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“Making It Work” is a series about small business owners who are struggling.
When Precious Price bought her first home four years ago in Atlanta while working as a marketing consultant, she took advantage of frequent business travelers renting out homes on Airbnb when she was away. “I know I want to use it as a rental or investment property,” she said. “I started doing that, and it was honestly very rewarding.”
For Ms. Price, 27, and other young entrepreneurs of color, online short-term rental platforms like Airbnb and Vrbo represent a path to building wealth on their own terms. With a good credit score and minimal startup capital — a major barrier for people in this demographic — professional Airbnb hosts can put together a stable apartment with a long-term lease, then come back and rent out the property nightly to travelers. .
Some of these entrepreneurs see it as a fairer alternative to corporate America, with its legacy of institutional bias and inflexibility toward caregivers and working parents. Others are motivated by a desire to cater to black travelers, who say they still face discrimination even as platforms like Airbnb promise to address issues like documented cases of bias.
Mrs. Price became an evangelist of sorts, creating a social media channel to teach other aspiring entrepreneurs how to follow in his footsteps, and creating videos, tutorials and advice from his digital library using the handle @AirbnbMoney.
The irony is not lost on Ms. Price that his grand real estate ambitions have been propelled by the 296 square foot “small house” he spent nearly six months building for himself in the backyard. While the coronavirus pandemic slammed the brakes on travel, creating a road warrior lifestyle and evaporating additional income streams almost overnight, his tiny house allowed him to continue renting out his main home and making a big profit.
He even added to his portfolio, buying a second home and renting several furnished apartments in Atlanta’s popular Midtown neighborhood, and he eventually left his consulting job to manage a full-time rental business.
“It was a freeing experience in time,” she said. “I made a lot of money that most of my family had never seen in their lives.”
Mrs. Price earns $12,000 a month and gets the goal from his work on social media to help his friends achieve financial security. At first, he said he had no interest in renting to long-term tenants – the profit margin for tourist bookings was higher.
“I really only rent to vacationers,” Ms. Price said. “I’m just too much in the rat race.”
Then, the exciting messages started coming. First one or two, then so many more that I ignored: an increasingly disorienting litany of calls and emails from people who didn’t want Airbnbs for a weekend away — they needed a place to call home.
Ms Price realized she was on the front line of the housing crisis. By renting properties to tourists instead of long-term rentals, he and others like him add to the problem of housing affordability, because they related in a TEDxAtlanta 2022 talk. “I’m starting to realize that the conversation is starting to happen all over the country,” he said.
The request and the story of financial precariousness came home to Ms. Price, the oldest of five siblings and a first-generation college graduate. He attended business school at Indiana University. “When I started to get these calls from single mothers and students, I began to realize that the identity of some of the family members,” she said. “And I know the connection is how I’m not too far from it.”
He began to reexamine his values and walked away from the lucrative vacation rental business. they stopped listing properties on short-term rental sites, and over the next few months, he shed his rental portfolio. “Everyone has their own ethical compass and for me, I don’t think it’s possible,” said Ms. Price.
Some of the remaining tenants are currently on long-term leases, and the rent she collects is enough to cover her expenses, with maybe “a couple of hundred dollars left,” she said. He supplemented that income with freelance consulting and public appearances. Even though he’s earning a fraction of what he used to earn, he’s more satisfied and no longer feels burned out, he said.
The housing crisis that Ms. Price saw in Atlanta is playing out across the country. The United States is short about 6.5 million single-family homes, according to the National Association of Realtors. For more than a decade, homes have not been built fast enough to keep up with population growth, a trend that has been exacerbated by the pandemic. During that time, demand for larger homes grew even as construction slowed, dampened by public health restrictions, then labor shortages and supply chain problems that made everything from copper pipes to carpets cheaper and more expensive.
The number of affordable homes has dropped: Only 10 percent of new homes cost less than $300,000 in the fourth quarter of 2022, even though mortgage rates have doubled over the past year.
These challenges have had a knock-on effect on rents, too: Moody’s Analytics found that the average renter now spends more than 30 percent of their income on rent.
“If you look at the rental vacancy rate, it’s very low,” said Whitney Airgood-Obrycki, a senior research associate at the Joint Center for Housing Studies at Harvard University. “It’s hard for people to find affordable housing. It’s very tight, especially for low-income renters.
When Ms. Price experienced close, many municipalities – including Atlanta – have emerged from the pandemic only to find a full-fledged housing crisis on their doorstep. Lawmakers are seeking greater regulation of short-term rentals, with many trying to discourage “professional hosts,” rather than homeowners who rent out part or all of their primary home.
Policies should be sufficient to distinguish between the two categories of tenants, said Ingrid Gould Ellen, professor of policy and urban planning at New York University, and faculty director of the University’s Furman Center for Real Estate and Urban Policy.
“Airbnb can be a very useful tool for many people, for homeowners who may be struggling to pay their mortgage, or even renters who want to earn income and rent out their units while they’re on vacation,” she said. “These are all forms of use that do not limit the long-term housing supply.”
The experience of Ms. Price with a small house in his backyard inspired him to look for other ways for people to improve their homes – and for homeowners to generate rental income. These units, colloquially known as “small houses” or “granny flats” and officially identified as accessory housing units, can be small houses, guest cottages, or apartments that are independent or attached to the main house. A growing number of policymakers are hoping the units can help ease the pressure of a tight housing market.
“They’re working on an important issue — the housing shortage in the U.S.,” said Praveen Ghanta, a tech entrepreneur who started the Emerging Founders program, a startup incubator for Black, Latino and female founders in Atlanta. Mrs. Price, a participant in the program, is working with a start-up called Landrift, which is meant to be a resource center so that homeowners – especially homeowners of color – can increase property value and generate income by building. their own small houses. “We can make a meaningful impact, especially in a market like Atlanta,” Mr. Ghanta said.
“Sometimes I think people will think about affordable housing and it should be a nonprofit,” he said. “The fact is there is a lot of money to be made and housing to be provided, even at market rate construction.”
Ms Price has reoriented her social media platform away from short-term rental property management and towards promoting small developments of accessory housing units. “At this point, I want to start acquiring other properties,” he said. He was looking for a home with enough land to accommodate a small house while building a second additional structure — a guest cottage — on his first property.
“My plan is to get a property that I will be able to do some kind of house in so that I will not only take the house, but will be able to make another house,” she said. “The American dream is real estate.”
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