No Room: Under the new program, New York has approved just 9 apartments for short-term rentals. ILLUSTRATION BY STEPHANIE CUI FOR FORBES; P. SPIRO/ALAMY
Last week, Airbnb filed a lawsuit against New York City over a new law that the company is calling a “de facto ban” against short-term rentals that threatens $85 million in annual revenue for the home-sharing platform.
Set to go into effect next month, New York City Local Law 18 requires city residents who want to rent out a room or apartment to register first with the New York City Mayor’s Office of Special Enforcement (OSE) and attest that they will comply with what Airbnb calls “the maze of complex regulations in different legal codes governing short-term rentals.”
Those who skirt the law are subject to a civil penalty of up to $5,000 for each violation. Short-term rentals in New York City drove $85 million in annual net revenue for Airbnb in 2022, according to the lawsuit.
While that’s not a small sum by most measures, it’s barely more than 1% of the company’s $8.4 billion annual revenue.
Dan Wasiolek, a senior equity analyst at Morningstar Research Services who covers lodging and online travel, likens the new law in New York to a natural disaster. “Just to put it in perspective,” he explains, “let’s say a hurricane impacts one of your markets and shuts it off for a period of time until the issue gets worked out. I see this as a one-off situation that comes up in a cycle every so often.”
For now, it appears that Airbnb is on the brink of a near-shutdown in New York City, where there are currently 20,000 apartments and homes listed on its site. As of a month ago, the city had approved only nine registrations for short-term rentals, a number that makes up less than 0.04% of active listings that have been booked at least once since the beginning of the year.
“Nine is ridiculous,” says Wasiolek. “A fraction of one percent of Airbnb listings have gotten official verification, which is a sign that the law is extremely restrictive.” And to make matters worse for Airbnb hosts, “it’s my understanding the city isn’t explaining to people why their application is rejected.”
Of course, this isn’t Airbnb’s first civic battle. In the 16 years since the company launched, it has seen major markets—including Tokyo, Miami and Paris—issue ordinances to regulate short-term rentals, resulting in a dizzying global patchwork of laws and city codes of varying degrees of burdensomeness.
It’s a level of complexity that other players in the short-term rental industry would love to simplify. “Our industry is heavily regulated, but nothing much happens at the federal level,” says Nick Scarci, director of state and local government relations at the Vacation Rental Management Association (VRMA), which represents over 1,200 professional rental management companies.
The rise of electric vehicles in the United States is by no means a fad, temporary trend or mistake. From my perspective, leading an electrical components manufacturer for nearly a decade, I have seen the rapid growth of the EV space firsthand. At the outset, I was optimistic about the growth potential of the EV sector. Today, I’m ecstatic. Just look at some of the numbers:
Consulting leaders McKinsey & Co. say EVs will largely dominate the truck market by 2035, and Mordor Intelligence forecasts that the commercial EV market will grow to roughly $258 billion by 2027 (compared to around $67 billion in 2021). In response, almost every major manufacturer is retooling production lines for a largely EV future.
Those trends have many suppliers eager to break into the electrification scene, but few know how to effectively penetrate the market. When we committed to breaking into the electric vehicle market in 2015, we were well positioned for the space because of our experience in designing and manufacturing for safety-critical sectors such as aerospace, defense and medical devices. We also did extensive research on the electric vehicle industry.
Today, I often hear from executives in the manufacturing or services sector considering the same questions we faced then. The first is whether to move toward the EV market in the first place. I recommend they start by asking themselves a simple question: Do you believe that vehicle electrification is the future? Once you are committed to this rapid transformation, you can begin to discover ways in which your business can contribute to the industry.
Next, they want to know, “How do I break into the EV space, especially when my core expertise is in other segments?” or “How am I going to get customers in this space?” Some want to know how they apply their previous expertise to the EV space, while others are seeking ways to set their business apart from all the other players. I advise the following steps:
1. Do your homework.
I advise company leaders to spend substantial time researching the current services and products that are in demand within the EV space. Great ways to conduct said research include attending conferences, listening to industry discussions on a variety of topics and learning about electric vehicles and their architecture. I would recommend absorbing everything from how the vehicles are made to the individual players involved to gain a true understanding of the industry.
