I've learned my lesson with AirBnB rentals

Nathan Gesner · 2021-02-27T06:15:50-08:00

So I rented an AirBnB property in Dallas. This was the third time I've used that platform to rent a property and each one has been an illegal rental. I'm done.The first one was in California three years ago. It had five 5-star reviews. On the day of arrival, I was unable to reach the host at all. We arrived at the property and discovered a leasing office. Sure enough, our "host" had been caught and evicted. Three days before Christmas and we had to scramble to find somewhere to stay.A couple weeks ago I stayed in Dallas. I found a nice place downtown with 25 reviews at 4.7 stars. None of the reviews really said anything negative. Here's how the host describes himself:I was a little worried this would be some arbitrage setup but I thought AirBnb put an end to that and required hosts to verify authority. I was wrong. The first red flag was on the day of arrival when they sent us check-in instructions that included 15 steps, nearly 20 pictures to help navigate the building, and several warnings not to speak to any of the staff in the building or we would be fined $500. Yeh.The place was not cleaned well and missing some pretty basic amenities like hand towels and wash clothes, no cork screw, a cheap coffee pot with a decantur with no lid that had to be wrestled in/out because it was from a different brand/model, no welcome page or even instructions for the WiFi password, three towels for a rental set up for four guests, etc. It was a decent space and location, but I could tell the host had no customer service skills or attention to detail and it was a complete money grab. I contacted the leasing office as an interested renter and confirmed they do not allow short-term rentals or subleasing in the building, period. Now I've reported the host, though it's probably a waste of time.Long story short, I've probably stayed in about 20 vacation rentals through VRBO, HomeAway, or professional management companies and they were always a good experience. I've rented through AirBnB three times and it's always been less than a 3-star experience. It won't happen again.

Joe SplitrockPro Member

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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

I love how all the AirBNB hosts are like "sorry for your experience". No need to apologize for what some other hack host did. The problem with gig economy platforms can be consistency. You have thousands of "hosts" on AirBNB and there is just no way to verify much of anything. They do photo ID verification and background checks, but the only way verify how well they operate a business is reviews. On AirBNB look for hosts who have been on the platform, have super host status and all five star reviews. If you stay at a 3 star hotel, it can be better than a 4.7 star AirBNB. The rating systems are different. Anything below 5 star is bad on AirBNB.

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Leora Merrell

Rental Property Investor · Member since 2019 · 276 posts · 235 votes

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@Joe Splitrock

Less than 5 stars is only bad if guests understand how to use the rating system on Airbnb correctly. I had a lady leave me three stars but a whole paragraph about how amazing her stay was. When I reached out to her she explained she thought she was leaving a GOOD review as in the cabin was like a three star hotel (with an all inclusive resort in the Bahamas being a five star). And you’ll always get jerks who won’t leave a five star just because they don’t believe in leaving five stars. If you’re looking for ALL five star reviews, good luck. Of my four cabins only one still has a perfect 5. But they all come with the exact same amenities and service from me and are literally all on the same street. A lot of ratings absolutely have to do with guests misunderstanding (as I explained above) or guests just being Grade A jerks.

So I understand apologizing. There are a lot of really good hosts out there with a less than five star rating.

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @John Underwood:

It seems like the problem with Airbnb is that they allow Co-hosts. This seems to encourage Arbitrage. The millennials seems to see this as a get rich quick scheme where they need no or little money of their own to get started.

Many of these arbitrage people just walked away from their obligations when the pandemic hit and their urban house wasn't making any money and they couldn't make payments to the owner.

If I wasn't willing to manage my own property I would get a licensed PM. I would never get some wet behind the ears kid with no credentials or license to manage my property, but that's just me apparently.

That's a straw man. You're acting as if there is no middle ground between do it yourself and a "wet behind the ears kid with no credentials or license to manage my property"

The middle ground would be well capitalized hosts that make it their business model to lease units at scale to market on airbnb. I have two groups that, collectively, lease about 50 units from me to put on airbnb. They've got their systems/process pretty dialed in.

That said, I do get a lot of the people you're talking about reaching out to me. But as soon as I tell them they need to commit to several units, pay first/last deposits, and they do the math on ~$5k/unit to furnish, most that shouldn't do it don't do it.

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @Jay Hinrichs:

Originally posted by @Bruce Lynn:

I noticed in Dallas area many are apartments. They make them sound better than they probably are. Iḿ sure most corporate type apartments don allow subleasing or STR, but the arbitragers try to do it anyway. Not sure how long they last, or how often they get shutdown, but sure it happens. Itś not all that hard to pick out the people who don´t really live there in most cases. We see more and more cities that don´t like STR and seem to do what they can to shut it down after a few complaints. They also contract with consultants to find the illegal and unregistered places.

I can see a lot of places where it might work and that are really geared up for it....places like Orlando or beach resorts...

I surprised a bit that the apartment operators themselves dont set up a couple of prime units to do it themselves in locations that would

not disturb other tenants.

Cody from San Deigo who owns a bunch of MF in Houston talked about this in a thread were one person rented like 20 or 30 of his units to do the arbitrage then when covid hit he said they walked.

