The Case that Short-Term Rentals Actually Make Our Neighborhoods Stronger
This article is the second in a two-part series. To read part one, click here.
A few months ago, my partner and I found ourselves faced with a soon-to-be vacant apartment in our duplex, a dire need for more space and a tiny bit more cash, and what felt like a binary choice: to Airbnb, or not to Airbnb?
If you’d asked me a few years ago, the answer would have been unequivocal: never Airbnb. When I first bought my building, the term “short-term rental” directly equated in my mind to taking an affordable long-term rental off the market, possibly displacing a long-term tenant in the process, all in the name of greed.
But now my partner and I found ourselves with the need to move out of a too-tiny apartment, four tenants in affordable units who we didn’t want to displace so we could take their spot, and not enough money to buy a third building or rent. We didn’t even have quite enough money to maintain the buildings we had, at least not to the standard my partner and I had promised ourselves we’d stick to: sure, some people would say our properties looked fine, and we were definitely meeting the local building standards, but we had no interest in being landlords to tenants in need of affordable housing if we couldn’t also handle the costs of pulling the weeds, and regularly servicing the furnaces, and making it a safe, comfortable place where our tenants would be proud to live, not just tolerate.
We started to wonder: is the short term rental market the unmitigated evil that purists had made it out to be, or could we use it as a temporary pressure-release valve on our larger project of providing long-term affordable units? Were we letting the perfect be the enemy of the good?
And more to the point, I was thinking back on everything I’d learned at Strong Towns over the years: How adding or maintaining accessory dwelling units can be one of the gentlest ways to make a region stronger. How, in fact, homeowners have always used ADUs to alleviate temporary financial stress, letting the built environment flex and bend as their fortunes rose and fell—and that it’s actually a weird historical aberration that our era puts hotels in one neighborhood, homes in another, and discouraged property owners, legally or through cultural pressure, from using their home as leverage out of poverty or even temporary financial instability. Maybe if we ran it right, putting our second apartment on Airbnb would, paradoxically, be exactly the thing we needed to do to become the best affordable landlords we could be.
And I’d learned another thing from Strong Towns: the power of incremental implementation. We told ourselves we’d do the Airbnb thing for a month or two, see how it went, and then if it didn’t feel right, put the apartment back on the long term market.
Nurses, Locavores, and Dogs
So how has that two month experiment gone?
Reader: It’s gone really well.
Turning our previous apartment into a short term rental did exactly what we set out for it to do. It made it possible for us to move into our larger front unit—I’m writing this from my first-ever adult guest room/office, with the sun pouring through the front windows—while still capturing the same amount of income this apartment used to pull in, plus a tiny bit more. That tiny bit more, by the way, has been the difference between biting our nails and running spreadsheets before replacing the third water heater on the four family in a single year, and being able to assure our tenant confidently that we will get it done before she has to take cold showers. It’s meant that all four of our tenants stayed in their homes because we didn’t need to personally move into their units in search of a bedroom door to keep our dog away from our cats. It’s meant we didn’t need to take a big, risky gamble on a third property we couldn’t afford.
Canine Airbnb host Zozo greets a guest, ablur with hospitality.
And the experience of hosting short-term renters has upended many of my other assumptions, too. While, yes, we have the odd vacationers come to stay—if you tell me St. Louis is a city not worth vacationing in, I’ll fight you and/or send you to City Museum for a really fun day—our guests tend to fall into a few basic categories.
People traveling cross-country with dogs that are too large to stay in a hotel, or that need a fenced yard. (Zozo personally greets all of our canine guests and considers himself a co-owner of the rental business. We pay him in pets. Attorneys reading, please do not help him renegotiate his contract.)
Nurses working temporary contracts at the hospital five minutes up the road who really want to be able to cook their own meals.
People who would never stay in a hotel because they want to get to know the neighborhoods of the cities they visit, and they like staying in places like ours with a rich history and a thick house manual full of recommendations written by someone who loves their place.
What all our guests have had in common is that they’ve all been quiet, respectful, kind people who write us nice notes on the living room chalkboard and take the time to compliment the local restaurants we recommend in their reviews. I hope they loved this neighborhood as much as I do.
The History and Future of the American Neighborhood
I remembered something strange the other day: when we first pulled up the gross carpet that covered the rear apartment in this duplex, we found strange gaps in the subfloor that our realtor explained were probably evidence of where a wall once stood, framing out what must have been a tiny bedroom. St. Louis famously lost a lot of its oldest building records in a fire since our home was built in the late 1800s, but it’s very possible this building was once a boarding house, and this is not the apartment’s first incarnation as a short-term rental.
