Man, it’s like Christmas today at the Anderson household. October 20 aka Annual Financial Update Day!
We gonna order some good food, hope the kids stay in bed, and review some Excel spreadsheets together as all happily married couples do.
Honestly, a day we really look forward to each year. A time to reflect on the progress of the past year, challenges, and goals for the upcoming year. I like doing this at the end of October because there’s also enough time before year end to address anything that needs taken care of – max out the Roth if we forgot, make some charitable contributions, maybe adjust the daily automatic investments, etc.
Our annual update is mostly two items:
Review Personal Financial Statement (PFS) – essentially a net worth statement, often requested by banks
Make some fun goals for the coming year – travel plans, family visits, stretch goals for work or money
You can add more items if you like, but this set up works well for us. A bit of a New Year in October with the setting in of fall weather. So much to enjoy.
Hope you can also celebrate AFU with your partner, or a friend. Cheers!
I live in San Diego and often bike in the local area – Mount Helix, Bayshore Bikeway, Mount Soledad are some frequent rides – but had been wanting to venture a bit further. My friend Dylan and I decided to bike from Santa Barbara back to San Diego to take in part of the California coastline. It was a very fun weekend and I wanted to share some photos and notes from the trip for others interested in biking in Southern California.
We took the Amtrak Pacific Surfliner from San Diego to Santa Barbara leaving San Diego (Old Town) at 4:10 PM on a Friday. It was scheduled for about 6 hours and ended up about 15 minutes longer than that. It cost $44.20 a person and bicycles were included in the cost. The train was pretty full and standing room only in basic class for about half the trip. We ended up sitting in the dining car which was awesome as it had tables and couches facing the ocean. It also had overhead windows so there was a lot of light.
We arrived in Santa Barbara at 10:25 PM and biked about 10 miles South to Carpinteria. Although we would have liked to have a morning in beautiful Santa Barbara the hotel rates were huge and we could get a small start on our estimated 230 mile trip ahead. The ride from Santa Barbara to Carpinteria was really chill – very little traffic and riding on a frontage road along Highway 1.
We stayed overnight in Carpinteria and our next hotel stays were in Torrance and Oceanside. We had considered camping but couldn’t locate solid information on campgrounds that offered hike / bike sites we could bank on. Hopefully we can do that in future at the many state parks along the coastline. It was nice staying in hotels for an evening pool and hot tub, as well as a nice shower and comfortable bed.
Los Angeles Bike Paths – From Santa Monica to Redondo Beach in Los Angeles was awesome. Really wide bike path right on the beach and has recently been doubled in size on the north end. Awesome.
Seal Beach to Newport Beach – another great section of bike paths right on the water. Very low stress and enjoyable. Tons of people walking, biking, etc.
Lots of good coffee and pastries – a must for any morning bike ride. Prospect Coffee in Ventura was really good.
Century Club – I ride a decent amount but had never done 100 miles in a day. Got that done on day one. Nice accomplishment.
Malibu – just really not fun. North of Malibu is low traffic Highway 1 with a wide shoulder / bike lane. Lots of other bikers too which was fun to chat a bit. One group was going from San Francisco to Los Angeles and camping along the way, sounded really fun. When you hit Malibu you go to 5 + lanes and lose the shoulder, plus have a lot of sports cars zooming around. 25 miles or so of gritting teeth and intensity. Not recommended but not a good way around it if you want to stay coastal.
Suggestions and Tips
North to South – we originally planned on going from San Diego to Santa Barbara and train home, but on input from others took the train first and rode South. Good for two main reasons – less headwind typically as you are going South and East, and you are also on the coastal side of the road going South so have a bit better view and more breezes.
Backup gear – as with any longer bike ride having spare tubes, pump, multi-tool, etc. is a must. We had two flats on the trip but not a big deal with supplies in hand.
Early starts – We left about 6:30 AM each morning which was nice, cool weather and also quieter on the roadways. We ended most days about 4 PM so had some time to relax and enjoy a good dinner.
