Tenant is subletting on AirBnb, what should I do?

Rental Property Investor · Sacramento, CA · Member since 2017 · 14 posts · 16 votes

I just found out my tenant is AirBnBing my house. What should I do? I somewhat like the fact that they are keeping the house clean and there is less wear and tear, kitchen use, etc. The host has been getting good reviews, but I don't think the neighbors like the idea of it being an AirBnb. My first instinct was that it is a breach in contract, and to evict them (I have a property manager). But I also saw someone suggest a joint venture, how would that work out? Thanks in advance, Newbie in Sacramento

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Matthew Paul

Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes

I would get on website and reserve the room , show up at the house and see the look on their face

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Patrick Senas
New to Real Estate · San Diego, CA · Member since 2017 · 92 posts · 26 votes
9y
Actually, I take back what I said. I like @Jerry W. idea. More money for everyone!
1 Reply
Paul Vincent
Bay Village, OH · Member since 2016 · 155 posts · 55 votes
9y
I suggest that if you want a lease that includes airBnb, you should ask the tenant to sign a new lease and have some hold harmless language in it to protect yourself. You'll also want to check in with your insurance company as they may require an additional rider for coverage. Not every short term resident will be a good one, so you'll need a lever to pull when (not if) a nut ball damages your place and you need to collect for damages.
0 Reply
Noa Bloch
Realtor · San Rafael · Member since 2015 · 21 posts · 2 votes
9y
I have a tenant in a rent controlled duplex in Oakland. For a while I thought she might be doing air B and B - doing so is a just cause for eviction. The 2nd thing is that you might want to take a look at air DNA- it's a web site that can tell you how well listings are doing in your area. So if your tenant is doing well, you can either evict and do it your self - Or, you can partner up with the tenant. What city is the property located?
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Jesse Carlson
Iowa City, IA · Member since 2016 · 26 posts · 10 votes
9y
I would say make it a win- win for both of you by talking to the tenant. Talk to them and let them know that it is against the lease to do AirBnB but if they will agree to redo their lease so you can increase their rent a little bit, so you benefit more and make it mandatory the tenants carry renters insurance in case something happens during an AirBnB stay. The renters insurance should help so you don't take a major hit on your insurance, should something happen to their stuff. Then it can be up to you to renew their lease moving forward and do the AirBnB yourself.
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Yancy M.
Real Estate Agent · Summerville, SC · Member since 2017 · 7 posts · 3 votes
9y
@Victoria C. great question! As an investor I find ways to always be in a position to make money whatever the outcome. Conceptually, a joint venture is a sold approach so long as: you have rights of first refusal for guests, the tenant pays into an Airbnb contingency fund to continue operating, you receive a fixed amount or percentage profit share, and they an agreement to be fully liable for all damages and increased maintenance. The upside Things go well, you collect their rent, additional income of an Airbnb while letting the tenant do all the leg work The downside Things go south and damages occur, you replace the tenant, recoup the entire contingency fund plus their initial security deposit and have a contract to pursue any loses. You can always find another tenant in the future but finding ways to make extra money on the same asset takes creativity. Let us know what you decide
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Jared Boundy
Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes
9y
AirBNB actually has a way for you to list your property for rent, but assign someone else (possibly your tenant) as a delegate. That should help you be able to track the usage and keep your tenant honest. Why not partner with someone who is taking initiative and has a working business model. But I agree that if you do this, you don't need a property management company anymore. Negotiate a profit split, ensure they have their own insurance to cover liability, and make it a win-win. You could assess a fee for them breaking their lease and then change the lease to allow it in he future.
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Dave Ramirez
Rental Property Investor · Ashburn, VA · Member since 2016 · 239 posts · 119 votes
9y
Fire the property manager. List your own property on AirBnB. Why evict? AirBnb will shut down their account. Eviction complete! Here are some AirBnb/vacation rental property managers: Vacasa Evolve No Worries All Star Turn Key Proprly Skyrun
1 Reply
Manolo D.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
9y
@Esther L. The landlord will do anything to kick you out, that is what I would do, and you subletting and printing out documentary evidence as simple as him/her going to airbnb and printing out your ad will be a very simple case.
