Renting a property and running a short-term rental

10 Replies

We own several properties, and live an hour away from them. Recently we have had several prospective tenants set up an appointment to see the property, look the property over, THEN ask about running a short-term rental from our property. We have started stating in ads that we will not allow this, but that hasn't stopped some of them.

If this is your real estate strategy don't be rude, let the landlord know ahead of time that this is your plan, so they don't waste time showing it, some people might be willing to do this, it isn't workable for us. Trust me, you will not do well in any real estate endeavor if you don't respect other people's time and approach situations honestly. 

I am not a fan of rental arbitrage (renting a property from someone else and then renting on on VRBO or Airbnb)
But as the owner you would hold all the cards.
Here are some advantages for you:

Someone else is doing all the work.
Rent is paid before someone stays so you will likely get paid on time everymonth
You could negotiate a higher rental rate
You property is maintained at a higher level. Person renting from you will likely take care of small repairs (add this to your agreement).
The house is professionally cleaned after each stay
If the house does really well as a STR, you could do it your self at the end of the lease. Person doing the arbitrage has little control of property and that is why I recommend people don't do it. But as the owner you hold all the cards.
If property is doing really well at end of lease you could negotiate an even higher rent amount. They are between a rock and a hard place. You have all the control.
You could stay in your own Vacation rental for free for a period of time (add this to your agreement)
Make sure of their abilities, don't rent to someone that this is their first attempt at a STR.
You have little risk in this scenario.
Get first, last months and a security deposit to further minimize your risk and screen them like you would a normal tenant.

What ^^^ says.  Also, at the end of their lease you have the option to not renew it.  Then you can drop a bomb on them and offer to buy their furniture and appliances that are in your house.  Offer them just enough money for those things so that it's not worth their time or effort to move them out.

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@JohnUnderwood, how does any of what you say address my post? Be upfront and state what you are doing to the property owner before dragging them to a showing. 

My properties don't work in this scenario, they are mostly a house and cottage on the same lot with a long-term tenant in the other house, and I won't allow people without background checks to rent, period. It is thoughtless and rude not to disclose your plan prior to a showing, unless it is an open house situation.

I don't have time to go into refuting your assertion that the owner holds all the cards, but there are downsides. I am not saying it isn't a workable proposition for some owners but it would be a two-way street. 

Originally posted by @Gretchen Place:

@JohnUnderwood, how does any of what you say address my post? Be upfront and state what you are doing to the property owner before dragging them to a showing. 

My properties don't work in this scenario, they are mostly a house and cottage on the same lot with a long-term tenant in the other house, and I won't allow people without background checks to rent, period. It is thoughtless and rude not to disclose your plan prior to a showing, unless it is an open house situation.

I don't have time to go into refuting your assertion that the owner holds all the cards, but there are downsides. I am not saying it isn't a workable proposition for some owners but it would be a two-way street. 

Just saying there are options. You did post to the Short Term Rental forum.

Yes it is a waste of your time for people to have different intentions that what you want.

I would try funneling everyone to an open house instead of wasting your time showing to one person at a time regardless of their intentions.

Hopefully this is more helpful to your situation.

John knows what he's talking about.  What you are proposing is for  over 90% of people, an unqualified potential disaster.  It is not a clever way to do things, it is something fraught with many risks that makes no sense especially for a newer person

Originally posted by @Gretchen Place:

@JohnUnderwood, how does any of what you say address my post? Be upfront and state what you are doing to the property owner before dragging them to a showing. 

My properties don't work in this scenario, they are mostly a house and cottage on the same lot with a long-term tenant in the other house, and I won't allow people without background checks to rent, period. It is thoughtless and rude not to disclose your plan prior to a showing, unless it is an open house situation.

I don't have time to go into refuting your assertion that the owner holds all the cards, but there are downsides. I am not saying it isn't a workable proposition for some owners but it would be a two-way street. 

@Gretchen Place I agree with you.... BUT..... this is Brian Page Airbnb Formula.

Truth is these people paid money to learn how to do what they’re trying to do. BNB Formula preaches that they do NOT tell landlords until they get to the property.

Brian was on a recent episode of the Cardone Zone podcast. Check it out.

Ahhh, got it, super annoying formula. Start off a business relationship in a sneaky manner. Wonder if it works in hot markets, there are a myriad of downsides for the owner. 

Geez @Gretchen P., why come in here to post this if you didn't want any responses? Very few if any of us are interested in arbitrage so your valuable time is wasted commenting here.

Also, why be rude to the folks trying to offer a different avenue for you? @John Underwood didn't know your exact situation and tried to provide more information that could have benefited you. Instead of politely saying thanks for the info but it wouldn't work for us, you ask how this addresses your post.

I am not sure what you are looking for. Affirmation that you correct? No need to poke people in the eyeball when they are just trying to offer ideas on how it could benefit you.

I was not being rude, and I didn't ask a question and the reply didn't even address my assertion. There is no question in my original post. I don't even give an opinion on what I think of landlords who are willing to do this. 

This sounds like you are frustrated by some of the attention you are receiving when listing your properties. It's a teachable moment for someone like me who may be interested in short term rentals, while dipping their toes in before going full force. Be respectful of the listing.

I am interested in trying this. I would be up front list the pros and cons John Underwood listed. Seems like there are possibilities if the intention is completely transparent and both parties can profit.... partners in a sense instead of being sneaky. 

If a listing does not state they are against it, would approaching landlords with this method of investing be OK?

Thanks!