Tenant Using Rental Property as Full Time AirBnB
San Diego, CA · Member since 2014 · 14 posts · 9 votes
Tenant Using Rental Property as Full Time AirBnB
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Oxnard, CA · Member since 2017 · 15 posts · 23 votes
8yIf you’re going to confront your tenant, create an AirBnb account with a fake name. Book yourself at your own property. Ask him to be there during check in because this is your first time doing AirBnB and you’re nervous. Get there early and let yourself in. Have a new lease agreement on the table ready for him to sign.
Might as well have some fun scaring the living day lights out of him. Video would be fun to share on BP.
90 Replies
- 8yCharles SoperPro MemberRental Property Investor · Merritt Island, FL · Member since 2015 · 253 posts · 178 votes
It's fuzzy, but I think there's a podcast about somebody doing this:
https://www.biggerpockets.com/renewsblog/biggerpoc...
Probably doesn't really address the liability issue but worth a listen if for nothing else than getting inside the head of your "tenant".
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes8y
@Deanna O. Great point. Whether the motivation of the neighbor was to inform or to complain makes a big difference in the decision here.
@Matthew Fullam Oh! The rental is in Denver. Well, now you've tickled my Airbnb laws bone. Exciting! Two questions: 1. Is it in a condo building or is it a SFH? 2. Do you know if he's living there at all or did he truly just rent it to then sublease on Airbnb full-time?
In Denver, you can only Airbnb a place if it's your primary residence. The PR is defined as your "place of usual return ... "as proven by a series of documents like voter registration, vehicle registration, driver's license, etc. Tenants ARE allowed but only with landlord permission.
However, if this is a condo, I bet you $100 the HOA has a minimal rental period of at least 30 days, if not 90 or 180, which would restrict him from doing Airbnb.
- Investor · Riverside, CA · Member since 2015 · 280 posts · 111 votes8y
Originally posted by @James Carlson:
I have to push back against the hysteria in some of these posts. I think people are watching too much local news. "Local Airbnb Turns Drug Den Sex Party!!"
Bad stories exist, but Airbnb hosts more than half a million stays every night, so if a few here and there are bad, that doesn't sound that crazy to me. Imagine if the local news wrote a story every time a regular tenant trashed a place. They'd fill up the daily paper.
The nearly 200 guests my wife and I have hosted and the thousands of guests that everyone I know from our classes have hosted have been on the whole, amazing. Some guests are weird, sure. And some leave you wondering what that smell is. But the bias I see toward short-term rental guests always has a whiff of, "Damn kids, get off my lawn!"
Way I see it is you can do as you please with your property or properties. If someone wants my opinion I give them my opinion. It’s not hysteria nor should you be so quick to dismiss it. But your investment your risk. I have over 2.5 million dollars in properties. I have no interest in letting someone make a profit on my investment while I take all the risk and get stuck with the repair bill.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes8y
Are you saying you would proceed with the eviction no matter what? If so, I'm interested in hearing what your thoughts are on this.
Or were you just saying, IF Matt wants to evict, he could do it according to his local landlord tenant law? (If the latter, then yeah, always a good idea.)
Oh, and congrats on the book! That's awesome!
- Investor · San Diego, CA · Member since 2014 · 592 posts · 765 votes8y
There is also a taxation component in San Diego. There is a transient occupancy tax and it's currently unclear if that liability is being paid.
It would be very unfortunate if the city sent you a bill for revenue that your tenant is generating.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes8y
I hear you @Rob D. There is a little bit of risk in allowing Airbnb, and you always have to do with your properties what feels right to you. I don't advocate that everyone should allow Airbnb. Heck, I'd be upset if someone was doing it without my permission. I just push back when I feel the fear of Airbnb is based on hyperbolic stereotypes.
I think if someone is open to the idea, there are answers to the common concerns:
- Get the right insurance so you're not at risk.
- Charge to offset whatever extra risk you think there is.
