Over the past few years, Airbnb's (ABNB 2.63%) business has become more than just vacation rentals. In this video clip from "The Virtual Opportunities Show" on Motley Fool Live, recorded on May 3, Fool.com contributors Travis Hoium and Rachel Warren discuss how customers could save money by renting an Airbnb rather than renting or owning a home.
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Travis Hoium: The way that I would look at this is like a market. Let's take Jose as an example, I live in Minneapolis, so if he can move from the East coast to Minneapolis and have lower costs, there's going to be less demand incrementally for housing on the East coast and prices are going to adjust accordingly.
That's, I think, the way to think about it, especially in Silicon Valley where housing has always been such an issue if you're allowing these tech workers to not have to be in Silicon Valley and they can live anywhere in the world, you're going to have incrementally, maybe even significantly less demand in Silicon Valley, maybe housing prices come down there.
That's generally, I think, the way to think about it. If you want to do location arbitrage, I don't think there's a huge issue with that. Is it having your cake and eating too? Sure. But there are a lot of people that do that around the world.
Rachel, you can maybe touch on if it's actually cost-effective to rent and live in an Airbnb versus renting or owning a home. I don't know that costs would be the driver here, wouldn't it be the experience and the ability to live somewhere for three months and then go somewhere else and pack your stuff in an evening rather than having to move in and move out?
Rachel Warren: Yeah, absolutely. It can be more cost-effective. It depends on what you're looking for, the type of accommodation you choose, where you choose, how long you're there. These are all very much factors that play into whether it will be more cost-effective compared to, for example, a rental contract that you sign for a year or a mortgage that you pay.
But there is, definitely, very much that element of experience. There is also that ability to have a certain amount of belongings with you, you go somewhere for a few months, and then without having to go through things like shipping a lot of goods or furniture, you pack your bags, and you can move to the next location with relative ease. So, that kind of flexible aspect of what Airbnb is offering, that's something that is also very easy to do through Airbnb.
It can definitely be more cost-effective in the sense that if you're moving around or even if you tend to pick a location where you're able to live for a longer period. For example, Airbnb was saying they're partnering with some of these local governments for some remote working visas. Let's say, you have someone that gets one of these visas and then lives in an Airbnb that they rent for a year.
It could still end up being more cost-effective because those Airbnbs are furnished, all the costs essentially should be included with Airbnb, except for maybe some local tax that you would pay. There are a lot of advantages depending on the lifestyle you want, I think is what it comes down to.