Requesting to AirBnB a Landlord's Property

Gabrielle E. · 2018-03-15T05:51:11-07:00

I'm trying come up with the best strategy for finding landlords who would be interested in allowing me to rent their property to AirBnB tenants. The owner would benefit from the relationship because I would ensure the landlord will receive their originally-advertised rent payment each month and I would take care of property upkeep. This would allow the owner to basically have a no-hassle rental and I would have a rental that I control without much money out of pocket. I've considered contacting landlords to take a look at their property as a prospective tenant, then after building rapport I could pitch the AirBnB concept. I plan to contact landlords who have properties in areas with high demand in my city. I'm in the Richmond, VA market so this would be properties downtown, near colleges, etc. I plan to get a pretty good sense of demand in certain areas by searching on Airbnb in specific areas throughout my city and checking out various listings. I can ensure the spread is there between the landlord's rent rate and the AirBnB price by checking local rates, how many reviews other listers have, and whether those reviews are concentrated or spread out over many months. (A listing with 30 reviews in the past four months shows good demand. A listing with 30 reviews over the past three years, not so much.)My main question is, as a landlord, what is the best approach to pitch an AirBnB opportunity to a landlord? Any advice about how I should go about this process?

Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

8y

Great idea, you've done your research. Now let me tell you what will probably happen after you've found a willing landlord. You'll be able to do your AirBnB thing for 6-12 months, then the landlord is going to remove you from the equation and do it himself. You have already done the research for him, and he has a list of repeat customers that will come back, and he can see how you are running it. If he doesn't run it, he has a cousin, brother, nephew, wife, son, daughter or whoever that will run it for him. The upside is that he will probably offer to buy your furniture and appliances.

1 Reply

Jason D.

Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes

8y

I think it's a great idea, and would be onboard with someone approaching me about it. I have no desire to do all of the work to manage an air bnb, and if I could collect market rent to let someone else make a buck, good for them. My only caveat would be that you would have to qualify the same as any other tenant. You'd need decent credit, verifiable income equal to 3x rent, etc....

1 Reply

Thomas S.

Member since 2016 · 13k+ posts · 12k+ votes

8y

Offer me a portion of your airbnb income above my rental rate and I might consider it assuming it is a property where other tennats and neighbours are not impacted by the high trafic.

Bottom line is that guaranteeing to take care of the property is not incentive enough. I already make my money renting to a tenant so if you want to airbnb I will be your partner, sharing the profits, otherwise forget it.

3 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

@Paul Sandhu hopefully I will find a landlord who just wants to relax and let the money roll in without taking over the AirBnB process. I think it's a risk I'm willing to take though. If he did want to do it himself I'd offer to sell the furniture and run the process for a percentage of the rental income

@Jason D. it's nice to know that there are some landlords who would be interested in the opportunity. I think qualifying is fair and I'd be open to the screening process

@Thomas S. hopefully most landlords wont have your same requirements lol. I wouldn't be too eager to cut deeper into my cashflow but I'd consider it starting out

2 Reply

Edward B.

Investor · Midlothian, VA · Member since 2015 · 980 posts · 823 votes

8y

@Gabrielle E., I have a duplex in Churchill on Broad that would be perfect for this and have been approached by other investors looking to do something similar. Personally, I am not interested for a couple reasons. Increased liability, loss of control, complications of being the owner of a short term rental vice long term rental, higher wear and tear. Those are just a few objections that no one has been able to satisfy.

Now for the nugget of wisdom. The closest anyone got to convincing me was an individual who markets exclusively as an executive/corporate housing provider. He only does 1-6 month terms so you don't fall into the short term rental category and your wear and tear is significantly less. His revenue is somewhat less than a true AirBnB but his turnover and maintenance costs are significantly lower so his overall NOI is higher than either an annual rental or true AirBnB, so he claims. Additionally, he can sell you on the professional quality of his tenants vice some random vacationer. His competitive advantage that would prevent me from just taking over from him is the relationships he has developed with the organizations that place these types of tenants, which ensure his supposed near 100% occupancy rates. Just food for thought.

3 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

@Edward B. great input. I like the idea of executive/corporate housing. I'll have to look into that. How did the investors approach you to initially bring up the proposition? Was it at your rental listing or a local REIA meeting? Any dos or don'ts with pitching the concept?

0 Reply

Edward B.

