Any landlords here renting to an Airbnb host?
Lake City, FL · Member since 2018 · 18 posts · 5 votes
Hey @Aaron K. not disagreeing with you at all, but could you elaborate on why you think renting short term causes more wear and tear vs. long term? I assume this is because there is the assumption that there will parties and disregard for the property? Would love to hear the landlords perspective on this point. Thanks!
I think that would be a tough sell, because the business model would cause more wear and tear to the unit than a normal tenant with no increased return to show for it. Once they saw whether or not you were making a profit they might just find a short term rental management company and do it themselves.
Hey @Aaron K. not disagreeing with you at all, but could you elaborate on why you think renting short term causes more wear and tear vs. long term? I assume this is because there is the assumption that there will parties and disregard for the property? Would love to hear the landlords perspective on this point. Thanks!
Also, @Kim Becker and @Aaron K. , you might be interested in the discussion on this thread -- https://www.biggerpockets.com/forums/52/topics/529...
I won't rehash my own opinions from there, but there is a spirited debate over there about whether a landlord should allow his tenant to Airbnb the place and whether it causes more or less damage to the place.
Thank you, Will check out the other thread. As property owners, we find that our Airbnb Guests take much better care of our property than the tenants in our long-term rental. I’m sure that varies from one property to another though.
@Tyler Work Sure I'd be happy to expand, I don't think it would be because there would be parties necessarily, but just more people in general. If 99% of tenants are good and clean and 1% is terrible and you rent the home to 7 different people in however many years you own it you have a much lower chance of getting a terrible tenant than if you rent to lets say 30 different people a year. You also have the ability to run background checks etc. on tenants who are there for the long term. I also believe that the majority of any liability would fall on the owners shoulders and not the person renting the property on Air BnB so again if you have 99% non litigious tenants and 1% who are litigious by having more people in the house you increase the risk.
Also in general I think most landlords are of the mindset that if they wanted to do vacation rentals they would do it themselves instead of collecting normal rent while someone else made a profit off short term renters.
@Kim Becker On the wear and tear issue, what we've observed is that when you adopt Airbnb's price suggestion and we lower our nightly rate, we tend to attract renters who typically do not take care of our unit. Very interesting dynamic, but I guess one could debate the same scenario for long-term tenants too.
Oh, Kim, as for your question, I think it's about transparency with the landlord if you tell them what are trying to do and they allow you, that could be a win-win.
Hope this helps, Kim. Goodluck. Thanks! - Ola
@Kim Becker On the wear and tear issue, what we've observed is that when you adopt Airbnb's price suggestion and we lower our nightly rate, we tend to attract renters who typically do not take care of our unit. Very interesting dynamic, but I guess one could debate the same scenario for long-term tenants too.
Oh, Kim, as for your question, I think it's about transparency with the landlord if you tell them what are trying to do and they allow you, that could be a win-win.
Hope this helps, Kim. Goodluck. Thanks! - Ola
Yes I agree Ola! I just smh when I get price suggestions from Airbnb. No way. I am a tiny bit higher than competition and my occ. rate is solid. This is the strategy we have used for long term rental as well- we offer a pristine property and charge slightly more. We’ve attracted great renters this way.
I think that would be a tough sell, because the business model would cause more wear and tear to the unit than a normal tenant with no increased return to show for it. Once they saw whether or not you were making a profit they might just find a short term rental management company and do it themselves.
@Kim Becker my thinking as an owner would be that once they see the success of your business it would be only too easy to not renew your lease and take over if they wanted to. Also unless they have heard of this style before or you in an area where STRs are in demand it will be difficult to convince them that this is legitimate. I as an owner would also make the assumption (maybe incorrectly) that the host would not be able to pay the rent if they didn't get any short term renters. In addition I would be very concerned about liability. If you approach an owner I would also suggest showing them the relevant state or local regulations so they understand that everything is legal.
@Kim Becker my thinking as an owner would be that once they see the success of your business it would be only too easy to not renew your lease and take over if they wanted to. Also unless they have heard of this style before or you in an area where STRs are in demand it will be difficult to convince them that this is legitimate. I as an owner would also make the assumption (maybe incorrectly) that the host would not be able to pay the rent if they didn't get any short term renters. In addition I would be very concerned about liability. If you approach an owner I would also suggest showing them the relevant state or local regulations so they understand that everything is legal.
Good point re: concern for being able to make the rent should bookings not meet expectations. If a host approached me on my long-term rental, I would be looking at their track record and history more than anything. Because the host would definitely make or break the success of the venture.
I have left no rock unturned re: insurance and regulation, as that Would be my top two concerns as a property owner. That’s covered.
@Kim Becker It's an interesting strategy, but one of the first things to be regulated or banned if your local municipality decides to regulate Airbnb more. If it were me, I wouldn't want to sign too long term of a lease, and be on the hook if Airbnb stopped panning out for whatever reason.