@Victoria C. Be upfront with your tenant and make him/her cover liabilities for AirBnB (there is an insurance coverage for short term rentals now) and name you and your property as additional insured, then raise the rent as a premium to the additional wear and tear/foot traffic. I would say no joint venture but +25% rent increase or eviction/get kicked out would be fair deal. It boils back down to basic "what your lease says" and on normal circumstances, any additional tenants/guests will need to be screened and registered. Joint ventures are ugly in your situation.
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Will GastonPro Member
Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
9y
I very much agree with @Jerry W. I think us as investors too often let our ego and/or pride get in the way. If somebody told you that you'd have a tenant that paid rent on time and kept the place immaculate (would have to be to get positive reviews on AirBnB) then surely you'd sign up for that.
I rent to a lot of college students. They are constantly violating their leases. Some big item and others, not so much. But I'm not looking to pick fights if I'm getting paid on and they're not bothering me, the neighbors, or harming the property.
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Jeorge Goebel
Chippewa Falls, WI · Member since 2017 · 2 posts · 0 votes
9y
In all my leases I have a place where is stated that subletting is against the rules! Secondly, I have it stated that they shall not use the property in anyway as a form of business that they can profit from. I'd say that they are going against the lease.
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Justin B.
Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
9y
In my opinion, you have to shut it down. You are liable for anything that happens in that house (not your tenant). I would just inform them that they have to stop listing it on AirBnB and if they don't, evict. I do understand the arguments around people saying to ignore it, cut yourself in, etc, but the bottom line is you have no control of what happens but will be responsible for what does.
0 Reply
Shelly Doris Milburn
Property Manager · De Soto, KS · Member since 2017 · 58 posts · 30 votes
9y
I have looked at AirBnB before. I believe their terms indicate that you cannot participate as a renter. I would review their rules and if that is in fact against their policy contact them to have the posting removed. As an owner I would be more concerned about possible liability.
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Frandy Blain
Holliswood, NY · Member since 2017 · 49 posts · 10 votes
9y
Victoria C. 🤔Draw a contract and Charge them 10% if anything happen to the guests they're responsible
1 Reply
James Hunt
Investor · Cleveland, OH · Member since 2016 · 96 posts · 27 votes
9y
Why is this an issue?
0 Reply
Andrew SeverinoBusiness Member
Broker / Owner / Real Estate Investor · Fairhope, AL · Member since 2017 · 36 posts · 14 votes
9y
1) I am never ok with a tenant violating a lease. 2) You have the right to know what is going on at your property and who is in it at all times. My advice is is the following: 1) They need to be notified immediately if the breach and that you can terminate the lease agreement immediately. 2) If you decide to profit share, I would suggest a new lease at a higher rate that includes a subletting clause holding you harmless if any and all liability or claims resulting from an incident at the property. This leaves all the work to them, with yiu having a guaranteed increase in rent with very little downside risk. 3) I am currently doing Airbnb in one of my rentals. It's easy! If you have interest in this business, evict them and do it yourself. Good luck!
Andrew Severino | Need help with Quickbooks for property management? I can help...
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Vagif Seidov
Investor · Colorado Springs, CO · Member since 2017 · 3 posts · 0 votes
9y
Take 20% make sure they have rental insurance. Ensure the listing has the no party, no smoking, and no pets clause. This is a win win. You could push them out and do it yourself but then have to manage it. If you take 50% you would make it less profitable and it they may stop.
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Timothy Winfield
Rental Property Investor · Baton Rouge, LA · Member since 2017 · 78 posts · 26 votes
9y
You should do it yourself or let your property management company handle it. That's money your losing but still paying the cost to own the property
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Account Closed
Professional · Brooklyn, NY · Member since 2017 · 624 posts · 147 votes
9y
@Jerry W. lol @ getting mad because someone else makes a buck :) There seems to be quite a few suggestions on here that property owner try to get in on action but that business model exposes owner to a different set of risk... insurance company will also want to alter policy to reflect that... is there any market data suggesting the vacancy rates with that model is lower than say hotel vacancy rates? In many ways its like a tenant renting from a hotel then trying to sublease their unit.
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Dustin Figenscher
