“Making It Work” is a series about small business owners striving to get through tough times.
When Precious Price bought her first home in Atlanta four years ago while working as a marketing consultant, she took advantage of her frequent business travel by hosting her home on Airbnb during her absence. “I knew I wanted to use that as a rental or investment property,” she said. “I started doing that, and it was honestly very lucrative.”
For Ms. Price, 27, and other young entrepreneurs of color, online short-term rental platforms like Airbnb and Vrbo represented a way to build wealth on their own terms. With an excellent credit score and minimal start-up capital — a primary barrier for people in this demographic — a professional Airbnb host could amass a stable of long-term apartment rentals, then turn around and rent those properties out nightly to vacationers.
Some of these entrepreneurs see it as a fairer alternative to corporate America, with its legacy of institutionalized bias and inflexibility toward caregivers and working parents. Others are motivated by a desire to accommodate black travelers, who say they continue to be discriminated against even after platforms like Airbnb have pledged to address issues such as documented instances of bias.
Ms. Price became something of an evangelist, setting up social media channels to teach other would-be entrepreneurs how to follow in her footsteps, and releasing a digital library of videos, tutorials, and advice using the @AirbnbMoney handle.
The irony did not go unnoticed by Ms. Price that her grand real estate ambitions were propelled by the 29-square-foot “tiny house” she spent nearly six months building for herself in her backyard. As the coronavirus pandemic put a brake on travel, grounded her street-fighter lifestyle, and her supplemental income stream virtually evaporated overnight, her tiny home enabled her to continue renting out her primary home and make big profits .
She even expanded her portfolio by buying a second home and renting several furnished apartments in Atlanta’s popular Midtown neighborhood, eventually leaving her consulting job to manage her rental business full-time.
“It was a liberating experience at the time,” she said. “I’m making a ton of money that most of my family have never seen in their lives.”
Ms. Price earned a whopping $12,000 a month and derived a sense of purpose from her social media work helping her colleagues achieve financial security. Initially, she said she had no interest in renting to long-term tenants – the profit margin for tourist bookings was so much higher.
“I was adamant about renting only to vacationers,” Ms Price said. “I was just so heavy in the rat race.”
Then the disturbing messages started to come. First one or two, then too many to ignore: a litany of increasingly distraught phone calls and emails from people who didn’t want her Airbnbs for a weekend getaway—they desperately needed a place to call home.
Ms. Price realized she was on the front lines of a housing crisis. By renting real estate to tourists rather than to long-term tenants, they and others like them exacerbated the housing affordability problem in the country as they related in one 2022 TEDxAtlanta talk. “I started to realize that the conversation started across the country,” she said.
The pleas and stories of financial insecurity affected Ms. Price, the eldest of five siblings and a first-generation college graduate. She attended business school at Indiana University. “When I got these calls from single mothers and college students, I started to realize that this is the identity of some of my relatives,” she said. “And I realize the connection of how I’m not far from that at all.”
She began to reexamine her values and walk away from the lucrative vacation rentals. She stopped offering properties on short-term rental sites, and over the next few months she lost her rental portfolio. “Everyone has their own ethical compass and for me mine just didn’t feel right with what I was doing,” said Ms Price.
The few remaining tenants she has now are long-term leases, and the rent she collects is enough to cover her expenses, with maybe “a few hundred dollars left over,” she said. She supplements that income with freelance consulting and public appearances. Although she earns a fraction of her former income, she is more fulfilled and no longer feels burnt out, she said.
The housing crisis Mrs. Price witnessed in Atlanta is playing out across the country. The United States is short of about 6.5 million single-family homes, according to the National Association of Brokers. For more than a decade, homes were not built fast enough to keep pace with population growth, a trend exacerbated by the pandemic. During this time, demand for larger homes grew even as construction slowed, crippled first by public health restrictions, then by labor shortages and supply chain issues that made everything from copper piping to carpeting scarcer and more expensive. became.
Affordable housing numbers are down: Only 10 percent of new homes cost less than $300,000 from the fourth quarter of 2022even though mortgage rates have roughly doubled over the past year.
These challenges have a cascading effect that has also driven up rents: Found Moody’s Analytics that the average tenant now spends more than 30 percent of their income on rent.
“If you look at rent vacancy rates, they’re extremely low,” said Whitney Airgood-Obrycki, a senior research fellow at the Joint Center for Housing Studies at Harvard University. “It is very difficult for people to find an affordable place to move to. It is extremely cramped, especially for low-income tenants.”
As Ms. Price has witnessed firsthand, a growing number of municipalities – including Atlanta – have emerged from the pandemic only to find a full-blown housing crisis on their doorstep. Lawmakers are pushing for more regulation of short-term rentals, with many trying to discourage “professional landlords” as opposed to homeowners who rent out part or all of their main residence.
Policies should be nuanced enough to differentiate between the two categories of tenants, says Ingrid Gould Ellen, a professor of urban policy and planning at New York University, and faculty director of the university’s Furman Center for Real Estate and Urban Policy.
“Airbnb can be a really useful tool for a lot of people, for homeowners who might be struggling to make their mortgage payments, or even renters who want to earn some income now and then and rent out their properties while on vacation,” she says . said. “These are all forms of use that do not actually limit the housing supply in the long term.”
Ms. Price’s experience with the tiny house in her backyard inspired her to look for another way for people to add housing — and for homeowners to generate rental income. These units, colloquially known as “tiny houses” or “granny flats” and formally identified as accessory housing units, can take the form of small houses, guest houses, or apartments that are either stand-alone or attached to the main house. More and more policymakers hope that these units can help to alleviate the tightness in the housing market.
“She’s working on a pressing problem: the lack of housing supply in the US,” said Praveen Ghanta, a technology entrepreneur who started the Emerging Founders Program, a start-up incubator for black, Latino, and female founders in Atlanta. Ms. Price, a participant in the program, is working on a start-up she mentioned Landrift, which is intended to be an information center so that homeowners — especially homeowners of color — can increase the value of their properties and generate income by building their own tiny homes. “We can make a meaningful impact, especially in markets like Atlanta,” said Mr. Ghanta.
“Sometimes I think people get fixated on the idea of affordable housing and it has to be non-profit,” he said. “The reality is that there is both a lot of money to be made and housing to be delivered, even within market-based constructions.”
Ms. Price has refocused her social media platforms away from managing short-term rental properties and towards promoting small-scale development of associated housing units. “At this point I want to start acquiring other properties,” she said. She is looking for homes with enough land to house a tiny house while building a second outbuilding – a guest house – on her first property.
“My plan is to get a property that I can build some kind of housing on, so I’m not just taking housing, but I would be able to make more homes,” she said. “The American dream is real estate.”