Does Smart Home Tech Make You A Better Short-Term Rental Host?
How to ensure you don’t cross the line from surveillance to spying.
How to ensure you don’t cross the line from surveillance to spying.
For my money, the best horror film ever made was the 2012 movie, “The Cabin in the Woods.” A group of teenagers go on vacation to a cabin in the woods, only to find themselves terrorized, and slowly knocked off, by a series of horrible zombie monsters. Unbeknownst to them, the entire zombie monster operation is being run by a group of engineers who are surveilling their every move from a clandestine lab. The engineers are also technologically manipulating the events that trigger the release of the zombie monsters. It doesn’t end well for anyone.
I think of this film every time I try to decide whether we should install smart-home surveillance and control technology at our short-term rental property. I waffle back and forth between the advantages of having a remote view into the operation of the home, and the knowledge that I may be stepping onto a slippery slope that inevitably leads to zombie monsters.
Owning a short-term rental is fraught. The revenue is nice, but it’s a lot of work and worry. Landlords are completely at the mercy of a rotating cast of renters. Also, stuff happens in a house you don’t occupy full-time that can wreak holy havoc if left undetected. Smart-home tech, like smoke, fire and carbon-monoxide detectors that automatically alert responders, water heater monitors, and flood detectors can stop a situation going from bad to worse. This tech is firmly in the “benevolent” category.
Where I get conflicted is with the clandestine lab/evil engineer-type stuff.
Some short-term landlords have installed so much smart-home tech that they can, theoretically, observe their renters almost everywhere in the house, track who comes and goes, control the lights, air conditioning, heat and window shades, monitor their Netflix consumption, view the contents of the refrigerator, and reduce the water pressure to a dribble. They can lock renters out of the house entirely. Smart-home tech can’t unleash zombie monsters yet, but that’s probably coming in the next generation of the Amazon Echo.
While I love the idea of having a layer of oversight and protection over my rental property, I’m not sure I should possess the power that all that smart-home tech provides. Here’s why:
Obsessiontown. Population, Me: Web-enabled, real-time video surveillance, recorded on a remote server, is a proven way to reduce break-ins at vacation rentals, and, at the very least, gives landlords a chance to identify and prosecute perps.
But how do I stop watching?
If I got 24/7 access to a live feed of the comings and goings at our largest single asset, I’d never get anything else in my life done. I’d be reduced to a bleary-eyed gamer, staring unblinking at the action on my computer screen, afraid to look away lest I miss something: a criminal with a crowbar trying to break down the front door, a flurry of guests clearly dressed for a rave, someone smuggling in a pet tiger even though we have a very specific “no pets” policy, the progress on the crown of thorns plant by the front door. (It hasn’t been doing well.) Then, inevitably, I’d start going all evil engineer. How much would the renters freak out if I lowered the shades in the living room while they’re sitting there? What would happen if I made the pool really cold one day and really warm the next? How would they react to having only basic cable for eight hours? Hammer-hard water pressure, then just dribbles? I wouldn’t sleep. I wouldn’t eat. I’d just mess with them ALL DAY. Now, I am become Zombie Monster, destroyer of vacations.
Clearly, I couldn’t handle that kind of power.
It’s gross: Home-security systems are nothing new, but it’s a different ballgame when you’re surveilling your short-term rental, because you are, by definition, watching the daily activities of strangers. This is creepy. Clandestine lab creepy.
Short-term renters, like all tenants, have a legal expectation of privacy. Airbnb and other short-term rental companies have policies about what hosts can and cannot surveil at their property. Hosts are also required to disclose to renters the location of any surveillance.
But people forget about such things when night falls and alcohol begins to flow. Do I REALLY want to see what my renters are doing in the pool or on the couch at night? Nope. Don’t watch, you say? Please see the “Obsessiontown” item above.
Ignorance is still bliss: Dumb homes are more vulnerable than smart homes to many things. But I’ll bet the owners of dumb homes have less grey hair. They’re not sitting around, watching the feed, waiting for the big scary thing to happen, second guessing everything they see. Last winter, some friends of mine learned there was a raging party taking place at their rental property, complete with fire dancers juggling lit torches on the patio, which is covered with wooden furniture and other highly flammable things. It was still happening when they learned about it, but damage had already been done. If they had seen the fire dancers arrive on a video feed, they might have been able to get their property manager there fast enough to shut it down, but the only way they could have done that was to be glued to a video-surveillance feed at all times. That’s no way to live.