He didn't walk. To his credit, he fulfilled his leases. They were staggered. he just gave notice on leases as they came up. So he did give up his units but the 'right' way.

We ended up just leasing them to 'normal' tenants. Sadly the same thing that caused his business to suffer caused downtown properties to lose demand. So we had a few months of vacancy spike but are now caught up.

Honestly I thought the setup worked well. He paid a bit under market (not much) but we got one tenant and didn't have to do minor work requests. For the few years he did it we didn't have to worry about turn over or anything like that.

I still get new people wanting to do STR all the time but normally it's some kid with no money that wants to take one unit. There is no reason for us to do that.

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @Michael S.:

If a tenant does decide to turn a property into an AirBNB illegally (assuming the lease clearly states no subletting or use of the property for a business), is there any other legal recourse besides simply evicting them? I find it hard to believe that would stop them from doing it again. Can you sue their arbitrage "business" for the entire value of the lease that they violated? Are there any class action lawsuits against AirBNB in this regard, especially given how widespread this appears to be?

If you lease a unit from an owner, and then put it on airbnb, that's not "illegal". A lease violation? Sure. But that's not the same thing...

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Jerry W.Pro Member

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Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes

5y

@Nathan Gesner, hey Bud! Come over to Thermopolis and stay in my Air BnB and see how nice they can be. It is funny, but I advertise on both platforms. I actually make my VRBO fees a little higher because when I started VRBO would not take out and pay local taxes so I had to get a tax license for the sole purpose of paying the lodging/sales tax. Next VRBO charges higher fees than AIR BnB does so I pass it on. Very odd thing though, most of my one night stays are Air BnB, but almost half of my VRBO stays are for multiple days, I get better than 85% of my bookings from Air BnB however. Most of of Air BnB are much younger than VRBO guests, but not always. They have a very different demographic for some reason. Despite having VRs for 3 years now I have never stayed in one. I have tried a few times, but they were usually with less than 24 hour notice and so were not accepted. One very big difference is that Air BnB requires a government ID with picture to book, VRBO did not. I have had at least 4 or 5 attempted scams from guests off of VRBO but never the other platform. Despite hosting for 3 years they keep coming up and they are exactly the same each time, weird.

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Nathan GesnerBusiness Member

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OP

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

5y

Originally posted by @Jerry W.:

@Nathan Gesner, hey Bud! Come over to Thermopolis and stay in my Air BnB and see how nice they can be. It is funny, but I advertise on both platforms. I actually make my VRBO fees a little higher because when I started VRBO would not take out and pay local taxes so I had to get a tax license for the sole purpose of paying the lodging/sales tax. Next VRBO charges higher fees than AIR BnB does so I pass it on. Very odd thing though, most of my one night stays are Air BnB, but almost half of my VRBO stays are for multiple days, I get better than 85% of my bookings from Air BnB however. Most of of Air BnB are much younger than VRBO guests, but not always. They have a very different demographic for some reason. Despite having VRs for 3 years now I have never stayed in one. I have tried a few times, but they were usually with less than 24 hour notice and so were not accepted. One very big difference is that Air BnB requires a government ID with picture to book, VRBO did not. I have had at least 4 or 5 attempted scams from guests off of VRBO but never the other platform. Despite hosting for 3 years they keep coming up and they are exactly the same each time, weird.

They are definitely different demographics. Most of my AirBnB reservations were short notice whereas VRBO guests scheduled well in advance and for longer periods of time.

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Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

5y

@Leora Merrell That is one of the main things wrong with airbnb, the rating system. If it was as advertised hosts think you should give them a 5. If you don't they badger you to increase the rating. It is not a star system. It is a system for meets expectations vs not. Something that meets expectations but winds up being in a bad location how do you rate that? Something that goes above and beyond is a 5, something that is adequate is a 5..... no variability where there should be some.

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Sofia Sharkey

Property Manager · Kansas City, MO · Member since 2018 · 280 posts · 221 votes

5y

@Nathan G. There are too many illegal Airbnbs operating worldwide but here in the US it depends on the city and their restrictions / permits. Some cities have successfully implemented regulations and permits and have followed through shutting illegal listings. Some other cities are under staffed and don’t know where to begin.

I stayed in an Airbnb in Nashville about 2 years ago and was shocked to see the entire building (19 floors) was airbnbs. Needless to say, the building was dirty and needed consolidated management to handle that situation. Later I found out Nashville did not have regulations on buildings and the result was many long term tenants were leaving as they could no longer put up with poor management from hosts that allowed parties, loud music at all hours, etc.

With that being said, I’ve had wonderful experiences at airbnbs and as a host I’ve received many private notes from guests telling me how much they loved their stay. Its vital for me to stay with super hosts who know what they’re doing but I stay away from hosts who have 50+ listings as they likely have a “bare bones system” that won’t deliver the level of quality and customer service I’m looking for.

Ultimately, it’s a matter of preference and your traveling needs. I like to have a kitchen and a backyard for my dog when I travel, therefore I stick to Airbnbs (have never used VRBO as a guest).

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I've learned my lesson with AirBnB rentals

I've learned my lesson with AirBnB rentals

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