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David Oberlander's profile image
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David Oberlander's profile image
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David Oberlander
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Wow, my tenants have a 5 star "Host" rating on AirBnB! For my Property???

David Oberlander
  • Investor
  • Valrico, FL
Posted Jul 19 2015, 06:04

Good morning, BPers.  Hope your weekend is going better than mine.  As you can see by the subject line, tenants at one of my rental properties have decided to increase their income by renting out rooms at the house they rent from us.  It's a duplex.  The tenant next door called yesterday and told me he thought they were having various people coming and staying for the past month and that he hadn't seen either of the couple living there for a week.

It took less than five minutes to find the listing for our property on AirBnb and to start reading the 31 reviews they have received (almost a 5 star average) for the "property" they "own".  LOL  (no, actually I've been doing a slow burn for about 16 hours)

So, what do we do next?  As they are in violation of their lease, various city ordinances, building codes, etc I intend to shortly ride over there and slap a 7 day vacate notice on the front door.  Then should I sign up on AirBnb as a guest and leave a "review" telling people not to try booking a room at this "hotel" and that those who have booked up already need to request a refund?  Yes they have reservations booked thru September.  I'm sure my insurance company would love handling a claim from some one getting injured there.

The thing is I kind of like the AirBnB concept.  As I intend to add vacation rental properties to our holdings and use them for bookings.  But this proves to me that AirBnb has no way of verifying owners or renters at properties listed there.

Anybody else have this situation occur? Or have any suggestions or comments as I'm open to any ideas.

Joe Gemma's profile image
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Joe Gemma's profile image
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Joe Gemma
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Replied Jul 19 2015, 06:21

That's pretty crazy. Without knowing any of the legalities of a situation like that, I wonder if you (the actual owner) would be entitled to the revenue they received from AirBnB. Just a thought. Hope this works out for you. 

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Richard Dunlop's profile image
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Richard Dunlop
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Replied Jul 19 2015, 06:22

If you evict the temporary tenant by name I bet the host score drops a bit.

Why aren't you renting both units on AirBnB?

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Fred Grant
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Replied Jul 19 2015, 06:44

I think you should definitely post on AirBnB unless you like the thought of them making more money than you while you are getting them out.

Presumably they are keeping the place in good shape though for their guests so that is a plus. (too soon for jokes?)

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Jim Shepard
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Replied Jul 19 2015, 06:49
Busted! The wife and I have to find a new BnB to stay at on our vacation! Just when I thought I had seen it all. Tenants always seem to amaze me. I'd serve them a 5 day notice to quit. Good luck with collecting any of their "BnB income".
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Replied Jul 19 2015, 06:52

 Time for them to go.  They just passed a tax in our area on short term rentals and when I read this I thought of all the various issues you could run into with this scenario regarding taxes,  who is cited if this violates local ordinances, and insurance.  I would quickly take action.  However I don't  think Airnb verifies ownership at all, do they?

You might also check on other sites like homeaway and vrbo to be sure you are not listed there. 

James R.'s profile image
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James R.
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Replied Jul 19 2015, 07:13

Check out the "Couchsurfing" website too.  I had tenants doing that.  I figured it out when the water usage went up by about 3 people per quarter.  

They denied it and asked that I prove it.  I threw them out when their lease came up in 5 months. 

Tenants think that paying rent is "owning" and that they can do whatever they want.  

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Account Closed
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Account Closed
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Replied Jul 19 2015, 07:18
Legally it seems like it would be pretty close to a sublet. I don't see how that is any different than investors who lease option propertiesby agreeing to rent from an owner and then turning around and renting them at a higher rate. Just give them the notice. As a practical matter though your property is safer with them than with tenants who just have tons of house guests who don't have to pay.
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Jaago Viitkin
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Replied Jul 19 2015, 07:33

Just talk to the tenant, make a deal and get more rent from them. Doing it yourself takes too much time. 

