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Private investigators are making bank catching illegal Airbnb hosts

(BUSINESS NEWS) With rents sharply rising, it’s not hard to see why so many people are tempted to illegally rent out their spaces on Airbnb.

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What’cha gonna do?

Risk versus reward: it’s the classic conundrum of the businessman. How much risk is acceptable, and how great are the rewards that can be realized?

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In large cities across the United States and around the globe, landlords are undertaking that calculus, even when it may run afoul of the law. The risks are that they will be caught violating local or state laws prohibiting the eviction of renters to turn what used to be a great apartment into the next hot Airbnb rental.

For other landlords, they gamble that no one will notice that they’ve bought up properties in desired locations around the city, routinely exceeding local restrictions on the number of nights that a property can be used as a short term rental.

Private eyes, they’re watching you

Landlords’ decisions to gamble on Airbnb legalities have created a new cottage industry: the real-estate private investigator. Private investigators are tasked to spy not on people, per se, but on property. Watching vacationers enter and leave a recently vacated apartment, investigators attempt to prove their plaintiffs were evicted illegally. San Francisco law prohibits evictions solely for the purpose of converting the property into a short-term rental, such as is common with Airbnb.

That such a case would manifest itself in San Francisco is not surprising. The city has become a flashpoint in discussions about gentrification and a lack of affordable housing in the city. With rents skyrocketing in recent years, the city has just now seen stabilization in market prices for one-bedroom apartment rentals.

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In 2016, rent prices in San Francisco actually dipped by 1.2 percent over 2015 rates. But with a median rent for a one-bedroom apartment in the city coming in at $3,343, it’s not hard to see why so many apartment owners would be tempted to convert their holding to a short-term rental sites like Airbnb.

For their part, Airbnb contends that they haven’t affected the housing market for those in the middle and lower income brackets. Instead, they point their fingers at local building restrictions that prevent new construction from starting, with increased demand coming from the lack of supply. However, they are taking steps to partner with local officials to ensure that they are complaint with local laws.

One host, one home

In November, Airbnb began a policy in San Francisco that established a “one host, one home” requirement. The purpose is to drive out investors looking to acquire apartments to turn into Airbnb rentals, rather than homeowners looking to supplement their incomes by leasing out their own property.

The same policy now exists in New York City, which has seen many of the same problems with the affordable housing market that San Francisco has seen. An economic impact study conducted in New York found that in Manhattan’s Soho/Greenwich Village neighborhoods, a short-term rental exceeds a longer rental’s value by nearly $10,000 annually.

“We strongly oppose illegal hotels and bad actors who remove housing from the market,” said company spokesman Nick Papas, speaking to Bloomberg. “We’ve removed thousands of listings from our platform that aren’t right for our community. We are committed to working with cities to address their specific needs.”

Private investigators now fill the gaps when Airbnb or local enforcement officials are unable to monitor rental compliance.

They are trying to provide protection to those who may be otherwise at the mercy of their landlords, turning what was once their homes into a trendy nightspot for tourists.

Unfortunately for renters, investigators are finding themselves in a lucrative market.

#AirBnBusted

Roger is a Staff Writer at The American Genius and holds two Master's degrees, one in Education Leadership and another in Leadership Studies. In his spare time away from researching leadership retention and communication styles, he loves to watch baseball, especially the Red Sox!

Business News

What small business owners can learn from Starbucks’ new D&I strategy

(BUSINESS) Diversity and inclusion have been at the forefront of Starbucks’ mission, but now they’re shifting strategy. What can we learn from it?

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Hands of all different skin colors on green background representing Starbucks' D&I.

Starbucks was one of many companies that promised to focus on diversity and inclusion efforts after the death of George Floyd by Minneapolis police in 2020. What sets Starbucks apart from other companies were its specific goals.

How It Started

They began with hiring targets and have now added goals in corporate and manufacturing roles. Starbucks’ plans and goals revolve around transparency for accountability. They released the annual numbers for 2021 as a way to help hold themselves accountable. The data they’ve released so far show that they’ve met nearly a third of their 2025 goals according to Retail Brew. Because of this information, we can see why they are choosing to move in the direction of manufacturing and corporate jobs. In 2021, POC’s fell to 12.5% of director-level employees from 14.3% in 2020 in manufacturing.

How It’s Going

Per Starbucks’ website stories and news, “[I]t will increase its annual spend with diverse suppliers to $1.5 billion by 2030.  As part of this commitment, Starbucks will partner with other organizations to develop and grow supplier diversity excellence globally.” To put that into perspective, they spent nearly $800 million with diverse suppliers in 2021. With these moves, by 2030, it will increase by almost double.

