Long Term Lease tenant wants to start Air B&B his unit
Member since 2024 · 2 posts · 1 vote
Long Term Lease tenant wants to start Air B&B his unit
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James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 934 posts · 639 votesThis is basically a sublease/arbitrage setup, so a few things I'd nail down before you say yes.
First, check Saint Paul's STR rules. The city requires a short-term rental license, and the operator usually has to be the property owner or have written owner permission, plus there are zoning and platform registration requirements. If your tenant is the host, you're likely the one who has to pull the license, which means your name is on it.
Second, get it in writing as an amendment to his lease. Spell out that he's responsible for all STR compliance, taxes, guest behavior, and that he indemnifies you. Don't rely on a handshake for a 3-month trial.
Third, insurance. Your landlord policy almost certainly won't cover STR activity, and his renters policy won't either. Someone needs proper STR coverage or you're exposed if a guest gets hurt.
Fourth, the other tenant. I'd actually talk to them before this starts. Strangers coming and going in a duplex is a real quality-of-life change, and you don't want to find out they're unhappy after they've already given notice.
Honestly the upside here is decent since he's funding the test for you, but make him do the paperwork and carry the risk. If he's serious, he won't mind.
7 Replies
- 5moJames JonesPro MemberInvestor · Collierville, TN 38017 · Member since 2017 · 934 posts · 639 votes
This is basically a sublease/arbitrage setup, so a few things I'd nail down before you say yes.
First, check Saint Paul's STR rules. The city requires a short-term rental license, and the operator usually has to be the property owner or have written owner permission, plus there are zoning and platform registration requirements. If your tenant is the host, you're likely the one who has to pull the license, which means your name is on it.
Second, get it in writing as an amendment to his lease. Spell out that he's responsible for all STR compliance, taxes, guest behavior, and that he indemnifies you. Don't rely on a handshake for a 3-month trial.
Third, insurance. Your landlord policy almost certainly won't cover STR activity, and his renters policy won't either. Someone needs proper STR coverage or you're exposed if a guest gets hurt.
Fourth, the other tenant. I'd actually talk to them before this starts. Strangers coming and going in a duplex is a real quality-of-life change, and you don't want to find out they're unhappy after they've already given notice.
Honestly the upside here is decent since he's funding the test for you, but make him do the paperwork and carry the risk. If he's serious, he won't mind.
- Real Estate Agent · Memphis · Member since 2026 · 606 posts · 353 votes5mo
Personally, I’d look at this less as a tenant request and more as a change in operational model for the property.
The upside is real — market testing, more frequent cleanings, potential property improvements, and insight into STR demand without fully committing yourself upfront. But the risk side changes too, especially with another long-term tenant sharing the duplex.
For me, the biggest considerations would be:
• Local STR regulations and insurance implications
• Liability exposure
• Noise/security impact on the other tenant
• Who is ultimately responsible if guests damage property or create issuesIf I moved forward, I’d want everything clearly documented through a formal addendum, not just a verbal agreement. Things like guest limits, insurance requirements, maintenance expectations, termination rights, and accountability for complaints would need to be very clearly defined.
I do think the “trial period” concept makes sense — but only if the operational and legal side is structured tightly upfront.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes5mo
No way in hell I would do it. Let him get his own place and do it. Arbitrage is tough with experienced operators - it's a disaster waiting to happen with a novice with no experience. That's his problem that he travels - what do you care?
What is in this for you besides some crappy locks and someone pocketing extra money at your expense? Whether or not this guy can run one has no bearing at all as to whether you can run one. If you want to give it a shot, finish his lease or let him out and try it yourself and keep 100% of the money.
Skyline Properties - 5moAdam TafelBusiness MemberReal Estate Agent · St. Paul, MN · Member since 2017 · 592 posts · 403 votes
11 Year Twin Cities Airbnb Superhost here!
I would want a slice of the profits if I am going to agree to something like this, your main downside is that the other tenant is guaranteed to hate it. You’ll deal with issues between the two sides of the property and ultimately turn the long term unit more frequently.
I don’t subscribe to the idea that Airbnb guests are “harder on the property”, something we hear often from those who have never hosted. It’s the long term tenant with 4 kids who cooks with oil nightly and doesn’t run the fan during showers which is hardest on the property, not the weekender who barely uses the kitchen, or the mid term guest who works 12 hour days, comes home, orders takeout and falls asleep.
What part of St Paul are you in? Airbnb guests are getting pickier and pickier as the years go on. We used to use Goodwill furniture and set up in a Dinkytown basement 1bedroom, those days are long gone. If you cannot maintain a 4.8 rating Airbnb will bury the listing, which means that 95% or more of your guests need to give it 5 stars. If you are in a great part of town, he has nice furniture and the unit is higher end it could definitely work, but if you have classic landlord-grade finishes and classic tenant furniture this will not work, here is what will happen:
Your tenant will get a few 3 or 4 star reviews, and be forced to lower the price way down passed the median in the area. Your tenant won’t really care if they only get 75/night, because it’s all cake to them (they are already paying for the apartment and will see it as pure profit). The people booking the unit will increasingly become high school kids looking to party, a guy who “just needs a spot to crash for a while”, criminals, and so on. Ask me how I know….