If it works out then give them your other unit also. You will get the top rent, they will never be late with your rent. Everybody wins! Just get a better insurance that covers vacation rentals also. There are many companies out there.

Good luck

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Marcia Maynard
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Replied Jul 19 2015, 08:01

@David Oberlander Thanks for sharing! Wow!

I'd contact AirBnB as soon as you can and discuss the matter with them as well. I'm sure they've had this happen before. They have an obligation to the vacationers who made reservations for the future. Since your tenant misrepresented themselves as the owner, AirBnB may bar them from future dealings. 

Also, time to do a "maintenance inspection" to check out the property. But be considerate of the innocent vacationers. 

Hopefully you still have contact information for the tenant of record. Make sure the legal notice you post is not in violation of landlord-tenant laws for your jurisdiction. If you are receiving rent on time and they are on a long term lease, your options may be limited to serving them with a "Notice to Cure". When the lease ends, you can choose to not renew. You may, however, arrange to meet with the tenant of record now, address the issue at hand, and talk with them about a move-out plan... anything is negotiable. They will either agree to it or not.

In our jurisdiction we have the option to serve a 20-day (no cause) "Notice to Vacate" prior to the start of the next rental period. This works well if the rental agreement is month-to-month. But if the tenant's lease is longer, to get action sooner, I would need to serve a 10-day "Notice to Comply" to get them back into alignment with the rental agreement. Otherwise I would need to wait it out until the lease ends or negotiate with them for them to leave sooner. 

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David S.
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Replied Jul 19 2015, 09:40

@David Oberlander

What does your lease say on subletting?

What does it say about running a business out of your home?

I have clauses in my leases forbidding both of these issues.  If you do (I assume you do, since you said they were in lease violation), you have the AirBnB listing as proof and you can evict based on a lease violation.  Getting proof is usually the hardest part on lease violations (sometimes witnesses are required), but you have that already. If you don't have these clauses, time to update your lease, assuming these clauses are legal in your state.

I know another landlord running an AirBnB in Florida  and I do know they are very strict on the hotel taxes (not sure if it is the state or the municipality). You may liable for thousands in back taxes. He had over 10k due when he fired his property manager.

I once had a tenant running a hotel and restaurant out of one of my apartments..... She just didn't understand why it was a problem.  She even wanted me to upgrade the apartment for her commercial use! I kept getting broken stoves and everything else before I caught on.

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JR T.
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Replied Jul 19 2015, 10:19

I totally do not get the sentiment in this thread. Why does anybody care one bit if their tenant rents to a roommate, AirBnB, etc. If you're getting your rent, let the tenant do what they have to to continue paying you. 

I believe in treating a rental portfolio like a business and not getting involved in any of my tenants' personal affairs.

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Joseph M.
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Replied Jul 19 2015, 10:30

I'm sure this is happening with a lot of rentals but most people probably don't get 'caught'. I know there are various cities 'cracking down' on Airbnb type rentals too. I think as this industry evolves there will be more of a legitimacy and property management companies that specialize in Airbnb...i'm sure there are already some. 

I've even heard of some of the big income earners on Airbnb and they will rent multiple apartments in popular cities in order to rent out. I don't know how they get away with it or if they do get away with it..but the returns can be pretty massive it sounds like. 

Best of luck. 

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Account Closed
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Replied Jul 19 2015, 10:47

There are plenty of horror stories of airbnb  tenants causing damage, not vacating the premises when there time is up plus a mentioned local laws that you might be in violation of.They are conducting a business which is probably in violation of your lease They are a lot of potential liabilities and no upside for you  

Silvia B.'s profile image
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Silvia B.
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Replied Jul 19 2015, 12:02
Originally posted by @JR T.:

I totally do not get the sentiment in this thread. Why does anybody care one bit if their tenant rents to a roommate, AirBnB, etc. If you're getting your rent, let the tenant do what they have to to continue paying you. 

I believe in treating a rental portfolio like a business and not getting involved in any of my tenants' personal affairs.