- The idea that an Airbnb is less well-maintained is the opposite of what I've found. Someone who's running a good Airbnb has to keep that space cleaner than any tenant ever would. Otherwise, they'll get bad reviews and never get rented.
Anyway, love this discussion. I'd love to hear what @Tyler Work thinks. He has master leased properties here in Denver with the owner's permission to Airbnb it. What has that experience been like?
- Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes8y
Wait so this guy doesn’t live there and is profiting off your place? Kick him out and do it yourself.
Think about how many other properties he’s doing this with
- Oxnard, CA · Member since 2017 · 15 posts · 23 votes8y
If you’re going to confront your tenant, create an AirBnb account with a fake name. Book yourself at your own property. Ask him to be there during check in because this is your first time doing AirBnB and you’re nervous. Get there early and let yourself in. Have a new lease agreement on the table ready for him to sign.
Might as well have some fun scaring the living day lights out of him. Video would be fun to share on BP.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes8y
@Account Closed Hilarious.
- Investor · Atlanta, GA · Member since 2016 · 20 posts · 5 votes8y
Have them show you how to use Airbnb to maximize your profits, on your property. Then show him how to get his own property. Sound like a partnership to me.
- Rental Property Investor · Denver, CO · Member since 2017 · 179 posts · 208 votes8y
Thanks @James Carlson
To be honest it's been a win-win for us and the owner. It is definitely not for everyone, but our agreement spells everything out and ensures that all parties are properly insured. The owners love it because their property is professionally cleaned 5-10 times per month, all minor maintenance paid for, little to no appliance use, and they make a little above market rate. They don't have to deal with a potential bad tenant running their property in the ground and we have the freedom to get creative and host the property like it was our own. Out incentive to keep the property looking amazing is the need to keep good guest reviews and keep good relationships with our owners.
There is one little known insurance option I found pretty cool that has recently come out called Safely. They provide premise and liability coverage AND do background checks on each guest.
- 8yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
@James Carlson , since the property is in Denver, I would absolutely evict. He's not living in the property, and as you well know, he is renting it out in violation of city laws. TBH, I don't know the fines or punishments for renting a not-primary residence in Denver - I'm sure you do and I'd love it if you shared for the OP's benefit - but this "tenant" is showing no regard for the legal document he signed. I'd give him the boot - OP won't have any problems finding a tenant in our market.
- San Diego, CA · Member since 2014 · 14 posts · 9 votes8y
@Deanna O. no hostility, more of a friendly heads up as we were just discussing airbnb.
@James Carlson this is a condo and we currently are voting on allowing short term rentals or not. decisions will be made feb 12th.
- 8yAnya SwansonPro MemberRental Property Investor · San Clemente, CA · Member since 2017 · 21 posts · 12 votes
I have done high end So Cal beach vacation rentals for years and in my own experience, vacation rentals are great, if you have a quality property attracting quality guests.
If the property is airbnbable, which it appears to be, I'd look into getting rid of the tenant in violation and airbnbing it myself. If he is doing it, it means that you have a good property in demand and he is making more money than you collect from him in rent. That's a good news, no? :)
Another question is, do you want to do this? Vacation renting takes TIME. Is it worth it? If you do not want to do it, then you have options discussed already above. If anything, you can change the agreement, have him cover your insurance, make him liable for any possible damage to the property, and charge him a higher rent. Also, collect a higher security deposit. But getting mad? Meh... ;)
Good luck!
- Investor · Riverside, CA · Member since 2015 · 280 posts · 111 votes8y
If the LL and the tenant are ok with the arrangement that’s fine. Not my problem or decision and it most likely wouldn’t be a discussion topic. Now as in this case where the tenant just blatantly and most likely knowingly and deliberately violated the agreement yeah I would most likely end that relationship. A tenant is supposed to pay the rent on time and keep the property clean. They already signed a lease stating they will do that. They also signed stating they will not sublease in any way or form.
