🏠 Airbnb bust & Interest rates rise again

How is it that Airbnb’s earnings exceeded expectations during Q3, yet the company’s stock dropped by more than 10% this week? 🧐 Let us investigate.

Almost 100 million nights and experiences were booked on Airbnb from July through September, leading to record-breaking revenue for the platform. But the company doesn’t expect to do as well during Q4. One Twitter user even coined “Airbnbust” to describe the sudden decrease in bookings.

Why are travelers over Airbnb? We have a few hunches.

1. They’re fed up with rate increases. The average rental price has gone up 5% compared to last year.

2. The list of checkout chores hosts leave for guests are getting out of hand. Some of the more outlandish requests have been shared on TikTok.

Everyone saw “Barbarian,” the new horror movie about a woman who double-booked an Airbnb where another traveler is already staying. We won’t spoil what happens, but let’s just say there is, in fact, a hidden dungeon.

SPILLING THE (REAL)TEA

Someone finally admitted it: “We’re navigating one of the most challenging real estate markets in 40 years,” said Eric Wu, CEO of Opendoor, this week after the company reported $928 million of net losses during Q3 and laid off a fifth of its workforce.

Surprise, surprise: the Federal Reserve has raised interest rates again. What’s it to ya? Well, the 0.75 percentage point increase will make it costlier for you to get a loan, which the Fed hopes will make you cut back on borrowing and spending.

Is there a lake house on your vision board? Then you may want to scope out Saranac Lake, New York, for your future home. The charming small town in the Adirondacks was ranked by Evolve as the No. 1 place to buy a lake house in 2023.

Leave it to a group of self-proclaimed entrepreneurs on the internet to do something sketchy and then out themselves for the views. These TikTokers are signing leases, renting out the properties on Airbnb, and pocketing the difference. Then, they’re showing their followers how they can do it, too. Thing is, though, rental arbitrage is strictly against Airbnb’s terms of service.

When was the last time you reached for your checkbook? Whether you’re paying rent or collecting it, the end of the month is probably the only time when you’re signing or cashing paper checks. JPMorgan Chase wants to update the invoicing/collecting process by automating online rent payments.

HOW TO CALCULATE YOUR HOME EQUITY

What 👏 is 👏 home 👏 equity? Home equity = the difference between your home’s appraised value and how much you owe on your mortgage. Here’s how to calculate it in three steps:

01 — Find out your home’s value: Hire a professional appraiser to tell you how much your home is valued at, or ask your lender. You can also ballpark it by checking out the recent sales in your area on Zillow.

02 — Figure out how much you still owe: Check your most recent mortgage statement to find your mortgage payoff amount.

03 — Do the math: Take the first number you tracked down (home value) and subtract the second figure from it (loan balance), and there you have it!

WHAT WE'RE CURRENTLY INTO

📚 What we're reading:  The Book on Rental Property Investing by Brandon Turner will help you get your financial ducks in a row now so that you’re ready to invest when the opportunity arrives.

🎧 What we're listening to: This week on the Life with Marianna podcast, hosted by the co-founder of Summer Fridays, Marianna Hewitt chatted with Kirsten Jordan, a real estate broker and cast member on Bravo's “Million Dollar Listing” about buying a home and investment properties.

👀 What we're watching: Halloween is officially over, so you know what that means… It’s Christmas movie streaming season! Check out this list of 155 new holiday-themed movies premiering on Hallmark, Lifetime, Netflix, and beyond this year.

🛒 What we're adding to our shopping cart: It wouldn’t be the holiday season without a Sephora sale. Stock up on your favorite beauty products during the Holiday Savings Event for Beauty Insider members happening through tomorrow.

EXPLAINED: FORBEARANCE VS DEFERMENT

What happens if you can’t make your mortgage payments? Asking for a friend, of course. 😉

Your friend has two options:

FORBEARANCE - this is when your friend (the homeowner) comes to an agreement with the lender to pause or reduce mortgage payments for a period of time.

Pros: Your friend will avoid a foreclosure, which would affect their credit score—and their ability to get a future loan.Cons: While payments may be temporarily reduced or paused, interest will continue accruing. That means once the forbearance is over, your friend’s future monthly payments could increase.

DEFERMENT - this is when your friend (the homeowner) comes to an agreement with the lender to postpone overdue mortgage payments by sticking them at the tail end of the loan term.

Pros: Not only can your friend avoid a foreclosure, AKA a drop in their credit score, AKA a hard time getting a future loan, BUT their loan also won’t accrue interest, so payments will continue to stay the same.Cons: Your friend will agree to stretch the length of their loan. So, they should really only defer if the circumstance keeping them from making payments is a short-term thing.

WOMEN OF THE HOUSE

Featuring Katie Gatti, founder of Money With Katie

One word to describe the state of the economy right now? Ooof.

If you don’t know what to do with your finances during this tumultuous time, you’re not alone. We’ve asked the founder of the blog and podcast Money With Katie for a few money moves.

What mistake do you commonly see millennials making when it comes to their finances?

Probably believing that they should wait to invest in some capacity until they "have more money." Investing (in stocks, rental properties, etc.) is how you get more money, and I think that's a common misconception. There's not as much urgency as there should be for how important it is.

Can you walk us through a few investing options?

I'll highlight the three that I feel like I know the most about:

1. Stocks are my personal favorite because they're truly passive—dump some cash into an account, buy some diversified ETFs, and you're done—now all you have to do is wait!

2. Real estate is the one I haven't dabbled in yet because of the current market but it’s such a good opportunity for using leverage *relatively* safely and a great option for those who potentially have less time or less capital to work with in the beginning.

3. Small business acquisition—the one I'm currently pursuing—requires the most upfront work for sure, but has returns that make stock market and real estate returns look paltry by comparison.

If someone chooses to invest in real estate, what are some ways to save in advance of making a down payment on a property?

This one always comes down to timeframe. I personally think two principles make the most sense:

If you're going to drain your entire net worth to buy a piece of real estate, you're playing it too risky. You want to have some capital on the side for necessary, unexpected repairs, or for renovating and adding value to the property.

There are interesting investing options with companies like Betterment called "Big Purchase" accounts where you can input your time horizon for purchasing the property and it'll allocate your investments in a way that's a little more risk-averse.

To save money, should we focus on cutting down on costs or making more money?

I'll caveat this by saying that there are absolutely people who manage to live paycheck to paycheck on $300,000/year (I've met them!), but when you look at the data, save rate is highly correlated to income. In other words, people in the highest 20th percentile of earners save roughly half their income, compared to people in the lowest 20th percentile of earners, who can't cover their costs every month and are (presumably) going into debt to make ends meet.

While it's good to do a cursory examination of your spending to make sure you're not living beyond your means or expecting more from your lifestyle than your income can responsibly provide, once you've done that, it makes more sense to focus on growing your income.