For instance, in Boston, our mayor just outlined a plan to regulate how many days one can rent out an entire apartment on short term rental sites like AirBnb, (proposed 90 days per year). It would also most likely ban the practice of renting out a unit and then "subleasing" on airbnb as this practice is exactly what cites are trying to avoid.
The airbnb strategy works well if you own the property and can pivot back and forth short/long as needed, but I don't think the risk/reward lines up for effectively subleasing out apts owned by someone else.
I am a superhost in Los Angeles (we rent our our tiny little guest house). After two years of having our space rented almost 24/7 I can report that in our experience, it's in MUCH better shape than it was after renting to a longer term tenant. I totally understand the instinct of landlords to expect that things will be in worse shape with constant turnover of airbnb guests, but the truth is: the space is cleaned every couple of days from top to bottom; I'm immediately aware of any repairs that need to be tackled; airbnb guests are typically gone most of the day and don't spend much time in the space; because it is an online community that relies heavily on reviews, it's very hard for irresponsible guests to remain on the platform (they would immediately get bad reviews and then other hosts wouldn't accept bookings. In terms of vetting, you can actually being quite strict about bookings you are open to (must have state ID, certain # of reviews, social profile, etc). I can also reject any airbnb guest who inquires about staying with us with no penalties. I would really love to figure out an airbnb arbitrage situation here in Los Angeles, as I think it's a pretty killer idea!
Totally agree with @Ken Breeze Once you come up with a solid gameplan in terms of managing your Airbnb with systems, it's crazy how easy it to make money. In fact, our place is so popular now, Airbnb is using the listing for our place in their own ads! (that they are paying for). I see them on Instagram...people can book our place directly from the app/ad and we're not even paying for it. We are currently booked up through Sept. @Dennis M. You set up your account exactly how you want in terms of screening: you can have it so that every person who inquires needs to reach out to you before accepting a booking. There is no penalty for hosts who reject a guest before the booking goes through, and sometimes I just say no because I just don't get a great vibe or don't like all the questions they were asking (I've gotten way better at trusting my gut as time has gone on). It's a very community driven platform, so if someone behaves badly, they get a bad review and then every other host can see that. If you have someone who tries to book with no reiews and a brand new account, you can just reject their request. In fact, you can set up your account to ONLY allow people with positive reviews to book. If you want to throw a party and trash a place, it's wayyyyy easier to just book a hotel room. There is no back and forth with a host, filling out profiles, etc. In two solid years of doing this, our biggest problems have been: an international guest who ignored our no smoking policy (and we easily got them to pay us an additional $200 cleaning fee after filing a complaint with Airbnb); older guests who can't figure out how to use our nespresso; and some broken plates and glasses. We charge a $100 cleaning fee to every guest (our housekeeper only charges us $40) and 99% of guests leave the space so immaculate it barely needs to be cleaned. In fact, most ask if they can strip the bed, take out the garbage or throw the towels in the washer/dryer for us. We sublet our NYC apt for two years and both tenants (who seemed lovely, had good credit, had great jobs, and even references) turned out to be a nightmare. And we were stuck with each of them for 12 months. We are currently earning 3x as much as we would with a long-term tenant with Airbnb. In fact, our monthly Airbnb earnings completely cover our mortgage payment. So Airbnb guests are building equity in our home for us AND we also get to live there (in our main house), essentially rent free. We have additional insurance that would cover any damage and Airbnb also covers up to a million dollars in damages. I totally understand your concerns, but for us, it's been pretty amazing right from go.
I just signed a one-year lease in April with a tenant who occasionally stays there and, more often, uses it as an AirBnB. A discussion he had and agreed to during our first conversation. He lives about an hour away. I vetted him, just like any other tenant, and he can easily afford the rental even without any AirBnB income.
It happens to be the other unit in my side-by-side personal duplex. I've AirBnB'ed it myself before, when I was between tenants and a big festivals were coming up. So I was well aware of the pros and cons. I crunched numbers in the past about renting short vs. long term. I decided that, although it would be a bit more money over the course of the year, it just wasn't enough to account for the monthly income uncertainty, higher utility bills, and extra hassle of constantly cleaning the unit. Though now I've learned from his model that the cleaning fee charge is a much more lucrative part of his income than I would have thought, lol. I hadn't previously considered that in my own number crunching.
I still don't think I'd actively choose to end his lease at the end of the year. But, if/when he decides to leave, I'd probably offer him something to leave all the furnishings there and take a stab at it myself.
So far, it's been working great. He pays his rent on time and keeps the place IMMACULATE. He's shared with me and been excited that his bookings are more than paying for all his expenses (including the rent), plus he has his own getaway to the city when he doesn't have guests. Overall, the guests have been pleasant and we've enjoyed briefly chatting on the porch with people from all over the country. However, I did make it clear verbally and in the lease that he is 100% responsible for managing his own guests and for any damage they might cause. Though we are potentially available to help, for a fee.
Your best hook? Offer to pay the normal rent, plus a % of the vacation rental profit. Admittedly, I didn't negotiate a % of the profit. Perhaps I should have. But he's a great tenant (so far) and I'm very happy with the arrangement.