So you want to operate a short-term rental for your vacation home, in-law flat, previous home, or other property? Sites like Airbnb and VRBO have made the idea of second home or investment property a reality for many. These sites make the marketing and management of a property much easier than in the past. However, there are a number of additional tools and considerations to take into account.
Here a few recommendations for getting your short-term rental up and running smoothly.
Open a Checking Account (and potentially Credit Card) – If you are running a rental property, you are operating a business and will need to report the earnings and expenses on your tax return. Open up a checking account at a minimum to make tracking your net income easier. You may also want to open a credit card to earn rewards or cash back, depending on the amount of activity you have.
Check (And Modify As Needed) Your Insurance Policy – You may need to get an additional or different insurance policy for the property. There are a number of insurance providers that offer policies for short-term rentals, I use Foremost. Additionally, you may want to add an umbrella policy or consider setting up an LLC to address liability exposure.
Utilize Additional Tools – I currently use the following add-on tools for my Airbnb listings.
BeyondPricing – This tool adjusts the nightly rate to account for prices in the area, occupancy rate, seasonal factors, etc. There are a number of similar tools but I’ve been happy with BeyondPricing. The company charges 1% of gross for the service but I’ve found that just being able to pick up higher rates for large events like Comic-Con or conventions pays for itself.
Smartbnb – I really like this tool for managing multiple properties and team members. You can set up automated messages for check-in, check-out, etc. You can also set up text reminders for your housekeeper, manager, or other service providers.
Utilize Service Providers – Depending on your situation and goals, it may be well worth it to hire a property manager for your short-term rental, especially if you don’t live in the area. Guests often need in-person assistance for various needs, repairs, or other reasons. You may also want to consider a housekeeper unless you’re typically in town and have a flexible schedule to clean yourself.
Hosting on Airbnb for over a decade has been a great financial help for my family. I hope these suggestions are helpful to you and if you’re looking for more specific advice please contact me and let me know. Cheers!
The City of San Diego continues to discuss options for regulations and rules around short-term rentals on sites like Airbnb. Short-term rentals are rentals for less than a full calendar month and have been the topic of discussion at a number of City Council and committee hearings over the last few years.
I recently received an inquiry from a San Diego resident that would like to rent out one or two bedrooms in the home they live in – sharing a room or home with guests is often referred to as “home-sharing”. Home-sharing is frequently brought up in the short-term rental debate with both sides typically saying there is no issue with this type of activity. (However, home-sharing is the only type of short-term rental I’m aware of that the City of San Diego took to court, and ultimately the judge decided that this type of activity is not allowed under current rules and issued a fine to that host.)
The prospective host in this case was looking to do the right thing and get clarity from the City before hosting on Airbnb. They contacted several City departments regarding how to fill out the right information for the Transient Occupancy Registration Certificate( “TORC”), if a Business Tax Certificate is required, what taxes they need to pay, and if there are other regulations they need to follow for lawfully renting out rooms via platforms such as Airbnb.
On the response to the prospective host, the city was clear and straight-forward in providing the process to register for the TORC, what kind of taxes the host would need to pay, etc. The Transient Occupancy Tax (i.e. hotel tax) is not part of the debate and proposed short-term rental rules – it is already in place and collected (and in the case of Airbnb remitted for all hosts on the platform each month by the platform itself).
However, in regard to other requirements for operating an Airbnb, the prospective host was directed to consult the Development Services Department (in charge of Land Use and Development). Surprisingly, when the host reached out to Development Services they were told that since there are no official regulations or rules around short-term rentals, this kind of activity is currently not allowed in San Diego. That’s when the host reached out to me, as part of my efforts with the Short-Term Rental Alliance of San Diego (STRASD) – seeking clarity the city couldn’t provide and how they should proceed.
The contradiction between the responses from different City departments is confusing but accurate. Yes – you can register and pay the taxes for this sort of activity. No – you can not engage in this type of activity in the first place. This is the current status of short-term rentals in San Diego, at least for home-sharing situations. It still seems that whole-home short-term rentals may be on firmer ground, although the current City Attorney has declared all short-term rentals illegal. [Note: the previous two City Attorneys held a different position, that short-term rentals were not illegal.]
