@Yolanda Columbus Erin and I probably aren't the ones to ask about that. When we did this four years ago or so, we were doing it without landlord approval. (I would blow my mind if I knew one of my tenants was doing that now.) So our agreement was more of an ask-for-forgiveness-not-permission approach. (In more than one instance, forgiveness was not forthcoming but a letter demanding we get out right away sure came.)
Anyway, I'd agree with @Myka Artis ... Standard lease without the prohibition on subleasing. I might go a little further even and ask to have it expressly enumerated in the lease. "Tenant shall have the right to sublease Property for short-term stays (less-than-30-days)." You might want to make that a bit more robust, but something like that.
Like @James Carlson , Zeona McIntyre followed this approach initially without LL knowledge/consent. I recommend checking out, if you haven't already, her appearance on the BP podcast (#229)... link below.
She now owns her Airbnb properties. That's my plan, as well. Just seeing if I can hustle this a little quicker than by doing this on the absolute up-and-up, a al @Myka Artis - who has a killer podcast of his own.
This is a brilliant concept if it actually works. You find a long vacant unit, not bringing any money in, you put your focus and energy and management to make it a success. It is management intensive, as is the nature of the business, but there may be money to me made.
Another aspect, and maybe long term STR-ers can weigh in on this is wear and tear. I think you would have some less long term wear and tear and constant cleaning on an STR which should maintain their property well.
Thanks @Mike Nelson .
@Julia Ann - I put my points down on four slides to share with landlords this afternoon. Your point is on there almost word-for-word. A full-time Airbnb is going to get professionally cleaned several times a month and is going to have a business owner (me) inspect the place to make sure every "i" is dotted and "t", crossed. Try that with your average LT renter - even if it is in a nice part of town.
My wife and I are currently on both sides of this situation in a way. We have a number of rental properties here in Memphis, TN and have recently purchased one for Airbnb use. It has been a lot of work on the communication end and coordinating cleaning, etc. However, we've really enjoyed the interaction.
So here's my question, because I have heard of this concept, is that, as an owner of an investment property you are typically not covered on insurance if the place is used as a STR. We had to go with a specialized company that writes policies for STRs specifically. I guess you could not mention this to the prospective landlord that they might not be covered under their current rental dwelling policy. Airbnb has certainly muddled up the industry. We've really loved it and plan to convert more of our long term rentals over to Airbnb where it makes sense. Good luck with it!
@Chris McHaney my understanding is that the usual combo of homeowners and renters insurances would cover neither damage nor liability in an STR / Airbnb situation. To be properly covered you need a commercial policy. For AirBnB, Proper Insurance (underwritten by Lloyd’s of London) seems to be one of the industry standards. I put in swag guesses using public data on a property I plan to inquire about - 2500 sqft 4 bedroom (relatively ancient) townhome - and got a quote of about 1500 for a year of standard 1 mil/2 mil coverage. Incidentally, this insurance could replace homeowner/renter policies, I think.
@Andy O'Neal you are correct from my knowledge. Proper Insurance wrote the policy for our property that we are doing an Airbnb at. The numbers you received a quote for sound right, and yes, they do cover similar risk that a homeowner or rental dwelling policy covers. My concern I guess for you in this situation is if the landlord does not have the commercial coverage you mentioned in place and something happened, where does it leave you? All I can say is it's unchartered territory I'm thinking! Fun, fun!
Oh, that’s an easy one for me - I plan to carry the proper policy myself to assuage the fears of the LL.
what about an umbrella policy
@Dahlia Bayoumi - good question. I think, from my limited reading, a personal umbrella policy might not cover Airbnb-related claims, citing an exclusion on "business activity." If it's a commercial umbrella, that might be a different story. I've learned a ton about insurance in the past 48 hours, but I still feel relatively unknowledgeable.
This was the first post I read on the topic: https://learnairbnb.com/airbnb-liability-insurance/
While the general STR concept is not in my "toolkit", it's clear that you and others who have responded to this thread have pretty solid ideas. I've enjoyed the thread. Thank you.
In the context that I have no real familiarity with the concept and I'm using only general business principles in these suggestions it seems to me that:
1) Sebastian's concern, while legitimate, can probably be dealt with by way of options to renew within the lease (perhaps extending out 5 years or so); and,
2) Andy's comment about extra security deposits between him and the owner being limited by law (though I'm not advocating that you should provide higher deposits than you are suggesting) may be worked around via a lease that, while similar to regular residential leases in wording, is designated as a commercial lease (a business-to-business lease) which it surely is anyway. THERE MAY BE REASONS UNRELATED TO SECURITY DEPOSITS WHY THIS MAY BE A BAD IDEA but, depending upon how Maryland (and local) laws impact STR you may be able to choose which lease type you prefer; i.e., which laws you want to fall under (of course, if a dispute ends up in court the courts will have the ultimate say in what kind of lease you've actually created).
