Would you rent to somebody who will list on AirBNB?

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Would you rent to somebody who will list on AirBNB?

Zeshawn Ahmed
Member since 2021 · 19 posts · 7 votes

Dear landlords,

I recently read the post about AirBNB arbitrage (renting someone's place and listing it on Airbnb). But as a Landlord, would you rent to someone who will list on Airbnb? Why or Why Not? What will it take for you to do this?

Thanks

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Patricia Steiner
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
5y

Absolutely no way...if you want to be in the vacation rental business, jump in - but why would you allow the wear and tear on your property, the potential code/zoning enforcement issues that can arise, the risk of being cancelled by your insurance provider and more.  Anyone who does vacation rentals knows that one bad review taints the property FOREVER.  One bad incident could have your property flagged as a nuisance by the municipality.  Bottom line:  it's your business - not the tenant's.  Let him buy his own property and assume the risk without involving you.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    No.  AirBnB is a commercial venture and thus would require a commercial insurance policy,

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    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Zeshawn Ahmed:

    Dear landlords,

    I recently read the post about AirBNB arbitrage (renting someone's place and listing it on Airbnb). But as a Landlord, would you rent to someone who will list on Airbnb? Why or Why Not? What will it take for you to do this?

    Thanks

     I personally would not do that for two main reasons:

    1. Increased liability. Short term rentals require special insurance and these policies cost more for liability because of the higher frequency of claims. AirBNB provides some host coverage, but it is notorious for being hard to collect and it doesn't cover owner liability.

    2. Usually you are renting to a business. That could mean little to no recourse if rent is not paid. Someone living in a property has major incentive to pay rent, because it is their home. Most of the people doing AirBNB arbitrage are broke and can't afford buying their own places. In other cases, it is corporations that shield owners from liability.

    3Reply
  • Zeshawn Ahmed
    OP
    Member since 2021 · 19 posts · 7 votes
    5y

    let's assume you were renting to a person (not a business), and were getting your rent paid on time, a percentage of the airbnb return, and were aware of Airbnb's property damage protection plan (see below). Would you still not do it? 

    "Airbnb's Host Guarantee is a property damage protection program. ... It provides up to $1,000,000 USD in property damage protection in the rare event a host's place or belongings are damaged by a guest or their invitee during an Airbnb stay."

    https://www.airbnb.com/d/guara...

    1Reply
  • Nick C.
    Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    5y

    If you're planning on paying the same amount of rent as a stable tenant, there's no reward and much more risk. Most landlords are investors, all downside and no upside is a bad investment. To convince a landlord to do this maybe offer more rent per month than they're asking. 

    5Reply
  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    5y

    Absolutely no way...if you want to be in the vacation rental business, jump in - but why would you allow the wear and tear on your property, the potential code/zoning enforcement issues that can arise, the risk of being cancelled by your insurance provider and more.  Anyone who does vacation rentals knows that one bad review taints the property FOREVER.  One bad incident could have your property flagged as a nuisance by the municipality.  Bottom line:  it's your business - not the tenant's.  Let him buy his own property and assume the risk without involving you.

    8Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Tamika Johnson

    Absolutely not

    1Reply
  • Zeshawn Ahmed
    OP
    Member since 2021 · 19 posts · 7 votes
    5y

    @Nick C.

    I think you hit the nail on the head. What extra amount of rent do you think it would take ?

    1Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    100% Hard no.  Not even in the slightest would it ever be considered.  

    2Reply
  • Tracy StreichPro Member
    Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
    5y

    Check with your insurance company.   This will be a problem with them for sure. 

    [email protected]918-728-8080
    0Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    5y

    Why not list it yourself and hire this person to manage it for you? 

    2Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Zeshawn Ahmed:

    Dear landlords,

    I recently read the post about AirBNB arbitrage (renting someone's place and listing it on Airbnb). But as a Landlord, would you rent to someone who will list on Airbnb? Why or Why Not? What will it take for you to do this?

    Thanks

     Not in the county right across the river (additional ones have been banned), but provided a proven host with a great track record came along,  I'd consider it.  

    We'd negotiate for increased insurance costs and stuff  but I'd be open to it for sure.  

    2Reply
  • Joseph Hammel
    Rental Property Investor · Lake Hallie, WI · Member since 2015 · 292 posts · 144 votes
    5y

    I know a guy who does this but he is the one leasing the unit and re renting on air bnb. Anything can be done with the right backing and insurance. Here is their website if you want to reach out/ research. https://www.turnkeypartners.or...

    0Reply
  • Brian Walters
    Las Vegas, NV · Member since 2019 · 173 posts · 78 votes
    5y

    @Tamika Johnson why take on the risk.

    If the Air BnB option is such a better one that they are willing to pay you rent, which is above your mortgage and expenses, and still profit, why not look into it yourself. If it's that good a deal you can probably even get someone to manage it and still net the same or more as renting.

    Like others said here, the added risk isn't worth it. You take on risk and get nothing more than renting to a standard tenant.

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    5y

    Why would I choose an unlicensed, uninsured person to manage my bnb with them getting all the upside when I can hire a licensed, insured professional to manage the property where I get the upside.   

    I do not understand LL that allow subleasing or bang arbitrage.  

    That is a hard no to me allowing it.  My lease has large penalty for sublease (I think $200/night on top of the rent collected).  


    3Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    If Airbnb is suddenly zoned out of existence like in las vegas how many payments do you think that scammer/hustler would make after that happened. Don’t forget. The MASSIVE fines for operating an illegal Airbnb often go to the owner. 

    https://www.reviewjournal.com/...

