Diana Hill
Online Trading Academy
Having been a real estate investor and educator for going on thirty years (yes, I really did just admit that), I’ve seen a lot of trends and fads. There is a big difference between a fad and a trend.
In dictionary.com, a fad is defined as: a temporary fashion, notion, manner of conduct, etc., especially one followed enthusiastically by a group.
Whereas a trend is defined as: To take a particular direction; extend in some direction indicated.
So, one is fleeting and the other is a change in direction. When it comes to VRBO or Airbnb, is it a trend or a fad? And as an investor, how does it affect us?
Let’s start with a little background on both companies.
VRBO is a part of the HomeAway family. HomeAway was founded in 2005 and was created by consolidating five of the leading vacation rental websites in Europe and the U.S. to be a one-stop shop. HomeAway went public 2011 and is headquartered in Austin, TX. In November of 2015 it was acquired by Expedia, Inc.
Airbnb was founded by Brian Chesky and Joe Cebbia. The two moved to San Francisco from New York; they were unemployed and needed to pay rent. They noticed that when a big convention came to town all the cities hotel rooms would sell out. So, they purchased a couple of airbeds and put up a website called: Air Bed and Breakfast. They charged $80.00 a night – a business was born.
Joe did a great TedTalk if you want to learn more.
So how do the two companies differ?
Airbnb is a marketplace where a property owner can list a rental. Airbnb also helps with the booking process and all financial transactions. It is free to list your property and there is a small processing fee that is assessed when the property is booked.
VRBO/HomeAway is an online listing service for rentals. It is as simple as that, the property owner pays to list the rental on the website. The booking and transaction is handled by the owner (or property manager). There is no other assistance from VRBO/HomeAway.
Both offer photos and a review system.
Which one is better for the investor? It is not a cut and dry answer – it depends on your desired amount of control and ability to do the administration. I would say if your property is perpetually a rental, Airbnb might be a better way to go because you aren’t paying every time you list it, you only pay when rented.
Back to the questions of Airbnb and VRBO being a fad or a trend: Well, vacation rentals have been around for a long time, these companies have just changed the way that the rentals are marketed. So, I consider them a trend.
What is a fad is that investors are buying urban units (or renting them) with the sole purpose of using Airbnb/VRBO to create income. This is a concerning business model as there are players, such as Cities and HOAs, that can inhibit a property owner’s ability to do business using the VRBO/Airbnb business model. A local city could quickly (and has in many places) restrict short term rentals. In addition, HOAs are becoming more restrictive about these rentals as well.
So, the question for the investor using Airbnb and VRBO is: if the rules change and short term rentals are no longer allowed, what is your plan B?
This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms
Editors’ Picks
EUR/USD loses ground below 1.1850 ahead of FOMC Minutes
The EUR/USD pair loses traction near 1.1840 during the early European session on Wednesday, pressured by renewed US Dollar demand. Traders brace for the Federal Open Market Committee Minutes for signals on future rate cuts, which will be released later on Wednesday.
When is the UK CPI data and how could it affect GBP/USD?
The United Kingdom Consumer Price Index data for January is scheduled to be published today at 07:00 GMT. GBP/USD trades slightly lower at around 1.3556 as of writing. The 20-period Exponential Moving Average trends lower at 1.3593 and continues to cap rebounds. Price holds beneath this gauge, maintaining a short-term bearish bias.
USD/JPY is looking for direction around 153.00 with key US data in focus
USD/JPY reversal from 153.70 has been contained above 152.70 on Tuesday. Major currencies are trading within narrow ranges amid thin trading volumes. Investors await the release of the US GDP and PCE Inflation figures to make decisions.
Editors’ Picks
When is the UK CPI data and how could it affect GBP/USD?
The United Kingdom Consumer Price Index data for January is scheduled to be published today at 07:00 GMT. GBP/USD trades slightly lower at around 1.3556 as of writing. The 20-period Exponential Moving Average trends lower at 1.3593 and continues to cap rebounds. Price holds beneath this gauge, maintaining a short-term bearish bias.
EUR/USD loses ground below 1.1850 ahead of FOMC Minutes
The EUR/USD pair loses traction near 1.1840 during the early European session on Wednesday, pressured by renewed US Dollar demand. Traders brace for the Federal Open Market Committee Minutes for signals on future rate cuts, which will be released later on Wednesday.
Gold: Is the $5,000 level back in sight?
Gold snaps a two-day downtrend, as recovery gathers traction toward $5,000 on Wednesday. The US Dollar recovers from the overnight sell-off as rebalancing trades resume ahead of Fed Minutes. The 38.2% Fib support holds on the daily chart for now. What does that mean for Gold?
Pi Network rally defies market pressure ahead of its first anniversary
Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.
UK jobs market weakens, bolstering rate cut hopes
In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.