Investor · Midlothian, VA · Member since 2015 · 980 posts · 823 votes

8y

@Gabrielle E., this was at a local training summit where it was pitched. PM me and I'll point you in the right direction. His program was too steep for me since I am not really interested in the model, but it may be worth it to you to answer many of your questions. I believe he goes into detail about how to pitch it. The investor who specifically approached me is a friend and knew I owned the property so very different from going in cold. I could probably put you in touch with a couple of local investors who did buy the program and could speak more thoroughly about it as well.

1 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

Thank you @Edward B. I will reach out shortly

0 Reply

Ned J.Pro Member

Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes

8y

So if I'm understanding your plan/model..... you would be acting as the PM for short term rental via AirBnB? So you become the "middle man" between AirBnB and the landlord....

So rather than the traditional role of a PM with long term rentals, you would be doing the same job but just with short term tenants

Interesting idea....but as landlord I would have a hard time turning over that kind of control for a situation that is changing and evolving on a daily basis as new client/tenants come and go very frequently. It's one thing to trust your PM to screen tenants and monitor the condition of the property when the turnover is every couple of years vs on a daily or weekly basis. As the landlord, you are now essentially owning a motel....can be done obviously but its a different dynamic than a typical landlord is used to doing

1 Reply

Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

8y

@Gabrielle E. This question gets asked on this forum at least once per week. The OP generally doesn't like what we have to say here and they move on to whatever their next idea is. This question is generally asked by someone with a small amount of funds that can't get in to their next deal and they're eager to keep things moving so they ask themselves "how can I make money with no money in real estate?"

I agree with @Paul Sandhu on this subject always. I'll also add that I don't think it's a good idea to "airbnb" in cities.

Another idea is Brandon Turners No and Low Money Down! Great book!!

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills

2 Reply

Ethan Cooke

Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes

8y

@Gabrielle E. I am doing exactly what you’re talking about in the San Francisco Bay area and would be happy to share how I have been successful convincing landlords to work with me and building my portfolio of furnished rentals. When I find a good property, I will typically spend $10K up front on first month's rent+deposit+furniture, then clear about $600-$1,000 a month in net profit. So I disagree with folks who say it can't be done profitably. As suggested by @Edward B., I do corporate rentals with a 30-day minimum, and adjust pricing to keep vacancy low. In addition, I typically offer the landlord free property maintenance, early rent auto-deposited every month into their bank account and a higher rent than they are asking for. This means I need to find below-market-rent properties.

I am part of a national community of “rental arbitragers” following in the footsteps of longtime experts like

@Al Williamson and

@J. Martin. Rental arbitrage can be done profitably, but you need to be very selective about the property. For example, I have learned that sometimes I can find a single-family home for rent with an in-law unit (basically 2 units) and pay just a bit more in rent than the single-family. But that nicely furnished extra unit is worth a whole lot more to a business traveller than the extra $300 a month I am paying for it. Also, 80%+ of the business traveler market is folks traveling alone who want either their own unit or at least their own room. So studios and 1-bedroom apts are easier to keep full than 2BR and 3BR homes.

Feel free to PM me. Happy to chat.

14 Reply

Corby GoadeBusiness Member

Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

8y

I think this is a really interesting idea- good for you for thinking it through. My two cents- you'll have an uphill battle getting traditional landlords to consider doing this. Keep in mind that, at least in the west, almost every rental is unfurnished, so there could be a huge up front expense to the landlord to furnish their unit. You might mitigate that loss by offering landlords more than they would normally get in rent. From my experience, well managed short term rentals in good areas can generate upwards of 3x the traditional rent they might get as a long term rental. Maybe you offer 125% of their standard rent for the first year or two, which allow them to pay off their expenses to furnish the unit, or at least part of it. Also, it might be interesting if you advertise your service as free property management, or "let me pay you to manage your rental."

I don't agree that most landlords would take over management after a year or two. Investors hire PMs because they don't want to deal with it, and managing a short term rental is more time consuming and hands on. I believe if you find willing parties and manage their investment and your relationship well, you might have a winning plan here. I'd definitely be interested in learning how it goes.

0 Reply

Edward B.

Investor · Midlothian, VA · Member since 2015 · 980 posts · 823 votes

8y

@Corby Goade, one selling point I had not thought of before that you may have unintentionally hit upon is the property manager. If you can convince me that I no longer need a property manager because you are essentially fulfilling that role, then you just saved me another 8%-10%. Same with routine maintenance. If you offer to take on that responsibility then that is another 5%-15% you are saving a landlord. That is starting to add up to some serious savings, especially if you are also making it easier on the landlord by being a stable long term tenant.

