Beware of Bad Actors in the Short Term Rental Industry

Some Advice for Homeowners Seeking Management of Your Los Angeles or Palm Springs Short-Term Rental

By: Brad Greiner, CEO of Open Air Homes and OpenAIRE Brokerage

August 3rd, 2024

Ocotillo in Palm Springs, CA by Open Air Homes

The short-term rental industry is filled with opportunities but also rife with challenges in both Los Angeles Angeles and Palm Springs, where we operate.

One major concern for homeowners looking to monetize their properties is the abundance of bad actors in this space.

With very low startup costs, many property management companies pop up quickly, often without the necessary experience or commitment to operate within legal frameworks. We have seen the start ups come and go over our 12 years in business. This is a challenging industry, as we cannot fully control what guests do in your home, but we can vet and be very clear on our rules, which has lead to long term success.

Choosing the right property management company for your home is crucial to protect your asset and ensure its long term viability as a rental property.

Why Experience Matters

At Open Air Homes, we have been at the forefront of this industry for over 12 years. We have always operated within the legal guidelines set forth by the cities of Los Angeles and Palm Springs, and California in general. We continue to be one of the top property management companies that adhere strictly to these rules.

Our homeowners use their investment properties as vacation homes, setting us apart in the market. Many of our clients live in multiple cities and prefer not to let their valuable assets sit vacant while they are away. This is where our expertise comes into play.

Ocotillo in Palm Springs, CA by Open Air Homes

Legal Compliance and Long-Term Rentals

Since our inception, we have prioritized working closely with homeowners to legally rent their homes. This involves following the guidance and rules established by the cities of Palm Springs and Los Angeles. A significant number of our homeowners opt for Month+ bookings, which fall outside the jurisdiction of short-term rental regulations in California and are considered long-term rentals.

These rentals require the signing of a CAR form to legally protect homeowners in case of eviction, ensuring a secure and compliant rental process.

Adapting to Changing Laws

Our commitment to legal compliance has allowed us to pivot our business model over the years as laws have changed. We have witnessed many bad players come and go, often engaging in fraudulent leases or scamming guests by skimming off the top of leases.

This article from the LA Times highlights the pervasive issue of bad actors in the industry, giving it a bad name.

The Case Against Rental Arbitrage

Rental arbitrage is when a property management company guarantees you a set amount of money every month, and they pocket the difference. We understand that this is an appeal prospective for homeowners.

However, with rental arbitrage, the incentives of the homeowner do not align with the incentives of the property management company. Sure, you are guaranteed a specific amount, but the property management company will want to make as much money as possible, and will often take 1-2 night rentals or allow events, which cause wear and tear and lead to neighbor complaints.

When Covid hit, many of these rental arbitrage companies went out of business. Instantly homeowners found their homes unoccupied and had to find solutions. At Open Air Homes, we quickly pivoted all of our homes to extended stays with flexible terms, and were able to fill nearly all of our homes with guests that did not feel comfortable traveling.

Ensuring Quality and Respect

At Open Air Homes, we are dedicated to ensuring that our guests and homeowners have a positive experience. We make it clear to guests that late-night noise or party homes are not allowed.

We are transparent and communicative about the importance of mutual respect while staying in our homes. To further ensure this, we have even turned off instant booking at several properties to discourage parties and maintain a peaceful environment.

Ocotillo in Palm Springs, CA by Open Air Homes

Our Commitment to Excellence

We are grateful to the cities of Los Angeles and Palm Springs, as well as Airbnb, for actively weeding out these bad actors. This effort allows those of us who want to follow the rules and work closely with homeowners to monetize their properties responsibly to thrive. As the LA Times article notes, the presence of unscrupulous players has significantly impacted the perception of the short-term rental industry.

A Reliable Partner for Homeowners

For homeowners who are tired of the stress and potential pitfalls of managing short-term rentals, Open Air Homes offers a reliable and experienced alternative. Our track record speaks for itself:

• Over 12 Years of Experience: We’ve been navigating the short-term rental market in Los Angeles, always staying ahead of regulatory changes.
• Legal Compliance: We ensure all 30+ day rentals are legally protected with CAR forms through our Real Estate Brokerage (DRE #02164159), safeguarding homeowners in the rare case of an eviction.
• High Standards: Our commitment to high standards and mutual respect has earned us a reputation for quality and reliability.

If you are a homeowner considering renting out your property but are wary of the complications and risks associated with short-term rentals, consider partnering with Open Air Homes.

We specialize in medium-term rentals and can help you monetize your home while maintaining its integrity and ensuring a positive experience for both you and your guests.

Contact Us

Contact us today to learn more about how we can help you navigate the complexities of the short-term rental market in Los Angeles, Palm Springs and beyond.