As part of their accountability and progress, they plan to partner up with Arizona State University to give out free toolkits to entrepreneurs on fundamentals for running successful diverse-owned businesses. Another goal they’ve listed is to boost paid media representation by allocating 15 percent of the advertising budget to minority-owned and targeted media companies to reach diverse audiences.

At the heart of all this information on their goals and future plans, data transparency and accountability are what’s forcing them to look at the numbers to make specific goals. They are doing more than just throwing money at the problem, they are analyzing how they can do better and where the money will make a difference. Something that, as entrepreneurs, we should all do.

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Business News

Peloton is back-pedaling: Reports of price increases, layoffs, and cost cuts

(BUSINESS) After a recording of layoffs leaks, ‘supply chain’ issues cause shipping increases, and they consult for cost-cutting, Peloton is doomed.

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Man riding Peloton bike with instructor pointing encouragingly during workout.

Is Peloton in Trouble?

According to many reports, Peloton had success early in the pandemic when gyms shut down. Offering consumers a way to connect with a community for fitness along with varying financing options allowed the company to see growth when many other industries were being shuttered.

After two years, CNBC reports that the company is “being impacted by …supply chain challenges” and rising inflation costs. According to the report, customers will be paying an additional $250 for its bike and $350 for its tread for delivery and setup.

As demand has decreased, Peloton is also considering layoffs in their sales and marketing departments, overheard in a leaked audio call. The recording details executives discussing “Project Fuel” where they plan to cut 41% of the sales and marketing teams, as well as letting go of eCommerce employees and frontline workers at 15 retail stores.

Nasdaq reported that the stock fell 75% last year, after a year where it soared over 400%.

Peloton reviewing its overall structure

According to another report from CNBC, Peloton is working with McKinsey & Company, a management consulting firm, to lower costs as revenue has dropped and the growth of new subscriptions has slowed since the pandemic. Last November, according to NPR, Peloton had “its worst day as a publicly-traded company.” It also anticipates greater losses in 2022 than originally predicted. It makes sense that the company would reexamine their strategy as the economy changes. They aren’t the only one that is raising prices amid supply chain issues.

It will be interesting to watch how Peloton fares

Peloton has a large community that pays a monthly fee for connected fitness. While growth has slowed, the company still has a strong share of consumers. Although it is facing more competition in the home fitness market and more gyms are reopening, as Peloton adjusts to the new normal, it should remain a viable company.

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Business News

CEO is offering folks thousands to *quit* their jobs, with one catch

(BUSINESS) A CEO out of Arizona is challenging employment norms by offering a sort of “sign-off” bonus upfront, but this method has one fatal flaw.

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Man counting cash in his hand representing the CEO offering money to employees who quit.

Chris Ronzio, the CEO of Trainual, a software company in Arizona that aims to systemize and scale your small business, is offering cold hard cash to quit your job in an unconventional ploy to bypass the effects of the Great Resignation.

Before you rush to turn in your notice and make some extra cash, you should know that this offer is dependent on being selected as a hirable candidate and making it through the hiring process for Trainual. This option is also offered to new hires after 2 weeks of employment.

This model of employment gives the employee the ability to fire the company and walk away with a little sum of money. The thought process of the CEO was outlined in an article by the Insider, saying it is a strategic move to retain top talent and maintain a strong company culture. While this is a unique approach…it has a glaring flaw. The offer is only good for the initial two-week period. However, it can take some time to recognize the shortcomings of any company when you begin employment. We can all recognize the long-term financial potential of reoccurring income and while $5,000 is not anything to shake your finger at, it will eventually be gone. I think we can all agree that constructive criticism can be difficult to swallow at times, however, if Trainual was truly invested in this model they would extend the offer at other key times during employment. What if this offer was again available at the 1-year mark? If the offer reappeared at a one-year review, the turnover may increase.

Per the Insider article, Ronzio was quoted as saying, “With today’s market, hiring teams have to move quickly to assess candidates and get them through the process to a competitive offer, so it’s impossible to be right 100% of the time,” Ronzio said. The CEO added, “The offer to quit allows the dust to settle from a speedy process and let the new team member throw a red flag if they’re feeling anything but excited.”

These statements detail another dimension to consider which is the employment hiring process and timeline. If top candidates are in such high demand that the process has to be sped up to secure a workforce, this monetary compensation can help to ensure the hiring decision. Although, when the offer was implemented in May of 2020, the offer was $2500, half of what it is now. Ronzio reasoned that they could stay while they looked for another job so they increased the amount to compensate for those with a higher salary range.

Let me preface this by saying that yes, accountability should exist, but I would be interested to know the turnover rate for the hiring team. The cost to the company from this unique approach adds extra weight for those making the decisions on who to hire. The stress the hiring team faces has to be factored into the candidate decisions. How many times can the hiring team get it wrong before they’re let go? While the pressure to hire the right candidate should always factor in, one has to wonder about the effects of this model.

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