Hey I can tell you some horror stories from when I was a young inexperienced landlord/investor. I had a long term tenant that I fully trusted. By the time they were gone I had a 60,000 dollar remodel slap me in the face. About 10 people were using that address to enroll their kids at a good school in the area, pet damage. Broken closet doors, trashed kitchen, destroyed bathrooms flooring shot to hell you name it I had it.
That was the last time I had full trust in tenants taking care of a property. Dont get me wrong I have great tenants now but I still check on them. I have no problem holding up my end of the bargain in repairs, upgrades etc. but I’m not going to let my tenants run my business.
I’ve been approached by people to let the, do the rent my place and do AirBNB on it and I refused each and every item. Just not interested in such arrangement. You want to do be a LL? Go buy your own place take your own risks and go to town making money.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes8y
The fine structure for violating Denver's Airbnb laws is technically 3-tiered ($150, $500, $999 for third and all subsequent violations.) In practicality, you also get a warning before the first fine, so really it's four-steps.
@Matthew Fullam That's interesting. I don't many buildings that have allowed it. I'd love to stay in touch and know how the vote goes. I have clients who are looking for condos as their primary residence who would like to be able to Airbnb while they're on vacation but can't find an HOA open to it.
- Investor · Riverside, CA · Member since 2015 · 280 posts · 111 votes8y
Originally posted by @James Carlson:
The fine structure for violating Denver's Airbnb laws is technically 3-tiered ($150, $500, $999 for third and all subsequent violations.) In practicality, you also get a warning before the first fine, so really it's four-steps.
@Matthew Fullam That's interesting. I don't many buildings that have allowed it. I'd love to stay in touch and know how the vote goes. I have clients who are looking for condos as their primary residence who would like to be able to Airbnb while they're on vacation but can't find an HOA open to it.
Most HOAs do not allow AirBNB (I have a few HOA properties and they do not allow BnB nor any lease less than 6 months.) and I know a few other investors and not one has a HOA that allows BnB, Not to mention lots of cities are starting to crack down on the short term rentals. I guess if it's a live in owner/tenant and they rent a room it's easier to sneak it in.....but neighbors can complain to the city or HOA.
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
@Matthew Fullam Alot of great suggestions. You will want to be careful about renegotiating his lease. The terms have already been agreed to, and he could have a case against you for demanding more.
You will want to check your HOA (if applicable) to make sure that that kind of thing is allowed. Many HOAs require a minimium 6 or 12 month initial lease term. They could argue that even though you have a signed lease for that term, there are sub-tenants who don't meet that criteria.
I would DEFINITELY check on your insurance AND his! He needs to be carying enough liability insurance to cover issues with the guests so they don't go looking for you if something happens.
Also, I would monitor his airbnb account to see how busy he is, what months he's busy and what he gets in pricing. Once his lease is up, BOOT HIM OUT and take over the business. You mentioned that you are out of state. Maybe he would be willing to be your superhost, so he could continue to manage the airbnb, but give you a bigger cut.
I agree with you that he went behind your back, and there is no excuse for that. So, you need to let him know that you know, and come up with an equitable solution, which would include making sure he is carrying sufficient insurance. That would be the most important thing if you are letting him continue.
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @James Carlson:
@Deanna O. Great point. Whether the motivation of the neighbor was to inform or to complain makes a big difference in the decision here.
@Matthew Fullam Oh! The rental is in Denver. Well, now you've tickled my Airbnb laws bone. Exciting! Two questions: 1. Is it in a condo building or is it a SFH? 2. Do you know if he's living there at all or did he truly just rent it to then sublease on Airbnb full-time?
In Denver, you can only Airbnb a place if it's your primary residence. The PR is defined as your "place of usual return ... "as proven by a series of documents like voter registration, vehicle registration, driver's license, etc. Tenants ARE allowed but only with landlord permission.
However, if this is a condo, I bet you $100 the HOA has a minimal rental period of at least 30 days, if not 90 or 180, which would restrict him from doing Airbnb.
