you’re probably paying less money for a larger house than you would be if you bought a single family home like I took on a greater risk because the overall house cost me more so I needed to take out a bigger mortgage but the reward is that my mortgage is smaller than it would be if I had purchased a single family home because half of its being paid by rental income. Does that make sense?

4:57
Of course that makes sense because yeah, you’re sure you’re by Buying a bigger place but you’re also subsidising much with rent but it’s also like your yeah with rental income with like short term rental income, but you’re also like you’re doing work it’s not like you can just do that and now it’s on autopilot like there’s still work involved with getting it set up and like so there’s risk involved and it’s that’s capitalism like you take risk and do work and get rewarded for it. So you know, that’s a lot of people do that how talking buy a duplex put it up on short term rental? Yeah, like I like that she’s actually taught speaking from experience as well not just speaking from you know, from the outside in the grandstands.

5:33
Okay, so my clothes are not with individual Airbnb rental owners were often renting out a portion of the home or one additional property to help make ends meet and create generational wealth. God bless. Okay, my problem is these investors who pride themselves on owning dozens, sometimes hundreds of rental units and listing them all on Airbnb and there’s a lot of them get this hot stat one quarter of the hosts on the platform run two thirds of its listings, make that math math, okay, search Airbnb on YouTube and you’re gonna find 100 Different people usually men who all look the same I’m telling you how to increase your Airbnb rental portfolio sometimes without even owning any property at all. And here’s my issue okay. The consequence of this mass ownership just from an anecdotal user experience is that the nature of renting on Airbnb has changed I think for the worse my friend.

6:23
I mean, I gotta I gotta agree with a part of this point. But I also disagree with the larger point here like I agree that the nature of hosting on Airbnb and of renting on Airbnb has changed like it used to be back in the day that you were literally staying in someone’s home. It was like very, very different experience than what it is today. I remember when I first stayed at an Airbnb, I was literally staying on like a farm stay with someone it was a cool experience, but a very different experience from what it is today with a lot there’s a lot less hospitality involved today. It feel it used to feel like you were going and staying with a family member or friend and now it doesn’t. And so I definitely agree with that because Airbnb and short term rentals, the entire industry has evolved massively, just like any industry would. But I just don’t see that as being a bad thing, right like there. There’s a huge amount more opportunity now than there ever has been for Airbnb and short term rental investing, hosting what have you. So I agree that the nature of it has changed as you would expect it to as an industry matures. But I just don’t agree that that’s a bad thing.

7:31
Plus experiences with Airbnb. We’re on a road trip that I took so low back in 2017. I stayed in people’s homes, like an extra rooms that they had, and I met some of the loveliest people, and I saved a tonne of money over having stayed in hotels and made some wonderful memories along the way. For example, I stayed in Virginia with a woman named Henry who rented out one bedroom in her house and then spent the rest of her time foraging for mushrooms for local restaurants. And we just hung out and had a bonfire in our backyard, she had a lovely dog. It was a beautiful experience that I still think about fondly now the mass owners of Airbnb and many people who stay in Airbnb is treat this the same as a hotel business and sometimes worse, based on the Airbnb horror stories I’ve seen on tick tock of like really disgusting spaces. Yeah,

8:17
but I mean, there’s also like really disgusting motels to there’s just like good and bad operators just like any other industry. Yeah. So I just, I don’t necessarily agree that this is the big the big issue. And the reality is like, if you wanted that experience, you would just find that if you want the experience of staying with Henry again, you could just go stay with Henry again, like there is that option, still, that part of Airbnb still does exist, you can still go and find people like Henry, and stay with them if you want that experience. But the reality is, not everyone wants that experience. And not everyone wants that experience all the time, which is why Airbnb became popular the way it did, people voted with their dollars on what they actually wanted. So that’s why again, I just don’t see it as being a bad thing because people are getting more of what people want. As part of that, like they’re voting with their dollars, they’re literally spending dollars on staying at you know, a place that is a whole home so that they can have privacy, they can have a cool experience a nice place and not staying with Henry because that’s has a time and a place for something like that. And I’ve also had incredible experiences when I’m just staying at someone’s home that they’re not even there. It’s a rental property. It’s an investor and I’ve had incredible experiences being able to rent out a whole home with a bunch of friends and I just never could have done that with a hotel. So again, I just don’t see the the the issue or the negative side of this,

9:38
because it’s no longer someone sharing their home with you. It’s some random person who doesn’t even live in the community and owns 100 other units cutting corners wherever possible to make a quick buck.