I am still apprehensive about giving up that much control, but it could be enticing if you market it right. And live up to your agreement of course.

2 Reply

Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

8y

@Ethan Cooke That's quite impressive with what you are doing with "rental arbitrage". You must need a wheelbarrow to carry your two big boys. The business travelers that want to stay by themselves, we have a word for them. White Hats. They will pay a premium to have a place all to themselves. They usually have bad personalities, in my experience.

My rentals used to be monthly. After switching to STRs, I get the amount of rent each week as I used to get each month, when places are rented.

2 Reply

Heather EshelbyBusiness Member

Investor · Boise, ID · Member since 2017 · 2 posts · 0 votes

8y

I'm doing this right now! It came to me, I didn't seek it out, but I'm loving it!

An acquaintance needed to relocate for work out of state so abruptly that she didn't want to get a storage unit for all the furniture, dishes, etc. The folks inquiring are mostly one to two month visits due to their own relocation. I'm able to collect 1.5X the rent I had originally projected in my rental analysis for the homeowner. Stumble upon a huge win, and yes, this has me thinking of expansion.

You will have the normal "where's the breaker box," and "what's up with the water heater" tenant stuff, but fairly easy going overall.

Corby mentioned the start up of buying furnishings. Likewise, the owner (or you) will need to carry all utilities and add Wi-Fi/cable, so consider all the overhead.

I think you CAN'T appeal to the ma and pa local investors that easily. Like in normal PM, these folks want to grit it out themselves. I think you'd need to target out of town investors, or folks that truly want the passivity that a good PM can provide. And if done well, you won't work your way out of a job! You'll give more than expected rents to owners and they'll be happy!

0 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

@Heather Eshelby great idea about the out of town landlords. I just wish I could talk to the owners face to face rather than over the phone. I usually gain so much more rapport in person. But great strategy regardless

@Edward B. nice tip about the landlord savings with property management and maintenance. I could even develop a nice list of benefits that I can present to the owner so that they fully understand their advantages in the equation

@Corby Goade I wouldn't expect the landlord to pay for furnishing the unit. I think that would be an expense I would need to cover, seeing that I would be the one converting the unit to an AirBnB rental

@Ethan Cooke PM coming shortly :)

0 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

@Ethan Cooke I decided to post the questions I would have PMed you here so that everyone can gain something from your response. How do you find corporate AirBnB tenants specifically? If I post an AirBnB ad with a 30 day minimum, will it attract these type of tenants? Would you suggest AirBnB hosts to use studios and 1 bedroom apartments to have success?

0 Reply

Ethan Cooke

Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes

8y

@Gabrielle E. - Regarding finding corporate tenants, I found that once I started posting my listings on Airbnb and Homeaway with a 30 day minimum, I started getting inquiries from companies. I also set up my units for business travelers (High speed Internet, nice work space, self check-in, lots of coat hangers, hairdryer, etc.). Then when a customer likes one of my places, their company typically will extend the stay and send additional employees to me.

An even more important question for me is how to connect to the landlords who will rent to you. I use Craigslist, visit the property and do whatever I can to meet the landlord in person.

Regarding studios and 1 bedrooms, yes these are the easiest to rent to business travelers. However I make even more money when I can find a home for rent with an In-law unit and rent out both units to business travelers.

@Heather Eshelby - Great point about out of town landlords. I almost landed a rental deal recently with a property manager who had an out-of-town landlord. But I have had the most success working with mom&pop landlords who love that it’s completely passive income and they do not need to do property management or property maintenance—and it’s free!

@Paul Sandhu yes there is definitely a trade off between the length of the rental and the revenue. 30 day minimum rentals mean you can make medium income with medium time investment, whereas Short Term Rentals are higher income with higher time investment. In my markets, I would need to do about 2.5 weeks of short-term rentals to equal a 1-month rental. Also many larger cities prohibit doing STRs (<30 days) out of other people’s properties, which is key to building a rental arbitrage business.

Great thread!

3 Reply

Alexander Ramos

Bedford Park, IL · Member since 2016 · 103 posts · 44 votes

8y

@Gabrielle E

Hello, I'll shed some of my experience the past 3-4 months. So far I have talked to 80-90 landlords. That is cold calling going on appointments and just testing it out through Craigslist.

