Adapting to the New York City Rental Landscape:Transitioning from Airbnb to Year-Round Rentals
If you’re one of the approximately 15,000 Airbnb hosts affected by New York City’s Local Law 18 (the “Airbnb ban”),
you might be reevaluating your real estate rental options. This ban has impacted a diverse range of hosts, including Airbnb entrepreneurs, professional landlords, and homeowners who have relied on Airbnb to supplement their income or support their mortgages – let’s call them “Airbnb OGs.” This article aims to guide Airbnb OGs through the process of transitioning from short-term Airbnb rentals to year-round rentals.
New York City’s Unique Real Estate Landscape:
New York City’s real estate market has long been characterized by its astronomical prices and rapid gentrification. Since 9/11,
Brownstone Brooklyn has undergone significant transformation, becoming a hotspot for property investment. Many homeowners in this area embraced Airbnb as a way to offset their housing costs, even going so far as to purchase homes they couldn’t otherwise afford, confident they could rent part or all of their properties on Airbnb during the summer months while they vacationed elsewhere.
Airbnb OGs, in particular, found solace in the fact that these platforms provided a reliable source of income, effectively helping them manage their housing expenses. Becoming an Airbnb host offered various advantages, including flexibility, virtually guaranteed rent payments, and fewer difficulties, risks, and expenses compared to having year-round tenants.
With the Ban in Effect, Airbnb OGs are Facing an Uncertain Future.
The Challenge of Transitioning:
Now, the rental market seems to be entering a slowdown about a full month earlier than in previous years, catching former Airbnb hosts off guard. Airbnb hosts who expected to easily transition to year-round tenants after a successful summer on Airbnb may be surprised by the lack of interest in their apartments, even when offered at reduced prices. This presents a dilemma for these homeowners.
On one hand, they need to rent their properties to maintain financial stability. On the other hand, they fear the difficulty of evicting tenants or collecting back rent from year-round tenants who may fall behind on rent payments, especially given the City’s strong tenant protections.
An Alternative Solution to Airbnb with Guaranteed Rental Payment:
For those caught in this predicament, there is an alternative – CityFHEPS, HASA, and Section 8 are housing assistance programs run by the city and federal government. These programs can provide substantial financial support, covering most or all of a tenant’s rent. While these programs may sometimes experience payment delays and are not without their flaws, they offer owners the peace of mind that comes with guaranteed rental payments.
In addition to the financial benefits, participating in these programs can fulfill a critical societal need by providing housing to those who require it most. It’s a win-win situation that balances economic viability with social responsibility.
Operating Your Rental Business:
Whether you decide to rent your former Airbnb apartment to voucher tenants or to “cash” tenants, you should also ensure that you approach your rental as a business. Transitioning from short-term rentals to year-round leases means you’ll encounter some operational differences. Here are some important considerations:
- Tenant Communication: Expect increased communication with your tenants compared to the minimal interaction often experienced with Airbnb guests. You’ll need to be responsive to maintenance requests, inquiries, and concerns promptly.
- Maintenance: You may feel pressured to address maintenance issues more quickly than before. To stay organized, consider implementing a system to track maintenance requests, repairs, and the maintenance history of your property.
- Lease Management: Keep track of lease expiration dates and renewal deadlines. Unlike Airbnb, where bookings can be short-term, year-round leases require proper lease management to ensure a steady income stream.
- Rent Collection: Collecting rent electronically is common, but choose a method suitable for business purposes. While some small owners turn to Venmo or Zelle, these options may lack essential features for professional rent collection. Explore an easy and inexpensive way to collect rent via ACH and credit/debit cards, which can also automate late fee assessments when applicable.
Conclusion:
As the New York City rental market undergoes significant changes, homeowners need to adapt to this evolving landscape. It’s essential to start your new full-year rental business off on the right foot, get organized, explore alternative rental options, and establish efficient property management processes. By embracing these changes and considering programs like CityFHEPS, HASA, and Section 8, you can ensure a stable income stream and contribute to meeting the housing needs of your community.
For more information, assistance, or questions regarding navigating the shifting rental market in New York City, don’t hesitate to reach out to us. We’re here to help you find the right path forward in this dynamic real estate environment.
Joshua Nunberg, Esq.
Founder & CEO of Urbanvie.com