New AirBNB Business in Columbus Ohio!

12 Replies

Right now we have 5 properties that we do rental arbitrage through right now and we are looking to expand into more properties. The issue that were having is in our communication with the landlords. They are very comfortable with Long Term Rental and allowing someone to come in and do Short Term is sometimes very intimidating. 

"Risk" is the biggest objection that we are seeing so far. My Business partner and I have both been in the Military for a combined 18 years so when a landlord or property mgmt company talks about risks... well we get risks and we know how to mitigate most risks (Exterior security cameras, smart locks on the doors, noise detection, AND a Full Time Private security team that is tied in with the CPD)

Does anyone have any advice on what we can be saying different or what is the best way to overcome some obstacles with landlords switching from Long Term to Short term? I love what I do and would love to hear your thoughts!

Offer to pay 6 mos or a year up front and tell them that you will take care of maintenance excluding large items. That is how I landed a couple of mine. It provides security for the landlord so he knows you’re serious and after a few months of not hearing from you, you’ll be his best tenant. 

Risk is not just limited to the behavior of guests. As a property owner myself, here are some of the risks that come to mind when I think of turning one of my long term rentals into an Airbnb:

-Seasonality of income/demand throughout the year.

-Regulations (Airbnb/STR is regulated on a city-by-city basis and can change at any time).

-Increasing competition from ever-more airbnb units coming online, reducing demand for my unit and lowering rates.

-The sunk cost of furnishing the home.

-Airbnb property management companies in general are in a bit of a limbo state right now with regard to regulation by the State of Ohio Division of Real Estate. If you call and talk to them about it, you will find their opinion is that they must be licensed just like a normal property management company or real estate brokerage. Yet several airbnb management companies are operating without a license and claim they do not need one. Who knows how this will play out.

-Risk of hiring a young/new company to manage my property. How do I know they will actually provide transparent accounting and remit all funds to me that are owed. Especially if they are claiming they do not need a license and are unregulated by the state.

-The risk of a lawsuit or liability incident goes up with so many people coming through the door every month.

-Risk of my insurance company not covering a claim if they find out I'm hosting short-term rental guests OR having to pay for more expensive insurance to make sure I'm covered. Airbnb's host insurance is notoriously useless.

-My neighbors might be pissed off about me running a STR and call code enforcement or otherwise be a nuisance. Or maybe I like them and don't want to make them mad.

That's just off the top of my head. Some talking/thinking points for you to consider as your work on your marketing and business plans.

      Originally posted by @Peter Lohmann :

      Risk is not just limited to the behavior of guests. As a property owner myself, here are some of the risks that come to mind when I think of turning one of my long term rentals into an Airbnb:

      -Seasonality of income/demand throughout the year.

      -Regulations (Airbnb/STR is regulated on a city-by-city basis and can change at any time).

      -Increasing competition from ever-more airbnb units coming online, reducing demand for my unit and lowering rates.

      -The sunk cost of furnishing the home.

      -Airbnb property management companies in general are in a bit of a limbo state right now with regard to regulation by the State of Ohio Division of Real Estate. If you call and talk to them about it, you will find their opinion is that they must be licensed just like a normal property management company or real estate brokerage. Yet several airbnb management companies are operating without a license and claim they do not need one. Who knows how this will play out.

      -Risk of hiring a young/new company to manage my property. How do I know they will actually provide transparent accounting and remit all funds to me that are owed. Especially if they are claiming they do not need a license and are unregulated by the state.

      -The risk of a lawsuit or liability incident goes up with so many people coming through the door every month.

      -Risk of my insurance company not covering a claim if they find out I'm hosting short-term rental guests OR having to pay for more expensive insurance to make sure I'm covered. Airbnb's host insurance is notoriously useless.

      -My neighbors might be pissed off about me running a STR and call code enforcement or otherwise be a nuisance. Or maybe I like them and don't want to make them mad.

      That's just off the top of my head. Some talking/thinking points for you to consider as your work on your marketing and business plans.

           Peter I do not believe this is relevant to what Isaac was asking for advice on.

          Isaac I do agree with Jeff, we have had success doing that in the past when needing to overcome the objections of the landlord!

          Originally posted by @Jeff Tyndall :

          Offer to pay 6 mos or a year up front and tell them that you will take care of maintenance excluding large items. That is how I landed a couple of mine. It provides security for the landlord so he knows you’re serious and after a few months of not hearing from you, you’ll be his best tenant. 

           I love this idea! We actually do maintenance everything pretty much inside the unit, other than super big problems like HVAC, Plumbing, Electric, etc. 

          Originally posted by @Remington Lyman :

          @Isaac Anderson I plan on switching one of my units to Airbnbs. It is located in Old North Columbus. Yes, there is more risk, but there is also a higher expected return.

           Let me know if you need any help! Making the switch is a lot of work, but the return is crazy!

          Originally posted by @Peter Lohmann :

          Risk is not just limited to the behavior of guests. As a property owner myself, here are some of the risks that come to mind when I think of turning one of my long term rentals into an Airbnb:

          -Seasonality of income/demand throughout the year.

          -Regulations (Airbnb/STR is regulated on a city-by-city basis and can change at any time).