9:48
Definitely not a blanket statement that applies. Just like anything there are people that do cut corners and there are shoddy Airbnb hosts and Airbnb has a rating system as well. Like you don’t have to book them His places. And generally those places do get taken off the platform quite quickly, because hosts give reviews for those properties. And if the reviews are negative, the listing gets taken down. So I think that that blanket statement is just wildly inaccurate.

10:15
Because truly buying property and then renting it on Airbnb is like the closest thing to a get rich quick scheme that exists and no one’s doing much to stop it. But that’s

10:24
why I yeah, I just could not possibly disagree more with that statement. What is get rich quick about buying one of the most tried and true assets in all of history, real estate, and using it to its highest and best purpose, leveraging and so that you don’t have to have all the headache of traditional long term rentals and get more cashflow. How is that get rich quick, you’re adding value to society by giving people a place to stay like the market wants that they’re willing to pay for that? What is wrong with giving the market what they want. The alternative is like if I wanted to go and stay at a cottage with eight people, 10 people like my friends, my family, what am I going to do book a hotel, like I can’t do that I can’t get that experience elsewhere. And so like this has always been a thing. There’s always been vacation homes long before Airbnb that just became more popular and more widely accessible to people because of the success of a platform like Airbnb. And I see that as an incredibly good thing for both the guests staying at great properties. And for the investors buying properties and making them great, making those stays exceptional because ultimately the cool thing is to as an investor sure, again, there are short sighted and bad investors out there that do have shoddy places, but the reality is that doesn’t get rewarded economically long term. If you want to succeed with short term rental investing long term you need to have really great places that people want to stay at and not only want to stay up but that they leave really good reviews and stay again and again and again. And so anyone that’s actually successful at investing real estate is actually offering really great places to stay.

12:00
This also means that the people who rent on Airbnb sometimes also treat it like a hotel service in my experience with absolutely no respect or understanding that they are staying in someone’s home like even if it’s a duplex it’s still my home okay not to mention the fact that

12:15
it’s it’s not like I think that’s a really bad attitude to have about hospitality like you’re it’s my home is your home me Casa su casa like you want people to treat it like their home and sure again, there are bad guests who don’t treat it like it’s their home but being territorial over a place that you’re putting up as a short term rental and like welcoming people in because you imagine inviting guests over to stay at your home and going well this is my home and I want you to remember this is my home not yours like why are you being territorial about it? If you don’t want people staying there, then just don’t put it on Airbnb don’t invite people over.

12:52
Maps, Airbnb ownership and rentals are decimating the rental market and making the availability on long term rentals dwindling, causing prices to surge because of the demand.

13:02
Yeah, there’s actually been a number of studies that have shown that I forget what it is something like an extra 10,000 units or something ridiculous in a city leads to like a 1.8% increase in housing costs. The reality is, it just isn’t that big of an issue. It’s not that big of an impact that it has on the supply on the cost of housing in a given market. Yeah, this argument has just been proven to be like to have some legs to I’m not saying it makes no impact. But the impact is so much more minimal than what people make it out to be like oh, wow, yeah. $800 36% increase like yeah, just crazy. And now

13:43
entire neighbourhoods are lost to short term rentals and analysis conducted by the Economic Policy Institute, which is a nonprofit, nonpartisan American Think Tank found that the economic costs of Airbnb likely outweigh the benefits, saying while the introduction and expansion of air b&b into cities around the world carries large potential economic benefits and costs, the costs to renters and local jurisdictions likely exceed the benefits to travellers and property owners.