    Would you operate your regular rental with zero screening? I mean that’s what you would be doing here. Heck, would you let someone rent your car if they said “hey I’m going to rent it out to other people you don’t know anything about  while I have it, no big deal right?” Don’t let these people talk you out of your investment?

    How many parties involving alcohol di you think happen at an average rental every year versus an Airbnb? How many lawyers does Airbnb employ to make sure they won’t be held responsible for any large settlements? “Sorry, you signed right there you won’t have a sorry and you did, so we don’t cover that, go after the owner…”


    etc…etc…etc…

    3Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    5y

    @Zeshawn Ahmed, I would absolutely rent to someone doing a VR.  They are making an investment in your property where the nicer it looks the better they do.  They will be buying nice furnishings, they will clean it after every guest, they will make sure the sink isn't clogged, they the rugs don't get torn, they fix everything bad immediately.  They will have extra insurance, they will likely be making a lot of money and will likely be a long time renter.  If you have to evict it will be a breeze since it is not residential the moratorium on evictions would have not applied.  I see very few downsides unless they are really crappy at it.

    5Reply
  • E.S. Burrell
    Rental Property Investor · MI · Member since 2019 · 192 posts · 205 votes
    5y

    @Patricia Steiner I agree.

    0Reply
  • Ron H.
    Investor · Melbourne, FL · Member since 2017 · 159 posts · 116 votes
    5y

    Hard no.  If I thought a property would work as airbb I would do it myself.  There will always be more risk and wear on a short term rental with unknown weekly tenants and potential profit must match the risk


    I vet my tenants very thoroughly. Something you can't do with someone else running an airbb on your property

    1Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

    @Zeshawn Ahmed

    This very much looks like a scheme to get into running rentals without owning rentals, id est, no skin in the game. I won't even listen to people who have no skin in the game and come to me looking to make money out of my properties. A credibility packet ain't gonna cut it here. I would need to have years of knowledge of the company and multiple local success AND failure stories before I thought about it, and my first, second, and third thoughts would really be, WHY CAN'T I DO THIS MYSELF?

    1Reply
  • Account Closed
    Handyman · MN · Member since 2020 · 92 posts · 46 votes
    5y

    A few years back I worked for a management company that allowed this. The operator had a legit business, any and all damages, failure to follow community rules and maintenance repairs were out of his pocket. He also had to be named on the lease. 

    At the time, the going rate was $1/sqft rental, and he was charging $3.50 for furnished, never had more then a day or two for vacancies. I had been trying to get in on this (maybe someday). He lost his *** when covid hit. 

    It also depends on the tenant pool. The clientele wasn't coming here to party or vacation. They were coming here to get heart transplants or have medical studies done as they die of some rare condition. 

    If they can set it up by the book, follow all the regulations and are taking a personal stake in the condition of your rental - you just got yourself a free property manager.

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y

    No, too hard on the units.

    No idea who is there--criminals, dope fiends, etc...

    They use them for big parties.

    Bed Bugs re so many people in and out of the place.

    If I wanted to rent motel rooms and be a Motelier--I'd buy a motel.

    It's not my business model.

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y
    Originally posted by @Zeshawn Ahmed:

    let's assume you were renting to a person (not a business), and were getting your rent paid on time, a percentage of the airbnb return, and were aware of Airbnb's property damage protection plan (see below). Would you still not do it? 

    "Airbnb's Host Guarantee is a property damage protection program. ... It provides up to $1,000,000 USD in property damage protection in the rare event a host's place or belongings are damaged by a guest or their invitee during an Airbnb stay."

    https://www.airbnb.com/d/guara...

    You're missing a couple of points.....1) Anyone renting a unit to then turn it over into a STR actually IS a business...... 2) As has already been mentioned, AIRBnBs 'insurance' policy is dubious at best.....

    1Reply
  • Account Closed
    Member since 2021 · 237 posts · 153 votes
    5y

    @Tamika Johnson

    I Wouldn't. If you're in a fabulous market for STR you can likely just hire a STR management specialist to run it that way for you if that's what your desire. It has probably been addressed here (I didn't read the entire thread) but the cases of Airbnb not covering damage and insurance companies not covering etc just aren't in my comfort zone as well.

    1Reply
  • Genny Li
    Baltimore, MD · Member since 2018 · 432 posts · 281 votes
    5y
    Originally posted by @Zeshawn Ahmed:

    let's assume you were renting to a person (not a business), and were getting your rent paid on time, a percentage of the airbnb return, and were aware of Airbnb's property damage protection plan (see below). Would you still not do it? 

    "Airbnb's Host Guarantee is a property damage protection program. ... It provides up to $1,000,000 USD in property damage protection in the rare event a host's place or belongings are damaged by a guest or their invitee during an Airbnb stay."

    https://www.airbnb.com/d/guara...

     I think too many people are aware of the Airbnb's Host Reality, vs the Host Guaranty.  If the sub-host fails to enumerate and submit not only the damages BUT THEIR COSTS TO REPAIR before the next person checks in, you're SOL. So their estimation better be bang-on.  And even then, you're only in the running to get reimbursed.

    0Reply
  • ST Tangirala
    Real Estate Consultant · Santa Clara, CA · Member since 2017 · 21 posts · 1 vote
    5y

    In my opinion, you would seed more control to AirBnB's terms and conditions. 

    0Reply
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