@Ed W. -- thanks for the kind words and the solid ideas. I'm not too-too worried about the LL "stealing my idea" and STR'ing their place at the end of whatever lease we sign. The way I see it is this idea is out there for everyone to consider. If I want to control a property for more than two years, I should buy it. I do like the idea of adding out-year options.
As for a commercial lease, I apparently have some studying to do! Thanks for that idea.
My first thoughts on this was to make my pitch appear as much like a traditional LT tenant to the property owner - just to tamp down the dissonance. Similar lease, with a couple risk-reducing provisions (requirement to commercially insure, etc). More money, but payments following the standard flat monthly rate.
I'm shopping as a buyer today (credit union finally got me a letter), but plan to approach a few LLs and PMs on my preferred rentals next week using the tact outlined by @James Carlson a few posts back. I'll certainly provide a 'read-out' of those conversations once I've had them.
About insurance, I agree that opting for an insurance product tailored specifically to short-term rentals is the only way I'd feel most comfortable. So many companies I talked to while doing Airbnb in Denver claimed they covered such activity, but after truly explaining what was going to happen, they were a definite 'no.' "Oh, you mean like a hotel?" was often their response. "No, we don't cover that."
Proper Insurance is great. And it will act as a homeowner's policy if you happen to live there for a time. It's a little bit more, but for the peace of mind knowing that you've got coverage areas specific to short-term rentals, it's totally worth it in my book. (You could also look at Slice if you're interested in a different model. They offer on-demand insurance for short-term rentals that's somewhere around $7/night on average.)
@James Carlson - Totally agree. I spoke with Proper yesterday. I'm convinced. The extra cost is worth, to me, the peace of mind. Insurance is not an area where I try to get cute.
This is definitely all great advice. I would also add that the more experience you can get as an Airbnb host the better, both to strengthen your case to the LL and also to help increase your bookings. As I'm sure you have seen, managing an STR can almost be a second job. Can you take over the daily hosting duties that your girlfriend does for practice? This way you will get experience responding to guests, dealing with reviews, etc. She can make you a cohost on the app, which will also help especially if she is a super host. Can you find your own short term rental to stay at and then rent out your current place? Being able to tell a landlord, "I've done this for my property for 6 months and grossed $3,000 without any wear and tear on the property" will really really help your case!
Hey @Andy O'Neal ! I just signed a lease in Denver doing exactly what I think you are looking to do. The landlords needed a lease signed asap in order to close on another property they were trying to buy since the bank wouldn’t consider Airbnb income. I provided them a signed lease and avoided them the hassle of having to find a trusted tenant, they get guaranteed income, and I get to keep all profits above the rental price. Echoing what everyone else has said, finding the right LL will be key. PM if you have any questions about how its gone so far. Good luck!
@Tyler Work - Congrats on the deal! Wishing you great success in Denver!
I'm close to signing a short-term lease on an already-furnished place to start getting my feet wet as a renting Airbnb host. The lead came to me - no joke - from this very thread. You've gotta love BP.
I'm planning to make my first approaches to LLs/PMs next week - though I'm also right in the middle of figuring out my first purchase. I'm not expecting a warm reception, but with each pitch I'll gain more experience. Rent or buy, all my properties will be aimed at Airbnb.
@Andy O'Neal as a landlord I love the idea and would let you do our entire portfolio of $12mm and offer it to all of our 3rd party portfolio which is ten times larger. A good master lease agreement would be a win win.
If you want to come to Minneapolis, I'll get you the properties. ;)
@Jenessa NeSmith - taking over or cohosting for my girlfriend would have been excellent practice. The bad news is it is no longer an option. The good news is she's moving in here, to my un-Airbnb-able apartment. :)
It looks like I am going to have a place super-soon to start 'getting reps' as a host and building up a base of reviews and experience. At this point, I really value those things over profit.
@Daniel Kurkowski - Thanks for the vote of confidence! There is definitely a pool of smart people who are either already doing this or are very much looking forward to starting.
I need to read more about master leases... I appreciate that tip.
(Also, careful what you ask for: I'm quite fond of the Twin Cities and my girlfriend is from MN. In addition to the cities, I bet lake homes have potential north of MSP. I can't recommend enough doing a little napkin market research using AirDNA or Everbooked.)
about the insurance (I'm starting the same thing)- Just a thought. I know that in the State of South Carolina, if somebody occupies your home for at least one night, money is exchanged, and they bring belongings into the house, they are legally considered tenants. Would this not bypass the need for anything other than regular homeowner's insurance/umbrella policy?
I'm also in Denver.
With the Airbnb co-hosting feature, you can now hire your property manager directly through Airbnb, and Airbnb also splits the income however you designate.
The Co-hosts who apply are usually experienced Airbnb hosts that live near the listing.