This sort of lack of clarity is harmful to potential hosts like the one highlighted in this post – a San Diego resident seeking to improve their economic position and do so in a straight-forward and compliant manner in the type of short-term rental that is roundly approved of and supported. We need clarity to support residents like this and should encourage this type of widespread entrepreneurial opportunity to give citizens more options and ability to chart their own desired course. Hopefully in the months ahead we will see clarity that gives certainty to current and potential hosts and guests and that supports the opportunity that platforms like Airbnb and others gives to many thousands of San Diegans.
Last month a press conference was held to release a study done on the economic impact of short-term rentals in San Diego for HomeAway / Expedia by Xpera Group. The report follows a similar study commissioned by Airbnb and done by National University in October 2015. Both full reports are included on this post for anyone interested in this issue.
A few highlights from the new study:
Total of $500M of impact in City of San Diego ($300M direct spending, $200 induced and indirect spending)
3,00 jobs in City of San Diego
Transient Occupancy Tax (TOT or “hotel tax”) estimated to be $19M or more in 2017, a 200% increase over 2015 when the TOT from short-term rentals total $9.6M
In 2016, City of San Diego TOT was $202.8M of which $15.6M was from short-term rentals, a 7.7% share.
“Short term lodging guests tend to be much younger than hotel guests and have a higher percentage of females than hotels.”
Short-term guests typically stay longer than hotel guests, “roughly half of short term lodging room nights coming from trips of seven days or longer”
7,436 total short-term lodging listings in City of San Diego, estimated (as of June 2017). 11,530 estimated for San Diego County.
In 2016 San Diego County had 30.4 million visitors, 17.4 million overnight visitors. That would be an average of 47,671 overnight guests per night in the County.
The short-term rental issue continues to be a hot topic in San Diego and a good explainer for the current status can be found here on Voice of San Diego (from Nov 1, 2017). A full City Council hearing is expected to be held on December 12 although a recent hearing was cancelled on short notice in October so we’ll see how the December hearing plays out.
I’ve been using custom online guidebooks from Hostfully for about a year to share recommendations and property information with our guests in San Diego. I really like the platform and functionality, especially the ability to send a PDF, print, or link to the guidebook for easy guest use.
Hostfully recently started a regular series of articles featuring hosts using the platform – the “Hostfully Host Spotlight” and this week they decided to feature our property in North Park and some favorite recommendations in San Diego.
You can check out the profile article at the below link. Cheers!
(If you’re an Airbnb or VRBO host in San Diego and interested in Hostfully please feel free to drop me a line and we can chat.)
New Airbnb Feature Likely To Be A Boon For The Platform
Airbnb has a feature currently only available in a number of cities around the world – Co-Hosting. The current list, below, includes 25 cities although additional cities are being rolled out per my conversation with an Airbnb representative this week.
So what is the Co-Host program about? Basically, it’s a way for a property owner (a “Host” in Airbnb parlance) to add another Host (the “Co-Host”) to a listing. You can tap a friend, relative, neighbor, or experienced Airbnb huser to manage your property for you. This is a huge growth opportunity for the platform and one I’m surprised is not getting more publicity. I’d guess this is because they’re currently in test mode and working out any bugs in the program. In addition to assigning management rights to an Airbnb listing, the Co-Host option allows users to set fees (management fees as a percentage of gross earnings or fixed fee, cleaning fees, etc.) and the platform will automatically split earnings and distribute to both the Host and Co-Host per the Co-Host settings.
There are a number of reasons why someone might want a co-host for their property. The hassle of managing a property isn’t for everyone and to be able to hand off some or all of that responsibility will be attractive to some. For others, travel schedules or work demands might necessitate a co-host for short periods of time or seasonally. I can see myself wanting to add one of my children as a co-host to our listings in the future and giving them limited management rights to gradually give them control and responsibility for their own business.
In addition to existing Airbnb Hosts it’s easy to see how the Co-Hosting option could enable landlords to allow long-term tenants to utilize Airbnb in a monitored and responsible way. Between landlords, existing hosts, and the growth in the number of hosts in general I see a lot of growth potential for co-hosting. It should also allow Airbnb to retain hosts as there’s an option to avoid the hassles of managing a listing but still have the earnings, flexibility of schedule, and other benefits the platform provides. Airbnb has built a huge user base complete with reviews and other data and strengthening that base and building on it will be a competitive edge for the platform against the many competitors in the field.