You never know until you actually go and test it. Some landlords just want the rent and have dealt with eviction so their ears perk up. I've had one lady who had two vacant places. Had one guy who already does short-term rentals except he does 30 days Plus. Also a landlord that's just getting started and wants to rent it out might be a good fit. I figured I would have cold called a hundred landlords before tapping into my relationships and connections I do already have with investors.

So far my close ratios has been 12 to 1. Which means for every 12 I got a yes. And keep in mind that's with my sales game being iffy. My upper hand, I bought a course on this. So I come professional with a landlord letter and business card. Which helps! PM me if you want it.

The past month I've had about three to four listings. And could have had more but I'm turning some down just because I'm going to end up running out of funds if I try to do it myself. So I am searching for others to possibly partner and keep it going.

I just signed a lease on a commercial space / apartment. That I will sublet one room and or use the other strictly for pilots and flight attendants since its near airport. Why bc airbnb may not work in this commercial space and 40min drive for me so it may be more hands-off to rent to these folks.

I should be signing another two leases within the next two months which would be for Airbnb.

-Alex Ramos

8 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

Alright, so it took me about 3 months but I have a seller who's interested in letting me airbnb her property. Its a 2 bed 1 bath condo that's a 3 min drive to VCU and 10 min walk to the campus. It would definitely make a good airbnb rental. She's fine with me taking over the property subject to the existing financing, but her financing is pretty funky. Here's the situation below:

Rents for $1050/mo
HOA fees are $210/mo
Purchased 10 years ago for $146,000 through a line of credit with interest-only payments
Owner's payments just went up to $900/mo
Taxes $1168/year. The property was renovated by a rehabber who got tax credits on the condo conversion so now the tax credits have expired and the tax payment just went up to $1168/year
Condo insurance amount unknown
Property doesn't need repairs

So altogether the monthly payments are around $1310/mo

I researched airbnb rates for the area and the property could bring in $59-76/night for a 2 bed 1 bath in the VCU area within walking distance of the school

If I put the property up for $67/night it could bring in around $2,000/mo

Thoughts? @Alexander Ramos @Paul Sandhu @Jason D. @Thomas S. @Edward B. @Ned J. @Luke Carl @Ethan Cooke @Corby Goade @Heather Eshelby

0 Reply

Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

8y

How much does it cost to clean and restock it after every occupancy? How many times in a month do you think it will need a cleaning? Multiply those 2 numbers together and that's another monthly expense.

2 Reply

Jason D.

Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes

8y

Is the property still financed through line of credit 10 years later? If that is the case I would want to know what the current value is and have a solid strategy to refinance out of that situation.

1 Reply

Gabrielle E.

OP

Flipper/Rehabber · Richmond, VA · Member since 2014 · 184 posts · 40 votes

8y

@Paul Sandhu true, I just added cleaning, restocking, and wifi/cable fees. @Jason D. she plans to refinance so i'll have to see what the new numbers look like

0 Reply

Ethan Cooke

Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes

8y

@Gabrielle E. - Sounds exciting! To clarify: you have an opportunity to BUY a property by assuming the current owner’s mortgage and you also want to AIRBNB that property, correct? These are two separate issues and the first one is by far the more important one.

Regarding #1, how much are comparable properties selling for in the area? $146K sounds like a bargain, but I don’t know your market. If the condo is worth $180K or $200K, that’s the BIG play here.

Regarding #2, you mentioned $67/night and $2000/mo in revenue. But this assumes nearly 100% occupancy, and it’s more likely to be 75-95% depending on your pricing, length of stay and how great the place looks online. I think that if you can get a minimum of $1800 in revenue on $1300 in monthly expenses, then it’s worth considering. For my cheaper units, I look at $500 minimum spread per month.

Go kill it! ;)

5 Reply

Alexander Ramos

Bedford Park, IL · Member since 2016 · 103 posts · 44 votes

8y

@Gabrielle E. Good going! Glad you took action!! I'd go for it. Think of it this way. Get your feet wet even if you don't make the most out of your listing right away. Your not putting down 20 % so risk is minimal. Whats your cash on cash return if you make a 100$ a month. Sure its more time intensive, however less capital up front.

1 Reply

Requesting to AirBnB a Landlord's Property

Requesting to AirBnB a Landlord's Property

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