Rental Property Investor · Rochester, NY · Member since 2015 · 33 posts · 9 votes
9y
I agree with Levi T. Set the precedent, jack rents and give them an ultimatum. If you like the idea, do it yourself. Air b&b can be great money. The recent podcast with @Zeona McIntyre is a great review of how well they work. Although more possible wear and tear, the income is greater due to the convenience of the rental. So you just save a bit more for maintenance. At the same time, MOST air b&b users are respectful and can be held accountable by the owner, so I kind of think they tend me last longer and are more respected.
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Ray Jacobsen
Investor · Ashland, VA · Member since 2008 · 41 posts · 20 votes
9y
As someone who is a landlord and a AirBNB host, let me say "Don't freak out" Yes the tenant should have asked if they could run your property as an AirBNB destination, many people are doing just this, your tenant skipped the "Ask first" part. As far as taking advantage of you by running your property as an AirBNB destination, let me tell you maintaining a property to get consistent 5 star reviews takes work, communication and planning. If your tenant is getting high reviews trust me your property will be fine, if there is a valid damage event by a guest most likely AirBNB will cover it, they have a 1 Million dollar guarantee.
AirBNB will allow the host to do a split every guest's payment, I'd highly recommend you work something out, take the daily rate X 20 days per month and that's probably close to what your tenant is making. Knowing approximately what your tenant is making work out something fair so they still get paid for doing the work and you get your share of taking the risk.
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Myka Artis
Rental Property Investor · Arlington, TX · Member since 2016 · 706 posts · 611 votes
9y
@Ray Jacobsen makes a great point. If he has 5 star reviews your place is in good hands. I'm an Airbnb host myself and that is pretty hard to maintain. That means he is keeping your space clean and being a great communicator with guests. I would check out the Airbnb listing and make sure he isn't violating any rules such as smoking, pets, etc. Like I said previously you can do the JV as well. Just charge him 10-20% of his cut on top of your base rent for the month.
1 Reply
Jason Goretzki
Fort Lauderdale, FL · Member since 2016 · 214 posts · 95 votes
9y
I was going to say what @Dylan B. said. If you have this covered in your lease agreement, then consult your lawyer & handle it. If it is not covered, then how is this an issue? My next step would be to the lawyer, either to follow through with the lease agreement, or to be updating it & asking for their advice.
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Jason Huber
Investor · Lake Elsinore, CA · Member since 2017 · 23 posts · 30 votes
9y
I would look at this situation and say " How do I make it even better?"..... For me i would take the following steps:
1. Fire your PM. They did not uphold their contract and you don't need them anymore.
2. Sit down with your tenant and create a new lease for this property. I would write myself in a monthly guarantee (probably whatever i was collecting in rent before). I would then ask for an additional 10-20% of all revenue generated off of the AirB&B rentals. I would outline their new responsibilities for maintenance and repairs.
3. Because you don't have lots of time (who does, right) I would have them email me a monthly statement that I can quickly check on the website since I would also force them to assign me "co-host" status.
4. I would make sure I have rights to the AirB&B web page for MY house. Those reviews are worth gold if I want to continue this model or get someone else to do it down the road.
5. I would agree to this for about a 6 month term and them re-evaluate how it is working. If I was happy with these results I would then sit down and see if this partnership could lead to further investments.
To me this is House Hacking without all the work! Not a bad business model.
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Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
9y
I don't think you should have had any conversation with the tenant. You have a PM, you should have just made a phone call. "My property at 1234 Main street is on AirBnB, take care of it" Then went back to sipping a Martini. Many owners hire PM's and then handle things themselves.
Good Luck in whatever you decide!
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Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
9y
I would get out of the situation. They can stop or move out or both. They are in violation of the lease. I believe sublet is not assumed and must be approved or contracted, since the AIRbnB is not on the lease.
If you want to be in the AIRbnb business, why keep the tenant? You can do it with out them. I have considered setting up properties on AIRbnb and have decided not to. It is higer touch than I am interested in being. Most municipalities have a problem with it. There have been a number of counties that have gotten ugly about it an fined people thousands of dollars for being an unlicensed hotel.
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