I recently became a Co-Host here in San Diego and am excited for the opportunity. As one of the most experienced SuperHosts in the area I’m comfortable with taking on another listing to manage and hopefully the Host will see a benefit from the reduced workload for the property. If you are considering a Co-Host in San Diego you can find my profile at the below link. I’d be happy to talk with you about co-hosting and my experience and expertise.
Wondering if Airbnb offers Co-Hosting in Your Area? You can find out by logging in, and checking at the bottom of the menu bar. If Co-Hosting is an option for you, there will be a section labeled “Management” with a sub-section “Co-hosts” on your menu bar. You can directly invite someone you already know as a Co-Host or use the “Find a co-host” option to search by location for experienced hosts.
If you’re a host on Airbnb you will likely have occasion to contact Airbnb for help with guests, refunds, bookings, or other issues. If you’re a Superhost (a highly rated host meeting certain criteria retested each quarter) there is a priority phone number you can call to receive assistance. The number for Superhost help is:
I’ve had issues locating this online in the past and wanted to share in case others have had the same experience. If you’re not a Superhost you can reach a human representative for help at: 855-424-7262
Below is a Facebook post I shared in August but am updating and adding some links and additional text. Next Tuesday the San Diego City Council will have a special meeting to consider changes to the Municipal Code which would eliminate nearly all short-term rentals in the city. The changes will address whole unit rentals of less than 30 days, as home-sharing (a room in a home rather than a whole unit) is essentially already banned. For more in-depth detail and the legal mumbo jumbo I’d recommend reading this great post by Omar Passons from earlier this week.
The following are my thoughts on Airbnb / short-term rentals, why I support short-term rentals in our city, and where I see the industry going in the future.
I am an Airbnb host and have been for a few years. When our family travels it’s basically exclusively what we use. We’ve had a great experience on both sides of the equation and I’ve never tried to hide that. I’m a supporter, user, money maker, etc. Next month we’ll be taking our family to Mexico City for a week and look forward to staying in an Airbnb property there. Here’s a photo of the property we’ll be staying at.
Locally and globally Airbnb has experienced massive growth since being launched in August 2008, this wouldn’t be possible unless it was affording an opportunity for the millions of hosts on the platform. (Potentially this could be due to hotel rooms being artificially capped by zoning / permits / etc but I think it’s mostly because these platforms are accessing non-standard rooms and properties in authentic neighborhoods that provide superior value.) Pair the desire for non-standard rooms / neighborhoods and value with the growth in travel globally and you have a massive opportunity.
However, the growth to date is likely to be dwarfed by the growth to come. PriceWaterhouseCoopers (PWC) issued a report in 2015 on the “sharing economy” including a variety of sites across industries including Uber, onefinestay, Airbnb, Feastly, and many more. As of the report date, only 7% of the U.S. population had participated in the sharing economy as a provider. PWC predicted that five major sharing economy sectors – travel, car sharing, finance, staffing, and music / video streaming – would grow from $15 billion in 2015 to $335 billion in 2025, a growth rate of approx. 36.4% annually.
What does the current opportunity and projected growth mean for hosts? Money. I know of few people that open their homes to strangers for free – even CouchSurfing is predicated on the give & get premise so there’s a benefit or exchange of value derived. There’s an economic opportunity for people to utilize and they are taking it – great. They’re doing so on a widespread, individual basis and connecting one-to-one with guests – even better.
I think a lot of the blowback is about “punk” millenials like me that are just saying “screw the rules” and “i do what i want, the system is the one with a problem”. Based on my interactions with other hosts I think this far from the truth. It’s widely covered that millenials don’t have much money, have major debts, live with their parents at historically unprecedented levels, and mostly don’t own property.