          -Increasing competition from ever-more airbnb units coming online, reducing demand for my unit and lowering rates.

          -The sunk cost of furnishing the home.

          -Airbnb property management companies in general are in a bit of a limbo state right now with regard to regulation by the State of Ohio Division of Real Estate. If you call and talk to them about it, you will find their opinion is that they must be licensed just like a normal property management company or real estate brokerage. Yet several airbnb management companies are operating without a license and claim they do not need one. Who knows how this will play out.

          -Risk of hiring a young/new company to manage my property. How do I know they will actually provide transparent accounting and remit all funds to me that are owed. Especially if they are claiming they do not need a license and are unregulated by the state.

          -The risk of a lawsuit or liability incident goes up with so many people coming through the door every month.

          -Risk of my insurance company not covering a claim if they find out I'm hosting short-term rental guests OR having to pay for more expensive insurance to make sure I'm covered. Airbnb's host insurance is notoriously useless.

          -My neighbors might be pissed off about me running a STR and call code enforcement or otherwise be a nuisance. Or maybe I like them and don't want to make them mad.

          That's just off the top of my head. Some talking/thinking points for you to consider as your work on your marketing and business plans.

              We decided to play it safe and get all the licencing and permits that we need to make sure our LLC is in the clear. We have a whole team of lawyers, CPA's, legal etc.. In fact, we can't even list anything on AIRBNB without having a STR Liscence from Franklin County. Would you suggest adding anyone else? You are right that we are in a limbo, but I would rather be on the safe side when Columbus decides to crack down.

               

              @Isaac Anderson are you offering market rent to the underlying landlord? If so, what is the benefit to them in the current market? Any area in Columbus that will be profitable as a STR won't have a problem landing attractive long term tenants at market rent. This is an honest question, not a critique.

              As far as communication with prospective landlords, I've found that addressing questions before they are asked can be very effective. It might be helpful to have a a short flyer/presentation/write-up you can offer that answers questions about the different types of risk people have brought up in the past. That could include physical, legal, and business risks.

              @Robert Ellis Sure it was. He was asking for advice on how to convince landlords to switch their properties to STRs. I was giving him the perspective of a landlord so that he can have a good understanding of the mindset, which will enable him to better handle objections and lay out the advantages of STRs. I run 1 airbnb unit myself so don't get the wrong idea - I think they're great. But if you want to convince more landlords you gotta know what they are thinking about.

              Originally posted by @Isaac Anderson :
              Originally posted by @Peter Lohmann:

              Risk is not just limited to the behavior of guests. As a property owner myself, here are some of the risks that come to mind when I think of turning one of my long term rentals into an Airbnb:

              -Seasonality of income/demand throughout the year.

              -Regulations (Airbnb/STR is regulated on a city-by-city basis and can change at any time).

              -Increasing competition from ever-more airbnb units coming online, reducing demand for my unit and lowering rates.

              -The sunk cost of furnishing the home.

              -Airbnb property management companies in general are in a bit of a limbo state right now with regard to regulation by the State of Ohio Division of Real Estate. If you call and talk to them about it, you will find their opinion is that they must be licensed just like a normal property management company or real estate brokerage. Yet several airbnb management companies are operating without a license and claim they do not need one. Who knows how this will play out.

              -Risk of hiring a young/new company to manage my property. How do I know they will actually provide transparent accounting and remit all funds to me that are owed. Especially if they are claiming they do not need a license and are unregulated by the state.

              -The risk of a lawsuit or liability incident goes up with so many people coming through the door every month.

              -Risk of my insurance company not covering a claim if they find out I'm hosting short-term rental guests OR having to pay for more expensive insurance to make sure I'm covered. Airbnb's host insurance is notoriously useless.

              -My neighbors might be pissed off about me running a STR and call code enforcement or otherwise be a nuisance. Or maybe I like them and don't want to make them mad.

              That's just off the top of my head. Some talking/thinking points for you to consider as your work on your marketing and business plans.

                  We decided to play it safe and get all the licencing and permits that we need to make sure our LLC is in the clear. We have a whole team of lawyers, CPA's, legal etc.. In fact, we can't even list anything on AIRBNB without having a STR Liscence from Franklin County. Would you suggest adding anyone else? You are right that we are in a limbo, but I would rather be on the safe side when Columbus decides to crack down.

                   

                  Your LLC and STR permit from the City of Columbus (it's not from Franklin County btw) have nothing to do with being licensed to operate a property management company (broker's license), which is handled by the State of Ohio. If you want to be safe, you need to be operating a licensed real estate brokerage.

                   

                  @Isaac Anderson  Most people that own long-term rentals have at least considered hiring a long-term rental property manager at some point. What you are offering them now is that service but in a new/different format. What you need to overcome is all the objections they had before to a property manager, (loss of control, loss of revenue) as well as new objections to the short term rental business (“risk”). 

                  I would agree with @Peter Lohmann , it is illegal to collect a fee for renting out property owned by someone else, unless you are working as a licensed agent or a licensed broker in Ohio. So when a property owner is approached by an unlicensed individual there is the added layer of apprehension and fear of risk involved. It is not that your goal can’t be done, but you need to have everything airtight to overcome those objections!


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