Jr T, it's not just about the money. This landlord has no  control over who his tenant let's stay in his property. This is one of the reasons that landlords run criminal background checks on prospective tenants. I don't want felons, drug dealers or sex offenders in my rental even if they pay the money!

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Aaron Mazzrillo
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Replied Jul 19 2015, 12:25

You should contact them through Airbnb site and inquire about renting the place. LOL

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Al Williamson
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Replied Jul 19 2015, 12:45

If you can work around city ordinances and quantify how much the proper insurance will cost, I would joint venture with the tenant.

Taking a probation stance and not letting your business evolve is a lost opportunity.

Evolve legally - someone will always move your cheese.

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David Hays
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Replied Jul 19 2015, 12:47

Well, there is definitely some misinformed suggestions here, but I think everybody is at least trying to be helpful. You most likely have every right to evict the tenant according to their lease terms, but I think at least some of your feelings here are a result of surprise and lack of information. 

First of all, you don't have to be an owner to list a property on Airbnb (it's not that you can lie, Airbnb just doesn't make this distinction at all). You most likely would not be entitled to any of their earnings from Airbnb directly, though I guess you could pursue this in civil court if you so desired. Airbnb will almost certainly not give you any information regarding the tenant from their profile, regardless of whether you tell them that you're the property owner - there are countless precedents of knowing landlords letting tenants 'vet' a property's potential, and then evicting them only to operate it themselves. In any case, it is entirely possible to lease your unit for the purpose of managing for Airbnb, so this also weakens your case in that regard. You will not be able to make any claims against future reservations, neither for their income nor the ability to honor them on your own - if you evict the tenant and they are unable to honor the reservations, Airbnb will cancel and relocate the guests directly.

 Again, I'm not saying that the tenants are not in the wrong here, and that you may feel the need to evict them...but I'd encourage you to think about a few points first:

  • First of all, do you require your tenants to maintain their own insurance? I understand that this isn't universal, but any US rental I ever had required that I had insurance.
  • If so, then how much liability do you still maintain, in this case? This is a genuine question, as I'm not clear where their insurance might end and yours begin.
  • Have you considered that, as people that are offering a product for sale, they are likely going to keep the place in far better condition than a normal tenant? Also (in reference to @Silvia B. )that they, as the ones living there, are going to be even less-inclined than you are to allow drugs, violence, or criminal activity on the premises?
  • Despite what @Account Closed said, the upside for you is that, as they are working to make money, the likelihood that they will default on rent is lower.

(Disclaimer: I have owned and operated a property management business overseeing apartments for tourist use since 2013, including listing on Airbnb. We have controlled 15 units, and despite a few hiccups during our growth, our clients are exceptionally happy with us and the condition in which their properties are kept. It is a transparent operation, however, and is not for every property owner.)

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David Hays
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Replied Jul 19 2015, 12:50

@James R.

 While you may not be personally comfortable with the idea, I haven't seen a long-term residential lease yet that would preclude being active on Couchsurfing, and I'm curious to know on what basis you were able to evict them.

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Replied Jul 19 2015, 12:52

Hmm, the Pope is scheduled to appear in Philly in another 2 months and they say all of the area hotels and motels are booked for those dates. I know a few homeowners that are renting out rooms in their house, some will be renting out their vacation homes. By reading this thread I'm sure it will be a few other duplex / apartment AirBnB goings-on at a niiice profit to the tenants too. 

Kudos,

Mary

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Hugh Ayles
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Replied Jul 19 2015, 13:06
Originally posted by @JR T.:

I totally do not get the sentiment in this thread. Why does anybody care one bit if their tenant rents to a roommate, AirBnB, etc. If you're getting your rent, let the tenant do what they have to to continue paying you. 

I believe in treating a rental portfolio like a business and not getting involved in any of my tenants' personal affairs.

 In Austin, in spite of being headquarters to HomeAway, the city has made a big deal about short term rentals.  I'm sure the first person they would go after is the property owner.  Then the property owner gets to spend time and money sorting this out.