14:08
Army I could not imagine making a more vague statement. Like it the cost to renters in local jurisdictions likely exceed the benefits of travellers and property owners. How do you quite like how do you even begin to backup a statement like that

14:24
property owners? This is known as the Airbnb effect, which is very similar to gentrification, and that it slowly increases the value of an area to the detriment of the local residents were then pushed out due to financial constraints. A recent study in the US found that a 1% increase in Airbnb.

14:39
Yeah, there we go. Yeah. So that’s what I was saying a 10% increase leads to what would that be a 10x? So it’d be 0.18. So a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026 increase in house prices. Like, come on, you’re telling me that that is the difference maker for short term for housing affordability. That’s crazy. Imagine if you were paying like $10,000. What let’s just do the math here quickly on that, if you were paying $10,000 per month in rent, that means that a 1% increase in Airbnb listings leads to a 0.018% increase. So let me make sure I get this right. That would be a $1.80 cent increase in the price of your of your rent on a $10,000 rental a month. That means you’re like, it’s just unfathomable how small of a difference that makes, like, even 100x that like if you multiply that by 100, it means that $10,000 A month listing that you’re renting is now and that that’s like the highest right? Obviously, most people are not spending $10,000 a month on their rental. But if they were it would be $180 increase if the number of short term rentals increased by 100%. Literally, if if the number of rentals doubled in a market, right like that is such an insignificant increase to the price of affordable housing for rentals. And again, so still such a small increase in housing prices. If you look at the impact that it makes it we have a shortage of supply because of zoning regulations restrictions, like that definitely makes a much, much bigger impact. So yeah, this is actually I’m surprised that she included this study because to me, it proves the opposite point from what she’s trying to make.

16:37
A stainless leads to a point 01 8% increase in rents, and at point zero to 6% increase in house prices. That doesn’t sound like a lot but a lot of communities are experiencing growth, much more than 1% of Airbnb listing Airbnb lists.

16:51
But again, even if they experienced a 100% increase, it still is insignificant I want to a doubling of the of the number of listings in an area increases, increases rents by 1.8%. That is insane. Like it’s so insignificant and it truly just is incredibly insignificant. Even if the number of listings in an area doubles,

17:18
stays, you know what I mean. And now that the housing and rental market is out of control, and big cities thanks in part to Airbnb property owners, Airbnb owners are now seeking out more remote destinations are smaller towns like Sedona, Arizona, for example, and doing the same thing now that people all work remotely and can move wherever they want. Sedona actually banned short term rentals way back in 1995. But then in 2017, and Arizona state law, SB 1350, blocked those curves. Legislators had pitched the law as an embrace of the new sharing economy and a boon for Arizonans looking into making some extra money by renting out their spare bedrooms, which is quaint. But when the law passed, of course, investors flooded the market, people in Sedona are now living out of their cars or camping on the outskirts of town and not in the cute van life way. Okay, but because they have no other choice.

18:06
I mean, come on, give me a break. Like, give me an actual break. If we’re talking about like a, like, literally, this wood for the average person who’s paying what maybe like in Sedona less than $2,000 a month in rent. If the number of listings grows by 100 fold, then we’re talking about or by 100%. Like if it just if it doubles, right? We’re talking about what would that be, it’d be about a $36 a month increase in their rent for someone paying $2,000 A month before, like, Give me a break. It’s not $36 a month that is causing these people to the few people like give me the stats on how many people had to leave their home and sleep in their cars. And then to tell me that that’s why that it’s because of the 36 extra dollars they had to pay in rent every month because Airbnb came metallic, like, get out of here that is insane.

19:03
And it’s damaging the national forests that surround Sedona, like, do we see the wide ranging consequences?

19:09
I mean, more people, more tourism going to an area is what’s causing that and like, people enjoying the area, frankly is like, you know, again, I think that I just don’t see how you can get mad at people for wanting to go to a beautiful place. I think that if they’re not protecting the area if they don’t have like, you know, they don’t have the proper protections in place so that people respect the area. That’s one thing but you can’t blame the hotel they’re staying at for the people not taking care of nature around the area. So you can’t blame Airbnb for that issue like that’s, you know, not cause and effect there.