I’ll keep my home dumb. I will let the campers frolic unobserved at my cabin in the woods. That way, if some zombie monsters do show up, I can honestly say I didn’t see them coming. And I know I didn’t send them.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: April 21, 2022.
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Buying activity by companies fell in line with the decline in overall home sales amid higher borrowing costs
Investor buying of homes tumbled 30% in the third quarter, a sign that the rise in borrowing rates and high home prices that pushed traditional buyers to the sidelines are causing these firms to pull back, too.
Companies bought around 66,000 homes in the 40 markets tracked by real-estate brokerage Redfin during the third quarter, compared with 94,000 homes during the same quarter a year ago. The percentage decline in investor purchases was the largest in a quarter since the subprime crisis, save for the second quarter of 2020 when the pandemic shut down most home buying.
The investor pullback represents a turnaround from months ago when their purchases were still rising fast. These firms bought homes in record numbers last year and earlier this year, helping to supercharge the housing market.
Now, investors are reducing their buying activity in line with the decline in overall home sales, which have slumped with mortgage rates rising fast. But with investors’ large cash positions, and with big firms such as JPMorgan Chase & Co. planning to increase its exposure to the home-buying business, investors are poised to resume more aggressive buying when rates or home prices begin to ease.
These firms have seized on a pandemic-driven rise in demand for houses in suburban areas. These owners rented out the homes and increased rents on homes by double-digit percentages. By the first quarter of 2022, investors accounted for one in every five home purchases nationally.
But ballooning borrowing costs have kept investors from buying as much recently, said John Pawlowski, an analyst at Green Street. Buyers and sellers are also agreeing less often on pricing, stifling sales.
“It leads to a lot of people just putting down the pen,” Mr. Pawlowski said.
Rent growth has also begun to slow. Rents for single-family homes rose 10.1% year over year in September, down from 13.9% in April, according to housing data firm CoreLogic.
That rate of growth is still very high by historical standards, however, and much stronger than in the apartment market. Multifamily rent increases are now much lower by most measures. Near record-high rental prices are failing to attract as many new tenants, and demand in the third quarter fell to its lowest level in 13 years.
Demand for rental houses has held up better, in part because many of these homes are leased to relatively high-earning people who have found the for-sale market too expensive to buy, some analysts say.
That rent growth for single-family owners hasn’t translated into stock-market gains this year. Investors have lumped these owners in with home builders and sold many of them. Shares for the three largest publicly traded owners, Invitation Homes, American Homes 4 Rent and Tricon Residential, are each down more than 25% year to date, underperforming the S&P 500 over that period.
Rental landlords also face headwinds from rising property tax assessments that have come alongside enormous increases in home-price appreciation.
At the same time, large rental landlords are coming under greater scrutiny from federal and local governments. Congressional Democrats have hosted a series of hearings focused on eviction practices and rent increases. Three Congress members from California this month introduced a bill called the “Stop Wall Street Landlords Act,” which proposes levying new taxes on single-family landlords. It would prevent government-sponsored enterprises like Freddie Mac from acquiring and securitising their debt.
Many of the places where investors have eased purchasing are the same cities where they had counted for an outsize share of total sales. That includes Las Vegas and Phoenix, where investor sales dropped more than 44% in the third quarter compared with a year ago.
Fewer purchases by online house-flippers, or iBuyers, may have contributed to those declines, according to Redfin. Redfin decided to close its own home-flipping business, RedfinNow, earlier this month.
Nationally, investors still accounted for 17.5% of all home sales in the third quarter, a higher share than they held at any time before the pandemic, by Redfin’s count.
That share seems likely to rise again. Builders with unsold homes due to widespread cancellations by traditional buyers have been looking to sell in bulk to rental landlords.
Meanwhile, some institutional investors are now readying large funds to snap up homes. J.P. Morgan’s asset-management business said this month it had formed a joint venture with rental landlord Haven Realty Capital to purchase and develop $1 billion in houses. A unit of real-estate firm JLL’s LaSalle Investment Management, in partnership with the landlord Amherst Group, said it plans to buy $500 million of homes over the next two years.
Tricon has nearly $3 billion it plans to tap to buy and build homes. “We will lean in and deploy that capital when the time is right,” Tricon’s Chief Executive Gary Berman said on a November earnings call.
While a recession could bring down borrowing rates, it would likely be accompanied by higher unemployment, making it difficult for traditional buyers to take advantage, said Daryl Fairweather, Redfin’s chief economist. For investors, however, that could offer an opportunity to acquire homes at favourable prices.
“An investor may have more resources to jump in at exactly the moment when rates decline,” Ms. Fairweather said.
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