NYC’s Airbnb crackdown has sparked an underground market for home shares — and these startups are looking to cash in

A year-old clampdown on Airbnb in New York City has created an exploding underground market for apartment rentals — and a handful of scrappy startups are attracting big-name investors as they look to grab listings that comply with the city’s new rules.

Last fall, the New York City Council imposed Local Law 18 — stiff regulations on home-sharing that forced Airbnb to remove most of the the tens of thousands of Big Apple rentals on its site at the time.

Now, hosts face onerous registrations and new rules including the awkward requirement that they be at home when guests are present — unless the rental period is longer than 30 days.

In response, a patchwork of private, invite-only groups has spread across Facebook, Instagram, WhatsApp and Craigslist with names like “Friendbnb” and “Gypsy Housing NYC.” Typically, they charge fees through apps like Venmo or Paypal.

One called “NYC Short Term Sublets” says it’s focused on the “middle ground for those looking for short to medium term stays,” with clients who “come to New York for extended periods of time for work, theater performances, film festivals, or just general tourism.”

The group has amassed 17,300 members on Facebook since April 2023 and has added 630 postings over the past month alone.

Meanwhile, in June a New York-based startup called Ohana rented out a 2,000-square-foot loft space in the newly renovated Domino Sugar Factory in Brooklyn.

There, a handful of 20-something employees can be found hunched over their Macs daily, trawling through some 40 of these social media groups that, according to its recent tally, account for some 60,000 listings.

Ohana, which focuses on rentals longer than 30 days, hasn’t been shy about trying to lure landlords and renters alike from any group on any app that it can. On a regular basis, sparks can fly.

“Hey guys – Apologies but this group has been infiltrated by some lame startup started by these Chads who are paying people to post listing in the group,” wrote Ricky Berrin, the founder of a WhatsApp group called “NYC Home Sharing.”

“Please report anyone who posts listings to a site called Ohana,” he added.

Elsewhere, Craigslist sent Ohana a cease-and-desist letter for recruiting prospective hosts away from the classifieds site. But Ohana’s investors see it as a badge of honor, according to CEO Ezra Gershanok.

“It’s common for companies like mine to poach leads in this way,” Gershanok told The Post. “Airbnb [targeted Craigslist listings] in the early days and investors love to see that because it’s proven to be a successful strategy.”

In June, Ohana raised $3 million from several former Airbnb executives and the co-founder of real estate marketplace Zillow, Spencer Rasoff. That was in addition to a $1.2 million round last year from startup accelerator Neo.

The cash bankrolled the hires of more than half a dozen students and recent grads who speak Mandarin, Hindi and Hebrew to woo landlords and renters alike, including foreign exchange students.

Ohana has recruited more than 1,200 hosts from Airbnb alone since it was founded 18 months ago and is grabbing 500 hosts a month from across social media and the web, Gershanok said. It has cleared more than $2 million in rent payments.

Gershanok, 25, did a brief stint at McKinsey & Company and founded Ohana with his childhood friend, Jacob Halbert, 25, a former engineer at Apple. 

Their increasingly sophisticated operation is ruffling feathers at groups like NYC Home Sharing, whose owner Berrin calls “an informal solution to a problem that’s arisen since these new restrictions were set up.”

The makeshift group was formed in 2021, but demand has skyrocketed since Local Law 18 was enacted, Berrin said. WhatsApp limits private groups like his to 1,024 members. Berrin said NYC Home Sharing is maxed out with a waiting list of more than 1,000. Recently, he hiked his fee by $5, to $25 a month.

In a follow-up email to The Post Berrin said, “The group was not created as a way to get around the law,” adding “and I’d guess that a majority of the posts are actually month or longer rentals, including lease takeovers and annual leases.”

“People who post on the platform should be complying with any local laws,” he added. As for Ohana, Berrin said he kicked them out because “they were clearly violating the spirit of the group and I had many people complaining about them spamming their accounts.”

HostU, launched in April 2023 by Northwestern University student Bella Le Sage, is also looking to cash in on the upheaval with a site that focuses exclusively on connecting students to housing.

The Chicago startup has mounted an expansion into New York City with the help of an undisclosed investment from Edwin Marcial, the former chief technology officer at Intercontinental Exchange (ICE), who now runs a tech-focused fund called Thirteen Castles.

“We view local law 18 and other regulations as positives for our business,” Le Sage told The Post, adding that hostU is in the process of closing its second fundraising round.

Meanwhile, Austin, Texas-based Furnished Finder, founded in 2014, is a now a major player in the 30-day plus market in New York.

Last year, it bagged VRBO’s former president Jeff Hurst when private equity firm Summit Partners took a majority stake in the company.

Hurst also confirmed that Furnished Finder’s business has spiked in New York City since Local Law 18 was enacted.

“Our growth has doubled in tenant demand and supply, and I’m sure they are hosts who used to be only on Airbnb,” Hurst said.