If you look down the length of our block, you’ll see even more evidence of a place that’s morphed a lot over the years: the addition on our next door neighbor’s house with scars in the brick that shows where the wide door of a horse stable became the narrow entrance for a doctor’s office and then, finally, a sunroom wall. The big storefront windows on a residential apartment that used to be a grocery. The sixplex that’s easily big enough to hold twelve renters who could do with a little less space if it meant a rent they could afford as they built the wealth they needed to move up in the world.
I don’t know the history of all of these spaces, but I do know one thing: all of them have grown and changed and flexed to meet the needs of the people who owned them, or lived in them, or both. They didn’t do it overnight. They added a wall; they took down a wall. They put an apartment in the classifieds; they took it off. Back then, builders couldn’t simply raze a block and put up the kind of hotel chain that sits a five minute walk away from my apartment right now. They could only move by increments—but over time, those increments built this beautiful place.
Zozo shows off a few of his neighbors: a larger single family, a smaller single family bungalow, a single family converted to a top/bottom duplex, and a four-family.
Look: I’m not trying to say that every property on Airbnb and VRBO and FlipKey is a part of some glowing historical tradition. When I walk by that multifamily in my own neighborhood that’s owned by an anonymous, seemingly international LLC and hasn’t seen a permanent renter in years, I still clench my fists a little. But these days, I’m asking myself a different set of questions about it.
Questions like: Why was the LLC the only one who could buy that building when it went up for sale a couple of years ago, in a closed market sale that potential neighbors couldn’t touch? There’s a good chance, for one, that the price it sold for is one that banks wouldn’t touch; if this property hadn’t (likely) been bought in cash, that price probably would have fallen squarely into the appraisal gap and become functionally unfinanceable by any traditional mortgage I’ve personally found. From there, the fact that the whole building was put up on Airbnb rather than turned into affordable long-term rentals make sense—if I were a volume investor, I’d want to make that money back as quickly as possible, too. But it calls into question the idea that the thing we need to do if we want to stop wholesale short-term rent-outs is to ban or tax short-term rentals themselves. What we should probably be doing is re-localizing our banking systems to be more sensitive to local needs. And we definitely need to be closing appraisal gaps that make buildings like this only buyable by people with big dollars, no need for a mortgage, and every incentive to want to put heads in beds (and dollars in pockets) as quickly as they can.
And part of the reason why more people don’t have those big dollars, by the way, has a lot to do with the way we build our neighborhoods. You’ll notice that I started this paragraph with a wistful example of how my neighborhood has grown and changed over the years—but have you noticed that all the doctors offices, horse stables, and grocery stores eventually all became houses? That’s because my region is still zoned primarily for multi-family use—not commercial. If you want to set up shop in St. Louis and try to build your way towards a little more personal wealth, it won’t be easy. Airbnb is one of your only options.
So when we get angry at owners who open short term rentals, why aren’t we angry at city zoning codes that make it functionally impossible to open any other kind of neighborhood business? When we get angry at landlords who furnish their apartments and let people rent them for a night rather than a year, aren’t we really frustrated by something that’s harder to point to: a system that’s put our neighborhoods under glass, and made it so much easier to open an Airbnb than build a much-needed new apartment, or two, or twelve?
Room to Breathe
I’m not saying short-term rentals are right for every city, or neighborhood, or even every landlord. I certainly don’t want to see them mandated on every block—I don’t want anything done on every block in my town, no matter how cool it might seem on mine. But what I am making a case for is this: policy and building processes that recognize that our cities need to breathe.
And that’s in no small part because our individual lives need room to breathe. If opening a short-term rental is this much of a financial relief for me, a middle-class nonprofit employee in a two-income household with three cute pets and impossible good fortune, how transformative could that income stream be for a long-term homeowner with less? Could we make it easier for her to build an ADU? What if we reformed our zoning codes so a person who’s flipping burgers in a kitchen now could conceivably open a burger restaurant in their own neighborhood? What if we changed our banking landscape so that talented guy who fixes our plumbing could get access to a mortgage that would buy him a fixer upper in his own neighborhood? How do we lower the bar so that we can take those small steps in our communities that we know make them financially stronger, rather than making big, top-down projects from the same handful of big players our functional default?
We might not always keep the rear apartment as a short-term rental. Maybe we’ll get tired of cleaning the same bathroom over and over and decide we want to spend more time in the backyard. Maybe we’ll see our fortunes change in some other area of our lives, and it’ll be easy enough to take the modest loss and find a permanent renter. But the freedom to let this building change as our lives do is everything to us—and when multiplied by all of our neighbors, it’s everything to our city’s future.