AirBNB Houston - Anyone subleasing?

30 Replies | Houston, Texas

Howdy folks,

I don't see any recent post about this topic so thought would start one since AirBnB rental is hot these days in many markets.  I am trying to venture out as an investor as well management and doing my initial due diligence. 

Does any one doing AirBNB rental in and Houston? What's your experience? Do you own it or sublease out of lease property?

can you share your numbers? I know it's going to be standard but it will give some idea whether it's worth it or waste of time.


Vijai

We do Airbnb ourselves and also let others sublease it and run the entire business. We make about 30% more than what the buildings rent for normally. We operate primarily in 1 bedroom and studio apartments inside the loop.

@Kevin Wood Thanks for quick reply. What do you mean let others sublease it and run business? You mean you allow them to sublease from you and they will again sublease or do AirBnN?? Is my understanding right? Why only 1 Bed? Is it because to attract more business rents instead of vacation rentals?  Do you have any in downtown? 

Yes I mean we allow other people to rent from us and Airbnb. We charge a higher rent and allow them to keep the extra money they make from doing an online rental. We mostly own apartment complexes so that is primarily why we use 1 bedrooms. We don't own any downtown, but own in the Heights which is nearby.

Thank you sir! Sorry for asking too many questions but that's the way to understand and learn right! Hope you don't mind. How many do you have you guys own and do AirBbN and What's the ROI on them? Do you lease from the owner and do AirBNB or own most of them?

Vijai

I own a 32 unit downtown (across the street from Toyota center). It’s made up of 2x 16 unit buildings, and each 16 unit is really two 8 units separated by a breezeway. 

I have a guy who rents 8 of the units from me in order to rent as Airbnb units. He pays me a fixed lease of $x (market rent) and he rents them short term with the goal of getting $x+20% or more on average. 

He’s doing well as he’s asking to take over any new unit’s that come up.  He also leases about 15 of our Montrose units including a whole 10 unit building of ours. 

IMO, and this might be obvious, the model only works in A locations (downtown, heights, Montrose, etc). No BFE burbs or C spots like 3rd ward 

@Cody L. Thanks Cody. I heard many people doing it like that renting and sublease through AirBNB and making profit on top of it. That's good strategy without much investment by owning and less risk except monthly rent.  I am still evaluating a property in downtown area and see whether I can do the same. It's 3 bed - 3bath prop so it might not easy to rent out like 1br suite. 

Originally posted by @Vijaianand Thirunageswaram :

@Cody L. Thanks Cody. I heard many people doing it like that renting and sublease through AirBNB and making profit on top of it. That's good strategy without much investment by owning and less risk except monthly rent.  I am still evaluating a property in downtown area and see whether I can do the same. It's 3 bed - 3bath prop so it might not easy to rent out like 1br suite. 

 The guy who leases from us for airbnb pays 2x months as a deposit (since we have additional risk if he folds, as we'll have a bunch of units dumped on us at once), and he has to furnish out the units.  And I suspect there is some ramp up time from when he first lists a property till when he has consistent bookings. 

So far it's been a win/win.  

I only have 1 Airbnb unit.  Our office is right on yale st, has a large victorian home we use as the house buying office and a 4 units adjacent to the house on the same property.  1 is the office for our construction company, 1 is a 800sf long term tenant paying $1600, 1 is a 150sf closet that i get $700mo for and the last unit is a 800sf airbnb.  I gross about $3kmo on that one and net around $2500.  Its been a great experiment and as the other units come available especially the tiny home i think ill switch them over to airbnb.

Hello, 

This might not be the thread to ask this question, but I did not see another thread that was related to STRs subleasing. For those who have Rental Properties and allow subleasing for the purpose of STRs, where do you usually list your properties? I am looking to rent specifically for that purpose. But, seems like my requests on HAR/Trulia just go unanswered. 

Thank you! 

Hi Diana, have you found any places that allow you to rent it out and host as airbnb? I seen a lot of people post their high rise apartments on airbnb. How does those people able to do it because it’s illegal in Houston unless the landlord say yes.

@Andy Nguyen hey Andy, you're right most of those are done under the table as most corporate leasing agreements have paragraphs specifically banning short term rentals. They way i have been reaching out is through zillow when I see it's listed by the owner of the proper and I created a business so I can buy commercial insurance for short term rentals, it's the only way I've had landlords feel comfortable about leasing them over to me.

@Andy Nguyen the only downside is that you have to be very selective on which apartments, some landlords try to charge you more a month because you are doing airbnb and then you can't justify the margins after furniture, insurance, etc etc. There is some bigger companies like Sonder that go and lease 10-20 units at a time so they negotiate better deals on those same midrise properties. My old apartment (property is less than 3 years old) made a deal with them because they couldn't keep 100% occupancy. So if you have deep pockets to negotiate something like that you can do that in nicer places.

Originally posted by @Andy Nguyen :

@Kevin Wood, Hi Kevin, is it illegal to rent an apartment and host airbnb in Houston? Do you know the right way to do it with apartment?

 Kevin is smarter than me, and he may reply, but let me give it a crack:  Is it "illegal"?  No.  Why would it be?  Luckily, unlike California, there are fewer things that Texas belives you should be locked away in a cage at gunpoint for doing.  And letting someone sleep in your own apartment or home in exchange for $ isn't one of them.

That said, it may not be allowed by the PROPERTY OWNER. Meaning if you lease an apartment from someone, don't just assume you can turn around and do STR with it. Make sure you're up front with them first that it's something you want to do. The "rub" will be that areas good for STR are also areas that are super easy to rent. So it might be hard to convince a property owner to rent to you so you can STR unless there is some other benefit to them. Such as you paying a higher rent amount, or renting a block of units (i.e., we have a 32 unit building downtown split into 2x 16 unit buildings. I have an STR guy who rents all of 1 of the buildings).

If you're looking to just grab a few random units around town to STR, and you're trying to pick hip/trendy areas, you're going to have a hard time.

@Andy Nguyen it's not illegal. You do have to disclose as @Cody L. and the owner may not let you do it. It's hit or miss and comes down to your pitch and/or the owner's appetite for it. @Cody L. and I both own apartments and have allowed it. As long as you cause no extra problems it's not that big of a deal. I personally find large risk in doing this as your primary investment strategy (see driver earnings through Uber over last 10 years). The platform can take more of your revenue any time they want without notice. Sure there is a little competition (again see Lyft and other local competitors for Uber), but at the end of the day it's worth factoring in to your long term model.

@Kevin Wood I have a new start-up STR business and I too am looking for places to lease. I would love to see if any of your properties would fit my needs and if we would be a good fit for you as well, for a win-win situation. How would you like to connect?