3 Disturbing Signs For AirBnb Investor "Hosts"

Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Is the big-time AirBnb boom opportunity winding to a close? There are three totally anecdotal, but eerily accurate, indicators I’m seeing, each of which gives an unambiguous answer to that question. I’m Bryan Ellis. I’ll tell you what those 3 indicators are RIGHT NOW in Episode #316 of Self-Directed Investor Talk.

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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #316 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you.

To ask question, just call 833-212-2112. Or if you’d like to receive a link to this show you can listen again at your leisure or possibly share it with a friend, just text today’s episode number – 316 – to 833-212-2112 and I’ll get that link to you right away. Again, that’s text today’s episode number – 316 – to 833-212-2112 right now.

Today we jump into a topic that I bring up with some concern. I want the answer to this question to be different than I fear it might be. The question we’re considering is this: Is the big-time boom opportunity in AirBnb drawing to a close?

I’ll give you my answer, along with the 3 pieces of evidence I’ll cite to support that opinion. But first, a quick word from a sponsor I know you’ll enjoy hearing from:

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Ok, AirBnb… Very cool concept, I’ve really respected the creative thinking of this company since the beginning. The idea is simple: You have a property. You let AirBnb list your property for short-term – as little as a single night – rentals, and the two of you share revenue from that rental. And it turns out that that concept has been so popular that many people who otherwise would have tried to monetize their real estate by doing conventional year-long or month-to-month rentals have instead been making money, and frequently MUCH more money, by doing short-term rentals through AirBnb than by using the more conventional approach to generating rental income.

But all gravy trains slow down, and this one will too at some point.

Are we there yet?

I don’t think so. But I think we’re getting pretty close… close enough that making money on AirBnb is no longer easy as “shooting fish in a barrel”, so to speak. I’ll share 3 pieces of evidence that leads me to this thinking, but I’ll go ahead and readily admit:

Each of these 3 reasons are anecdotal, not statistical. You probably know that my formal education is in engineering and computer science, so I don’t typically have a lot of use for anecdote. But I have noticed that anecdotal evidence is frequently a leading indicator for the more empirical form of evidence I prefer, so I can’t ignore it and neither should you.

So without further adieu, here are my 3 anecdotal indicators that suggest the AirBnb gravy train is slowing down:

Reason #1: Anytime there’s a cable TV show about an investing strategy, you’ve got to wonder if that strategy might be spent… or at least that there’s more competition than makes sense. And guess what? There’s now a TV show on the cable TV station CNBC called CashPad… and that show is about NOTHING BUT people turning their houses into AirBnb properties for profit.

Does this mean disaster is imminent? No, but it does mean it’s becoming so well know that it’s looking like a “good idea” to John Q. Public… and that’s historically not a good sign for anything.

Reason #2 the AirBnb gravy train might be slowing: The government. Look, the government is really only good at a few things, and the thing they do best is to destroy great business opportunities. That’s what is happening now in a number of jurisdictions where local governments are trying to flex their muscles and put rather onerous restrictions on AirBnb property owners. Some of these restrictions are reasonable, because AirBnb hosts and their guests aren’t always particularly respectful of the neighborhoods where they stay. But it’s bigger than that. Local governments see an opportunity here to generate more revenue, and frankly, I suspect this will, in many places, increase the effective cost of renting AirBnb properties enough to make serious, frequent travelers – the backbone of the hospitality industry – return exclusively to the big hotel chains.

And finally, reason #3: This is most anecdotal of all and I’ll admit it’s a little condescending, though I don’t mean that to be the case. Here’s the deal: Have you noticed that some of the people doing well with AirBnb’s don’t seem to be the sharpest knives in the drawer, if you know what I mean? Don’t get me wrong: I know that there’s not an actual connection between high intelligence and the ability to be successful as an investor. But it appears to me that the money has been so easy in that game that up until now, it’s been pretty easy for everybody – whether they’re more of the “wheat” or the “chaff” variety – to make a lot of money from it. And when something is too good to be true, there’s inevitably a market adjustment.

Now as I said, all of these reasons are “soft” reasons without data to back any of them up. They’re all observations, and they’re such soft observations that I’m certainly not suggesting anyone change their plans on the basis of what I’ve shared with you. But maybe, just maybe, it might be a good idea for you to keep an eye on this stuff.

After all, job #1 of the self-directed investor is to RESPECT YOUR OWN CAPITAL.

My friends, invest wisely today and live well forever!

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