LA brokers on Airbnb: Angry, charmed and confused

Agents have varied responses to clients looking to rent their future units short term

Jun.June 17, 2016 03:20 PM

With the Los Angeles City Council gearing up to weigh the pros and cons of the burgeoning short-term rental industry, real estate insiders may soon have a concrete set of guidelines to help them navigate the tricky terrain of Airbnb and its cohorts.

But in the meantime, brokers have been haphazardly tip-toeing around the issue, uncertain of legalities and certainly in disagreement about how the 21st century services might affect real estate at large.

While some realtors would go as far as encouraging rental seekers to check out Airbnb, others lament that it takes away from their business. And as discussion swirls around City Hall, the real estate industry as a whole has not yet taken a firm stance on the pending regulations.

Managing the disconnect between existing regulations and practice can get a little tricky, said Keller Williams agent Aaron Leider, who is also the president of the Beverly Hills and Greater L.A. Association of Realtors.

Landlords, for instance, will work with realtors to find renters for their buildings. In some cases, they don’t specify that the tenant cannot list the unit as a short-term rental — even if subleasing is explicitly named as illegal.

Tenants sometimes rent a condo for $1,400 or $1,500 a month, but list it on Airbnb for $3,000 a month, Leider told The Real Deal. “The next thing you know, people are coming in and out,” disrupting neighbors and violating the lease, he said.

But its unclear how much responsibility should fall on brokers, when it is the landlords who make the final decisions about who lives in their buildings.

“Ultimately we’re not the ones who approved the tenant, we just bring them in,” Leider said. “But I think it’s a growing problem.”

In West Hollywood and Santa Monica, it is now entirely illegal to list a long-term rental unit on sites like Airbnb. For the rest of L.A. County, however, rules are hazy.

“Most single family zoning prohibits it, and some multi-family zoning does but not all. And when I say illegal, it’s a zoning code violation rather than a criminal infraction,” UCLA urban planning professor Paavo Monkkonen told TRD last month. “[The] codes were written 60 years ago, and the legality of it in many cases can be murky.”

Brokers told The Real Deal that more and more homeowners are voicing interest in turning their secondary residences into quick and easy cash cows via Airbnb.

“It’s this incredible opportunity for homeowners to make so much more than they would from long-term rentals,” Coldwell Banker agent Steve Frankel told TRD.

“I sold a house off Coldwater Canyon, that would have probably been worth in a rental situation, about $16,000 to $18,000 a month,” Frankel said. “They called me the other day to tell me that they had started using Airbnb — they were getting $32,000 a month.”

Frankel said he’s had homeowner clients who are tired of the hustle and bustle of renting their homes on Airbnb ask him if they could make as much money through a long-term rental. Unsurprisingly, the answer is a resound, “no.”

But it’s not always worth it for the homeowners.

“The logistics of it all, the housekeeping — it’s a lot of work,” Frankel said. “You’re basically running a mini-hotel.”

The likeness to mini-hotels, however, is precisely why housing advocates, neighborhood organizations and of course, the hotel lobby, are up in arms about Airbnb.

Hoteliers argue that such Airbnb hosts are evading the rules and taxes to which the lodging industry are subject, while other activists claim short-term rentals take units off the long-term rental market and directly contribute to the rising rents in L.A.

That’s why the new draft of regulations, to be voted on in July, entirely prohibits the rental of secondary residences and poses severe limitations on the length of an Airbnb listing. If enacted, hosts would only be able to list units in which they live for at least six months out of a year, and for no longer than 90 days annually.

Among realtors, however, attitudes over the regulations dramatically vary.

Partners Trust’s Lee Mintz, who specializes in both selling and leasing the luxury homes of professional athletes, is on one extreme of the spectrum: She’s quite peeved by the emergence of short-term rentals, and would like to see them gone.

“I’m not a big fan of Airbnb,” she told TRD. “I’m a real estate agent and they’re dampening business for me.”

Unlike Frankel, Mintz said she has heard troubling accounts of Airbnb.

“I get calls from people who say that [Airbnb] owners have double booked and [call me looking for a place to rent] and now I’m frantic, scrounging to find them a place.”

But other agents are vocal proponents of the proliferation of short-term rentals. Take Shane of TBG Property Management, for instance.

“I am a real estate broker and manage apartments, 1-4 units, SFRs, etc.,” he posted on the Airbnb community forum last December. “Some of my clients are tired of the absurd California tenant landlord laws and asked me to host their properties for AirBNB. I’ve become a host by default!”

Shane could not be immediately reached for comment.

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