Go beyond your comfort level when it comes to complex subject matters. Everybody knows electric vehicles have batteries and that they run on an electric motor. But how does everything connect? How does it all work as one, cohesive piece of technology? How do the operators of these vehicles use them and what requirements are they looking for? These are the questions I encourage newcomers to answer themselves.
2. Identify industry needs.
At this stage, the line of questioning changes a bit. This is where I believe business owners should be asking themselves, “Which companies are manufacturing products for the space? What are the goals of these manufacturers, and why do they have these goals?”
This is an opportune time to reflect on the current value that your business brings to customers. Once you have done so, this is a great time to ask the next question: Given my existing value proposition, what can we contribute to this space?
For example, maybe you lead a metal fabrication business and you have years of experience fabricating high-precision metal parts for aerospace. You need to identify how to leverage these competencies in an electric platform. You could look at which high-precision parts are needed to power electric vehicles, and let’s say it turns out that there is one very high-precision part that is always included in electric vehicle battery packs. Because you understand both the architecture of the EV and are well aware of the major manufacturers in the space, you can now identify the value of the battery pack opportunity.
3. Supply the demand.
Continuing with our high-precision metal parts example above, upon delving into the internal structure of said battery packs, you realize that the development of this product would relate to a core competency of your existing business. You can now begin to take the steps necessary to identify customers, determine value proposition, produce prototypes and hopefully produce these items at a high volume to meet the growing demand of the EV industry.
4. Speak up.
This tip is very important: In my experience, you should never be afraid to reach out to companies that have already achieved success within the EV space (that are not competitors of course!). As I mentioned, the sector is still very much expanding. I am constantly talking to industry newcomers about what roles their existing businesses could play within the market and am happy to provide them with realistic resources and investment guidance that is required to get their new operation off the ground.
5. Embrace change.
Internal changes are necessary. There is no way around this. You will need to onboard more teams, enhance your engineering efforts and increase the number of hands you have working in sales, quality control, manufacturing and any other department within your business that will help you work with these types of products and build out the new segment of your business.
Breaking into a new-to-you industry may seem daunting, but it’s an exciting time in the electric vehicle industry. Apply these tips and remember: Without risk, there is no reward!
For the last several years, passive income has been hailed as a near-perfect approach to generating wealth, appealing to entrepreneurs, investors and average working professionals alike. But the promise of effortless income generation sounds suspicious on its surface. Is there really a way to generate revenue without hours of work? And if so, is it accessible to the majority of the population?
The Idea Behind Passive Income
Strictly speaking, passive income is any kind of recurring income that is generated without ongoing demands for your time and effort. Wages are paid hourly and salaries are paid on an annual basis, with both forms of compensation contingent upon your working a specific number of hours; these are not passive. Instead, a passive income source would be one that sends you a check in the mail periodically, without any effort on your part.
To better understand what passive income is and how it works, let’s look at some of the most commonly cited examples of passive income in action:
Dividend-paying stocks. First, there are dividend-paying stocks. Stocks represent fractional shares of ownership in public companies. In many cases, those companies decide to distribute profits regularly in the form of quarterly dividends; shareholders can count on a set amount of quarterly income based on the number of shares they hold.
A monetized blog. If you start a blog that generates a sizable amount of traffic, in the realm of thousands of visitors per month, you can start monetizing it with the help of ads, affiliate links, premium content or other paid features. You’ll earn a share of revenue based on the number of people you attract, the number of sales you make or other factors.
Rental properties. With rental properties, you can buy a property, attract a tenant and collect an amount of rent that exceeds your monthly expenses. With a decent profit margin and a few properties under your belt, this can add up to be a lot of income.
Digital goods. You can also make passive income with the help of digital goods, like eBooks or stock photography. After developing these digital goods and marketing them consistently, you may be able to generate recurring revenue from all their future sales.
