allowing a sublease Airbnb

3 Replies

I have a moderately upscale single family rental house in a desirable neighborhood. Current tenants are moving out. I was approached by another investor who wants to lease my rental and run it as his own Airbnb. 

I’m not hating the idea. I like the fact that it would be professionally cleaned on a regular basis. I’ve also been interested in dabbling with Airbnb but I wasn’t sure if the hassle would be worth it, and wasn’t ready to invest in furnishings in case it wasn’t for me. It appeals to me to have someone else try it first on my property, and if it works well for him, I can always do it on my own later.

Has anyone else agreed to let a third party run an airbnb? What other factors should I be considering.

I’m sorry if this has already been discussed ad nauseum. I couldn’t figure out how to do a search on this topic. 

Hey David! This is a common strategy investors use known as Arbitrage. I have not personally let a third party run an Airbnb in my properties. But I do have two properties that I operate as Airbnbs. Here's my take on what you're sorting through. On your end, I think it is a great opportunity. As you said, it gives you the ability to see how it will work on your property without taking any of the risk, especially if they are signing a year-long lease. 

We generally clean our units between 2 and 3 times a week. In my experience, our properties stay cleaner and better maintained than they do with an LTR tenant. It is important for STR operators to make sure that the property is in prime shape - landscaping, dust, dirt, lightbulbs, etc. If something breaks or is not up to snuff, it hurts their reviews, and in turn, can hurt their revenue.

If you were operating it yourself, I would recommend making sure you are up to date on any of the regulations in STR in your city. Since you are leasing to the operator, you would want to make sure that they are liable for damages and/or injuries on your property. I would make sure that you would be covered under your insurance as well just to be safe.

Hi Ryan, Thanks for your response. I'm arranging a deal similar to what David described above, i.e. giving our tenant the right to run the property as an airbnb arbitrage. I was wondering mainly for liability reasons whether we need to include specific clauses in our lease to protect us in case of an incident or catastrophe, e.g. if someone falls down the steps, short-term guests get into a fight with each other, someone cooks meth in their room, etc. I'd like to know if airbnb already has some legal structure in place to manage these situations or if it's a pass-through liability position, which would require us to hold our lessee unilaterally responsible for those situations... cheers. 

@Kia E. did you ever find a solution for this?  I'm in the same boat talking to a tenant who wants to run my property as an AirBnb and I am looking for a subleasing addendum specific to short term rentals.   The property is in Durham, NC.