19:43
When you prioritise tourism over all else, more tourism means more service industry workers are needed, but those service workers can’t afford the housing because of the increase in tourism. Like there needs to be a balance. Okay, this is what regulations are for and Sedonas

19:58
This is not a regulation And therefore, I strongly disagree. I think that regulations are for making sure that the bad actors aren’t in aren’t able to make a profit. So the people that are violating fire codes by sleeping like 25 people in their, like five bedroom place, those people are who we need regulations against. But honestly, we don’t even because they get really bad reviews. And it’s a self regulating industry for the most part. So yeah, I agree that regulation has its place. But saying that we should just do away with tourism or severely limited to hotels like that’s crazy. Why is it better than a hotel A gets to make all the money and gets to have all the profit. And then people get a worse experience when they stay there? Because they only have more limited options. Like, we’re just going like, that just doesn’t make any sense. Why do we want to restrict people’s options and concentrate the wealth more heavily, and then restrict overall tourism because there just frankly, isn’t enough hotel space for the people that were there. Like, this is insane. This makes no sense to me.

20:57
16% of Airbnb rentals are owned by five companies and the city has become the target of professional Airbnb has grown. And that’s just

21:05
Okay, okay, just wait a minute. The 16% of all active Airbnb rentals are held by five property management companies. That means there are five property management companies that are managing those properties. They’re not owned all by the same company, they’re managed by company. Again, that just makes it better it makes like the property management companies tend to do a better job because they have boots on the ground. They have people there, they actually know what they’re doing. Like, that’s not a bad thing. And that’s a pretty skewed way of presenting that information to say that 16% are owned or held held by just five property management companies. Yeah, the property management company manages the property, they don’t own it.

21:47
Five companies and the city has become the target of professional Airbnb hosts. And that’s just one example of what’s happening throughout the country. And the more remote that these investors go, the more damage is being done to the local residents and local environment that was not built for the influx of new people who don’t give a shit about what’s going on locally. They just want to have their bachelor party in Joshua Tree Goddamnit Okay, so Airbnb is taking the share of long term rental availability of business leading to greater competition and therefore increase rent prices are the few remaining long term rentals and many

22:23
calm on the few remaining long term rentals like play me the world’s smallest violin here. Are you kidding me? We’re not talking about like 95% of housing is now going into short term rental and there’s like, like you’re climbing against one another and like, clamouring at the available housing, like there’s not a few remaining housing options available. Like come on the language that we’re using here is is a little bit of an exaggeration of what’s really happening. The increase in housing costs we went over it, it’s incredibly insignificant.

23:04
And many of the people amassing short term rental properties are smaller or individual investors but then you’ve also got the big guns who come in extra I’m talking to institutional investors and especially private equity firms so here’s how private equity firms work lion No, so they are firms that manage pooled investment money raised from fund investors are not generally open to small investors instead, they take investments from company

23:29
Alright, so she’s gonna dive into into institutional investors and I’m sure I’m gonna I’m gonna maybe agree and maybe disagree with some points there. If you want me to go into that into another video let me know in the comment section down below. But I think these we’ve we’ve pretty well wrapped up her thoughts on the Airbnb effect and the Airbnb impact on this and I honestly, there’s some fundamental pieces that I may be kind of sort of agree with a little bit but for the most part, I think that she is completely out to lunch. And I think that just the numbers the staff that she’s actually following the proof that she’s pulling for this actually proves the opposite point. So yeah, I couldn’t disagree with this a whole lot more than I do. But I want to know your thoughts too. Let me know in the comment section down below if you liked this video. If you enjoy watching this, then give it a like button make sure you press the subscribe button to stay up to date. We post two new videos every single week helping you to understand and navigate and succeed with short term rentals. I’m one of those white guys that all looks the same apparently who just talks about how to actually succeed financially and invest successfully in real estate so that you can build well apparently that’s a crime. So you know if you liked this video, subscribe to the channel. Like it let me know in the comment section what your thoughts are. I hope you did enjoy the video. Hope you got some value from it. I’ll see you in the next one.