Then your insurance company finds out and wants to raise your rates.

A part of business ownership is risk management.  Ignore this part of your business and you can get hurt.

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Replied Jul 19 2015, 13:09
Originally posted by @James R.:

Check out the "Couchsurfing" website too.  I had tenants doing that.  I figured it out when the water usage went up by about 3 people per quarter.  

They denied it and asked that I prove it.  I threw them out when their lease came up in 5 months. 

Tenants think that paying rent is "owning" and that they can do whatever they want.  

 Couchsurfing is at least different in the respect that there is no money changing hands, but that many visitors almost certainly violates your lease if they're driving up water usage that much. Otherwise, I think you'd have a hard time distinguishing a couchsurfer guest from a friend staying the night or bringing someone home for a romantic evening, legally speaking. 

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Replied Jul 19 2015, 13:15

 I agree that you probably just feel burned because the tenants didn't inform you, but it wasn't personal. 

   I think this is a great opportunity for you to make more revenue. AIRBNB has their own insurance to cover any property for the time it is rented through their website. Check in to that. 

You should keep the tenants but take a percentage of their future bookings.

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Replied Jul 19 2015, 13:36
Originally posted by @JR T.:

I totally do not get the sentiment in this thread. Why does anybody care one bit if their tenant rents to a roommate, AirBnB, etc. If you're getting your rent, let the tenant do what they have to to continue paying you. 

I believe in treating a rental portfolio like a business and not getting involved in any of my tenants' personal affairs.

JrT.,

As many fine BP-ers have mentioned there are a host of reasons NOT to take a hands off approach. The biggest reason is you would be exposing yourself to a multimillion dollar lawsuit. For example a vacationing AirBnB tenant comes home a little tipsy one night, trips and falls down a flight of stairs and injures himself. He doesn't have insurance and he needs surgery. In addition to his injuries, he is claiming the lighting in the stairwell was poor and its all your fault. Your liability insurance investigates and quickly finds out that he was a AirBnB renter and NOT your tenant and they say they will not pay a dime as its illegal for the tenant to rent on AirBnB in your state. Now you are facing a $500,000.00 lawsuit in the face because you took the attitude of "hey, he's paying his rent on time, why should I care if he rents on AirBnB". 

In addition most buildings are not separately metered for water or trash. YOU will incur these extra costs of having extra people using those utilities and the wear and tear on your building. Most tenants don't care to take care of their units the way owners do. Can you imagine how little someone who doesn't live there does??? Think about how WE act when WE go to a hotel. WE use exorbitant amounts of water, towels, sheets, HVAC, and electricity. The AirBnB renter treats your rental apartment the same way. 

I have added a rule to my rule list that tenants sign along with their lease, forbidding short term vacation rentals. It specifically names AirBnB and others. I do this despite the fact that the CAR lease forbids it, becauseI know that most tenants don't read the lease in great detail. However everyone reads the rule list throughly. I hope this helps, KEEP ROCKIN BP-ERS!

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James R.
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Replied Jul 19 2015, 13:40
Originally posted by @David Hays:

@James R.

 While you may not be personally comfortable with the idea, I haven't seen a long-term residential lease yet that would preclude being active on Couchsurfing, and I'm curious to know on what basis you were able to evict them.

David,

I didn't evict them.  I waited until their lease was up and did not renew it.  I know the phrase "Kicked them out." sounds like evicting.  I should have written "Asked them to leave."  

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Replied Jul 19 2015, 14:09

@David Hayes: You are wrong is assuming that they would "be less inclined to allow drugs, violence or criminal behavior" than I would. My rental is next door to my personal home and I am very particular about who I allow to live there, as it not only affects me but also my neighbors. I absolutely do not accept felons or sex offenders. Criminal activity does not always occur in the residence which is why you do a criminal background check and do not allow sub-leasing. But, my rental is a SFR and not a vacation rental.