Upside to Home Values from Hourly Rentals?

By Dave Fratello | April 1st, 2019

April Fool's!

It's true, we can't quite help it. 4/1 is our favorite day of the year. Enjoy the post below, with some of the surprise removed...

 

The city of Manhattan Beach is gearing up to allow hourly home rentals as a way to raise revenue and to help offer more options to tourists and others who'd like to "see how the other half lives."

(If you haven't yet seen DigMB's report on the upcoming city proposal on hourly rentals, you need to go check that out now. Here's the link.)

The hourly rentals would be facilitated by a smartphone app called HourHome, which helps homeowners match up immediately to customers who want to use their properties for as little as an hour, or a quick overnight. The app automatically collects occupancy taxes for cities and transfers the funds directly.

The question we pose here on the real estate blog is: What is the potential impact on local home values as the city proceeds with the hourly rental plan?

On balance, hourly rentals seem like a plus to local values, with some homeowners standing to gain both in short-term revenue and long-term home value if their homes have special appeal for the hourly rental audience.

How things have changed! When the city was recently poised to crack down on short-term rentals - meaning any term under 30 days - there were cries from local homeowners that the city was unfairly restricting people's freedom to earn revenue from their own properties.

Under hourly rentals, the city is making a 180-degree reversal. In fact, many more homes could potentially join the stock of available rentals.

Owners don't need to vacate their properties, just skip out for a couple hours. That means more homeowners could benefit. With the reins removed, some homeowners could earn serious revenue.

Using the HourHome app to offer their homes for (very) short terms, homeowners would have instant access to thousands of potential hourly tenants.

What this means, in the big picture, is that any home in Manhattan Beach could become a cash cow soon after registration with HourHome.

There would be no marketing expenses, no fussy cleaning fees or furniture and staging costs. HourHome users would simply sign up, make their homes available and set rates and a schedule. Soon, customers could begin to show up at the door, whatever condition the home is in.

The app has the appeal of an Uber or Lyft, empowering property owners to seek out a little extra revenue when they want or need it. And you can think of HourHome as converting hundreds of local homes into the residential equivalents of Bird electric scooters. (Except they would all stay in place.)

Access to this potential revenue stream could notably increase the value of many Manhattan Beach homes.

Any home on the market could be evaluated by potential investors for its hourly rental potential.

Does the home have an ocean view, hot tub, massage room or other features that might make the home tempting for a short "spa vacation" for HourHome users? Maybe the home is actually worth more than what you'd expect based on comps.

Is the home near a surf spot where executive types might want to shower and have breakfast after a dawn session, before heading in to work? Ka-ching!

Is the home near popular restaurants or bars where people might, on a whim, decide to pop by?

Views of the fireworks? Proximity to Polliwog Park during summer concert season?

Truly, the sky's the limit with the potential uses of all kinds of homes all over town.

Some supporters say app users would be mostly locals renting homes for happy hours or dinner parties, maybe just bringing the kids over to swim in the pool. Some app users might dash off for naptime in the middle of the work day. How about movie night for a crowd in a home's big dedicated home theater?

No one has suggested that HourHome rentals would become flash-mob "party houses" or that savvy local teens might pool resources to rent a house on a Friday night, or create a "Risky Business" scenario. HourHome, like many startups, has clear Terms and Conditions that will prevent such abuses.

If the hourly rates are priced right, users won't have the luxury of hanging around long enough to cause a ruckus. They'll be in and out before most neighbors could notice or report a thing, tamping down some of the fears around short-term rentals having an impact on the community.

We'd like to hear more, but for now the upside to hourly home rentals seems clear.

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