Who does own property? Boomers. And older members of Gen X and the Greatest Generation. (And Millenials that inherited from those groups or have had above average successes.) Additionally, for many years the average house size has been growing while the average household size has been shrinking. Per the American Enterprise Institute, from 1973 to 2014 the average number of persons per home declined from 3.01 persons to an all time low of 2.54 persons. Over the same period the median home size increased from 1,525 square feet to a record high of 2,506 square feet.
So today home sizes in the US have never been higher and family size has never been lower. Meaning? There are tons and tons of empty rooms – completely unused, spider web covered. I live across from an entirely empty house (next to a surface level parking lot in a residential neighborhood) in the heart of San Diego’s hippest neighborhood of North Park. Empty rooms are the real opportunity of the short-term rental industry – for both host and community.
Many articles focus on flip young people (me and my brethren punk millenials) boasting about having 10 units and how the money is so easy putting properties on VRBO, Flipkey, or Airbnb. It’s probably true, to some extent. This is a new opportunity with a ton of excess demand not currently being met. This excess demand will be met due to the incentives created – there is real money on the table.
The idea and model of web-based room renting is fairly new – even a few years ago it was unknown or fringe. (Though boarding houses and room letting has existed for centuries.) Today people from all age groups use it widely, though as the PWC report points out there is much room to grow. Think of the evolution of users of Facebook – young first adopters, then a broader segment of the populace, and today with a huge amount of older frequent users. That’s where this model is going – both on the user and host sides. The same with uptake of private room vs. whole home. When I started hosting our guests were 70-80% foreign, today that’s about 15%. The idea of staying in someone’s home was odd to Americans but more familiar to foreigners. This trend will continue and even now I hear a lot of commentary about preference for private room vs. whole home. The personal connection is much greater – part of the “live like a local” push that is the current Airbnb media slogan.
As all of these trends come together the biggest opportunity – empty rooms – will take over. This will be driven by the biggest owners of property in the US, Boomers. Those multiple property “owners” (quotes because the multiple property hosts are often lessors that use Airbnb as a sublet opportunity) will be crushed by home-owning Boomers. Especially in California the advantage is huge – no mortgage, property taxes fixed at a very low level thanks to Proposition 13, and more empty rooms than a younger family with kids at home. Someone paying $700K for a 2 bedroom today can not possibly compete with someone offering a room in the same 2 bedroom bought for $70K in 1975. In a similar vein will be people with changing situations and spare rooms – couples about to have their first child and build a family, older couples that recently sent their children to college, etc.
What else is the economic opportunity doing? It’s spurring people to add units – increasing supply of total housing. That’s a good thing. Attic and garage conversions, adding separate entrances to bedrooms, building grandma flats, even building new units with purpose built areas for use as short-term rentals – when there is opportunity people respond. It’s the same reason you see cranes everywhere in San Diego today and none in 2010 – if there’s no opportunity no one is going to commit capital and take risk. Today many (maybe most?) of these sorts of new units may be going to short-term rentals. That won’t always hold true and when total supply goes up there is more flexibility in the market and potentially a decrease in average cost. (Potentially because demand also fluctuates.)
This post doesn’t even touch on non-economic factors – the personal connection is enormous and underplayed. Many of our guests are moving to SD, want to move here, are interviewing for jobs or academic opportunities – they instantly have a local perspective on the region, a connection for the future, and a guide. This is a huge deal. San Diego is the best place to live in America and I love sharing why with others. I know many other San Diegans feel the same. Our residents can connect and relate to guests from around the globe 100x better through short-term rentals than the biggest ad campaign, Comic-Con, or other paid marketing can accomplish. Opponents of STRs use the term “Short Term Vacation Rentals”, I prefer short-term rentals as many guests are not here to party and play at the beach, there are a host of reasons people visit San Diego and top of my priority list is attracting talent to our city.
I have a feeling that short-term rentals are likely to be banned soon in San Diego. Many other California cities have taken this path and it’s hard to blame them. We’re looking at all-time highs for rents, property prices, etc. Our population continues to boom. The economy grows, but mostly at the top. It is not a pretty picture for those looking to buy or rent and short-term rentals are undoubtedly a part of that growth in prices (although based on number of units I would say a very small part). But giving people an economic opportunity is a good thing and taking it away by dictat is a bad one.