The “Passive” Income Myth
All these methods are proven to be capable of generating income. More than that, they’ve been responsible for developing many self-made millionaires. But it’s not the “income” part of the term we’re concerned with as much as the “passive” part of the term.
Passive income is rarely passive in the truest sense; while these (and other) passive income sources may require less effort than a full-time job, they may require effort in other formats and in other contexts.
Let’s take a look at each of these:
Stock research and initial capital. It’s not hard to get involved with dividend stock investing, but you’ll still have to spend time researching which stocks are available so you can maximize your return. Additionally, you’ll need a sum of initial capital to achieve a meaningful stream; many dividends only pay 2 to 4 percent annually, so investing $100 won’t give you much of a return.
Blog setup and maintenance. According to The Blog Starter, “It’s easier than ever to start a blog — but even with a good plan in place, there’s no guarantee you’ll be successful. It takes a lot of time to create content for the blog, research your target audience and refine your approach over time.” Since you’ll also need to produce new content on a regular basis, even a successful monetized blog will require at least a part-time job’s worth of effort.
Property research and maintenance. Investing in rental property requires significant upfront capital (not unlike investing in stocks), and to be successful, you’ll need to carefully research and vet each prospective property. You’ll also need to maintain your properties and manage tenant turnover, or else cut into your profits by working with a property management firm.
Digital good development. If you want to sell an eBook or stock photography, you’ll need to produce those assets first, then find a service like Shutterstock where you can sell them. This often requires dozens, or even hundreds of hours of upfront effort, and then you’ll need to market your work.
Some people have claimed that passive income is a myth, but that may be a little extreme. Instead, a more accurate assessment may be that passive income isn’t truly passive. No matter what, you’ll still need to put in the time and effort to make your income-generating strategy work; it’s just in a different format than your conventional job.
The Bureau of Labor Statistics Thursday released inflation numbers for September. The Consumer Price Index for All Urban Consumers (CPI-U) rose by 0.4% in September on a seasonally adjusted basis, or 8.2% over the past 12 months before seasonal adjustment. The CPI numbers now allow us to calculate the inflation rate on I bonds that will take effect in November.
Using the month-by-month data, the new inflation rate will drop to approximately 6.47% starting next month. Keep in mind that we don’t yet know the fixed rate portion for November I bonds. The Treasury Department will release that information next month. The rate makes I bonds an excellent place to invest cash.
The projected 6.47% is a significant drop from the current 9.62% rate. At the same time, it’s still an excellent rate for a risk-free investment, particularly given the performance of both the stock and bond markets in 2022. And the lower rate beats some of the best interest rates on savings accounts and CDs. Still, there are several ways to lock in the 9.62% rate, even if you’ve already purchased I bonds this year.
If You Haven’t Bought $10,000 Of I Bonds This Year
For those who haven’t purchased I bonds this year, now is the time to do it. You can purchase up to $10,000 a year per person. If you make the purchase by October 28, 2022, you’ll receive the current 9.62% annualized rate for the first six months.
With Inflation Hot, Can Fed Stay The Course?
This confuses some folks. Even though the rate will change next month for new purchases, those who buy in October will first earn the annualized 9.62% for six months, and then the new November rate for six months.
Keep in mind two things about I bonds. First, you cannot cash them in for the first 12 months. Second, if you redeem an I bond within the first five years, you’ll forfeit 3 month’s worth of interest.
If You Have Purchased $10,000 Of I Bonds This Year
For those who have already purchased their limit in I bonds, there are still strategies available to buy even more.
First, those with trusts can buy I Bonds in the name of the trust. Many families have revocable living trusts, for example, which can purchase I Bonds subject to the $10,000 limit. In some cases, families may have more than one trust, thus increasing the limits they can purchase. You’ll find resources for trusts on the Treasury Direct website here.
Second, you can also purchase I bonds in the name of a business. The business can be a sole proprietor or an LLC. Even somebody with a side hustle can purchase I bonds.