These airbnb hosts are getting smarter and trickier though. You know how they get around HOA limits? They claim corporate housing. If they sign the lease under a business name, then they have met the 30/90/180/360 day rule because there is 1 tenant for the duration, but they explain the frequent comings and goings similarly to how corporations will have a place for their executives to stay in different places for conventions and so forth. Tricky.
- Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes8y
I would go give him a review on the AirBnb ad. That will get his attention quick.
- Specialist · Northern, CA · Member since 2017 · 182 posts · 34 votes8y
@Matthew Fullam - STRs (Short Term Rentals) are not actually "subletting" because the "guest" isn't typically residing in the residence... but "visiting'' for less than thirty days, in most instances. That's actually good, for the most part... because then he should be keeping your property in excellent condition, and if it "works out" for him, then will also likely renew the lease... even if you raise the rent, a bit? In fact many landlords are now being "approached" to do STRs with AirBnB or VRBO, etc. (Even HOA communities in most places allow them, but if there's an HOA presence, make sure (indirectly!) that they allow STRs within the community? If NOT, perhaps send him a "cease and desist," before they do...) I thought about doing STRs myself, but that's a LOT of time, work, and $5k. - $15k. in upfront costs for furnishings to linens, etc. I'm staying in an AirBnB myself right now, BTW. A far superior alternative to a hotel, in my opinion.
- 8yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votesYes, the place is cleaned alot but guests can break things and potentially increase wear and tear for you. Liability is an issue. Nieghbor relations are an issue. As one user said book a stay and confront them from thier
- Specialist · Northern, CA · Member since 2017 · 182 posts · 34 votes8y
@Jim Adrian Good one, Jim :-)
Indeed... Also some host's misrepresentation of places, not cleaning them, etc., and now most are also using AB&B's "instant booking" so it's as easy as "placing an order," or "contacting a host" and then it's DOCUMENTED, onsite. And these hosts "going around" AirBnB, or AirB attempting in 2016 to make it "mandatory" to let ANY member pay and "book" to stay in your own abode (when over 98% of their listings are SFRs, or single listings, I read?) apparently so hosts couldn't also use competitive platforms like say VRBO, etc. simultaneously... and with minimal initial scrutiny of members, is a double- edged sword. (So why no "exclusivity" contract?) At least AirBnB does some vetting... unlike say Booking.com, where there's next to no 'competition' aside from the local hotels, etc., but no OVERSIGHT of who books, EITHER! If I were a host, I'd want a minimum of several 'feedbacks' visible on the member's profile page... and only people 'recommended' by two or more, other hosts! (I currently have 19 FBs and nearly that number of recommendations for e.g., as a 'guest.')
- Rental Property Investor · San Diego, CA · Member since 2010 · 377 posts · 314 votes8y
I guess I may have a position that is similar to Scott --- I use Airbnb all the time when I travel for work, & find vastly preferable to economy hotels (when my clients put me up at the 4-5 star hotels however I DO prefer that LOL).
I usually only rent a single room, so it is often staying in a home-owner/renter's spare room. It's all over the board as far as whether the landlord knows -- in some apts shall we say the landlord "surmises" that it is going on without officially "knowing". From the landlord prospective it makes for a more financially stable tenant who is motivated to be clean & trouble-free. As long as the other tenants don't mind (which if they are also doing Airbnb they won't) everything can work out pretty well. For what it's worth, Airbnb does maintain their own liability insurance for the hosts.
Honestly, there are some parties who are dis-enfrancised by the gig economy (taxi drivers, cheap hotels), but in many cases it just makes them up their game - ever note how much cleaner taxis are these days? And the drivers are more polite? The low-income residents in SF who complain I'm afraid I'm less sympathetic to -- ("It is my human RIGHT to live continue wherever I want, no matter how little I earn. Landlords OWN the property, so it doesn't cost them anything to rent it to me. Besides which, they are rich & I'm not.").
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