I’m proud of the hosts / property owners I’ve met. We are committed to addressing real issues. We have proposed a number of specific, meaningful regulations to avoid negative impacts for San Diegans – an increasing fine scale including prohibition of use, dedication of TOT funds from short-term rentals for enforcement, an annual registration fee with funds for enforcement, posting of contact information and a required response time (or additional fine). These are meaningful suggestions and address complaints from opponents. We are happy to come to the table and discuss other aspects of the debate.
I didn’t come from money, we didn’t inherit our house. The opportunity from short term rentals enabled us to purchase our home in North Park as well as have a parent at home during the early years for our children. That was huge, huge, huge for us. If others don’t want to have a stranger in their home or yard – that’s absolutely their choice. But to take away that opportunity from future home buyers and others we should not do. Good times come and go – not long ago many in SD were underwater on their homes. More opportunity and more flexibility is great and should be embraced. I hope that short-term rentals will continue to provide an opportunity for San Diegans of all backgrounds, means and neighborhoods.
I hope you agree and will let your City Council Member know.
Plaza de Panama is the central plaza in Balboa Park and for many years was devoted to automobile parking. In June 2013 reviled former Mayor Bob Filner led a push that removed the parking spots from the Plaza de Panama and created a public space for strolling, sitting, and enjoying the surrounding museums and sunshine.
Here’s a photo of what the plaza looked like as a parking lot.
Below is what the plaza looks like now, less than three years later. Today our family had a small picnic lunch on the plaza and there were people everywhere – a newlywed couple taking photos on the steps of the Museum of Art, small children riding bikes and scooters, people of all ages sitting or taking photos. In short, it felt like an authentic plaza: “a public square, marketplace, or similar open space in a built-up area“.
While a lack of parking at Balboa Park continues to be a prominent point of public discussion and debate the Plaza de Panama proves that empty parking spaces do not a great space make – no one was hanging out at the parking lot it formerly was, other than the valets for The Prado restaurant. People enjoying life and each other are what make a plaza great and if you visit Balboa Park today you’ll find such a place at its heart.
The removal of the parking lot was the start of this new public life, but there have been many other elements that have contributed to the engaging place it is today. Below are a few and it’s encouraging to see a range of different players contributing – I look forward to see what other improvements lie ahead.
The Balboa Park Explorer Pass – This pass grants access to the museums and cultural institutions in the museum campus area of Balboa Park. Our family has had the annual pass ($229) since the inception of this program. It is fantastic and has us visiting the park more frequently and a wider variety of museums than we previously had. A great idea to increase the amount of visitors coming to the museum campus.
Trees and tables – After the parking was first removed the plaza felt empty – it’s a big expanse and needed to be populated to make it more inviting. The addition of a variety of chairs, tables, umbrellas, planter boxes, and other items have made it a pleasant and comfortable place to sit and people watch.
Panama 66 Restaurant – The owners of local favorites Blind Lady Ale House and Tiger!Tiger! Tavern now operate a full service restaurant adjacent to the Plaza de Panama (and technically part of the Museum of Art). This is a photo from March 13, 2016 at 11 AM – the line out the door says all that is needed about the popularity of the venue. The restaurant includes a sculpture garden area and sitting on the grass in the evening while the California Tower is aglow is a newly classic San Diego experience. [Caution: check schedules for sometimes irregular hours.]
Art of the Open Air – The newest addition to the Plaza de Panama is a series of sculptures set up around the plaza. In the central seating area there are information cards about the works including pieces by Rodin and Miro. A great addition and fitting complement to the Museum of Art which stands on the Plaza de Panama.
Improvements for walking and biking – Improved crosswalk markings and Balboa Park themed bicycle racks in prominent locations have made it more convenient to visit the park without a car. Hopefully in future we will see the Laurel Street bridge closed to automobile traffic and made into a full-time pedestrian promenade.
Thank you to the many people that are working to enhance Balboa Park and the experience of visiting for locals and tourists alike. The Plaza de Panama shows that even on a short time frame big changes can be made through thoughtful, low-cost projects that put people first. Cheers!