Third, you can purchase I bonds as a gift. Parents or grandparents, for example, might purchase I bonds for their children or grandchildren. To purchase an I bond as a gift, you must know the recipients social security number, and the bonds are registered in the recipient’s name.
After an I bond is purchased as a gift, it remains in the buyer’s Treasury Direct account until transferred to the recipient. While it sits there, it earns interest and is subject to the same rules as any other I bond purchase. And the buyer can keep the I bond in their account for years before delivering it to the recipient’s Treasury Direct account.
As odd as that may seem, it actually presents a fourth strategy for maxing out the current 9.62% rate. Spouses, those with significant others, or perhaps close friends can buy each other a $10,000 I bond as a gift.
If purchased before the new rates take effect, the I bond will earn the annualized 9.62% rate for the first six months. There is one catch, however.
When the I bond is transferred to the recipient’s account, it counts toward the recipient’s annual limit. If they’ve already purchased $10,000 in I bonds this year, you would have to wait until next year to deliver the I bond. Given that it earns the higher return from the start, this shouldn’t present an issue.
In theory, one could purchase more than $10,000 in I bonds as a gift this month for the same person. Just keep in mind that one cannot deliver more than $10,000 a year in I bonds to the recipient, and that assumes they haven’t purchased I bonds on their own.
One final note. Treasury Direct made some updates to its site this month. That’s the good news. The bad news is that the update broke parts of the website. One part that isn’t working is the buying of I bonds as a gift. The hope is the website will get fixed before the 9.62% rate goes away.
Minority communities have been the hardest hit financially by the current spike in consumer prices and housing costs, with high percentages of Black, Latino and Native American families reporting serious financial problems and even threats of eviction, according to a survey published Monday by the Harvard T. H. Chan School of Public Health, NPR and the Robert Wood Johnson Foundation.
With the annual increase in consumer prices hitting a 40-year high of 9.1% in June, Americans, by a wide margin, cite inflation as the number one problem facing the U.S. But the actual impact on individual households is more dispersed. For example, in the new survey, 58% of Black adults, 56% of Latinos and 69% of Native Americans say inflation has caused them serious financial problems, compared to 44% of white and 36% of Asian adults.
Soaring rents are similarly hitting certain minority households the hardest. In the new survey, 16% of Black renters, 10% of Latino renters and 21% of Native American renters reported they had been evicted or threatened with eviction in the past year. That compares to 9% of white and 4% of Asian families. “This is just a warning from this survey, that unless the government can provide some help for vulnerable populations, a year from now they are going to have more people who are homeless,” said Robert J. Blendon, co-director of the survey and an emeritus professor of Health Policy and political analysis at the Harvard T.H. Chan School of Public Health
Programs of emergency rental aid helped around 5 million American families during the early months of the pandemic, with 1.5 million fewer evictions compared to pre-pandemic levels. After 22 million Americans lost their jobs during the start of the pandemic, Congress provided $25 billion in emergency rental assistance in the Coronavirus Aid, Relief, and Economic Security Act (CAR AR+3%ES Act) passed in March 2020. A year later, in the American Rescue Plan, it added another $21.55 billion of rental assistance.
Meanwhile, the emergency rental funds Congress appropriated have either been used up or are being returned to the federal government unspent. For example, last Thursday, Mississippi Governor Tate Reeves announced his state would halt the federally-funded Rental Assistance for Mississippians Program by Aug. 15, meaning as much as $130 million for the program would be returned to the federal government.
The recent spike in rent prices leaves low-income and minority groups in particularly precarious situations. A May report by the Federal Reserve Board showed that as of last fall, about half of renters with income between $25,000 and $49,999 were already “cost burdened”—meaning they were spending more than 30% of their income on rent. In the Fed survey, 44% of Black households and 37% of Hispanic households reported they were renters, compared with just 21% of white households.
“Unless some sort of emergency help is provided, a substantial number of minority populations are going to be evicted over the next year,” Blendon warns.