I have probably hosted over 3000 groups over the past 11 years, and I’ve had maybe 1-2 problem guests - this is because I have higher end places with higher pricing - the bad guests almost always book the cheaper properties. I used to drop my Airbnb monthly rent down to 1500-1800/mo in a 1/1 unit every Dec-Feb to get someone to book it - now I would rather just let it sit vacant, that’s how prevalent these issues can be.
As far as liability goes - talk to an attorney and your insurance agent, but probably not a big deal as long as your have a short term license and you are covered by insurance.
Feel free to shoot me a DM as this subject is quite nuanced and hard to sum up in a single forum post.
Upside Property Sales 4.9110 Reviews - Property Manager · Houston, TX · Member since 2026 · 23 posts · 21 votes5mo
Personally, I’d be very cautious unless the agreement between you and the tenant is extremely detailed and iron clad. At that point, you’re essentially allowing a tenant to operate a short term rental business inside your asset while you still carry the majority of the liability and property risk.
My biggest concern honestly wouldn’t even be the Airbnb guests themselves, it would be the impact on your long-term tenant in the other unit. One bad guest experience, noise issue, parking problem, or safety concern could create turnover on the stable side of the duplex.
I’d also look closely at insurance coverage, local regulations, maintenance responsibility, damages, guest screening, cleaning standards, occupancy limits, and what happens if the Airbnb side starts affecting the other tenant or neighboring properties.
The concept itself isn’t necessarily bad, but I think this only works if expectations, liability, and operational control are very clearly defined upfront.
- Real Estate Broker · Nashville, TN · Member since 2022 · 163 posts · 87 votes5mo
Zane, the replies here are covering the legal and insurance angles well so I will add the piece I see play out from the management side.
The math everybody skips in this scenario is the cost of losing your other tenant. You have a stable long term renter on the other side of that duplex. That person signed a lease expecting a residential neighbor, not a rotating cast of weekend guests with luggage and late night check ins. One noise complaint, one parking issue, one uncomfortable interaction in a shared hallway or yard and your LTR tenant starts looking for a new place. In Nashville I have watched this exact situation cost an owner a $1,400 a month tenant who had been in place for three years. The turnover, vacancy, and make ready on that unit ended up costing more than the STR side ever brought in during the trial period.
The three month trial sounds reasonable on paper but it creates a messy exit. If the tenant invests in painting, new locks, and kitchen work, they are going to feel ownership over those improvements. When you try to end the trial or change terms, that conversation gets harder than it would have been on day one. Get very specific in writing about who owns those improvements and what happens to them if the arrangement ends for any reason.
@James Jones nailed the insurance piece. Your standard landlord policy will almost certainly exclude short term rental activity. If a guest trips on the stairs or causes a fire, your insurance company will point to the exclusion and deny the claim. The tenant carrying their own STR insurance does not protect you as the property owner.
If you do move forward, I would add one thing to the list that nobody has mentioned yet. Require the tenant to name you as additional insured on their STR policy, and get written confirmation from your own carrier that they are aware of and do not object to the arrangement. That paper trail is worth more than any handshake agreement about a three month trial.Zane, the replies here are covering the legal and insurance angles well so I will add the piece I see play out from the management side.
The math everybody skips in this scenario is the cost of losing your other tenant. You have a stable long term renter on the other side of that duplex. That person signed a lease expecting a residential neighbor, not a rotating cast of weekend guests with luggage and late night check ins. One noise complaint, one parking issue, one uncomfortable interaction in a shared hallway or yard and your LTR tenant starts looking for a new place. In Nashville I have watched this exact situation cost an owner a $1,400 a month tenant who had been in place for three years. The turnover, vacancy, and make ready on that unit ended up costing more than the STR side ever brought in during the trial period.
The three month trial sounds reasonable on paper but it creates a messy exit. If the tenant invests in painting, new locks, and kitchen work, they are going to feel ownership over those improvements. When you try to end the trial or change terms, that conversation gets harder than it would have been on day one. Get very specific in writing about who owns those improvements and what happens to them if the arrangement ends for any reason.
@James Jones nailed the insurance piece. Your standard landlord policy will almost certainly exclude short term rental activity. If a guest trips on the stairs or causes a fire, your insurance company will point to the exclusion and deny the claim. The tenant carrying their own STR insurance does not protect you as the property owner.
If you do move forward, I would add one thing nobody has mentioned yet. Require the tenant to name you as additional insured on their STR policy, and get written confirmation from your own carrier that they are aware of and do not object to the arrangement. That paper trail is worth more than any handshake agreement about a three month trial.
I wa thinking everything everyone above posted but I’ll put a cherry on top…
Why? Why would you allow this? You have more risk, risk of damage, risk of losing other tenant. Risk of material loss. What do you get out of that additional risk? I don’t think I’d allow it for an extra $500/months if they could prove they had the insurance to cover me, but let’s pretend you would.
What’s your tenants plan for the midnight call to them from an Airbnb guest saying this doesn’t work, or you don’t have any soap, or whatever else they like to complain about.
What’s your plan when your other tenant says “Hey, it’s’ midnight and you’ve got quite a few drunk teenagers still partying here…”
I’ll just end how I started. I NEVER would allow this, not for double rent. Why would you, what’s in it for you that justifies the risk. Just say no.
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