Airbnb has become extremely popular in the last decade, and in 2020, there had already been more than 250 million nights booked through the company. If you don’t know what Airbnb is, it’s a third-party service that connects individuals with short-term rentals, often just for a single night, but many people rent for a week or more. It was created as an affordable, easy alternative to hotels, but it’s not uncommon to find rentals that cost just as much (or more) than a hotel.
For hosts who rent their whole properties or spare rooms, Airbnb is a great source of extra income, and that’s exactly why you need to prohibit Airbnb listings in your lease. When a tenant realizes they can make some extra cash through Airbnb listings, you’re going to have random people living in your property who have never signed a lease.
Tenants who rent their spare rooms to Airbnb guests are basically subletting, although they don’t always realize this, and some don’t even know it’s a lease violation. If you’ve ever wondered if Airbnb rentals are worth explicitly banning, the answer is yes, and here’s why.
In the city of Houston, Airbnb hosts are currently required to collect 17% tax (subject to increases every year) from all guests. This amount covers state and local taxes. You might also be required to pay sales tax on all rental income you receive from each guest. This is similar to paying income tax on the rent you receive from your tenants.
The problem with this arrangement is that you can be held financially responsible for all unpaid taxes if your tenant is renting through Airbnb and not paying the required taxes. Since you are the homeowner, the city of Houston can hold you responsible, not your tenant, which means you’ll need to file a lawsuit against your tenant to recover the costs. Even if you win your case, you may not be able to collect on the judgment.
It’s best to prohibit Airbnb rentals in your lease from the beginning and make sure you explain this to your tenants when you go over the lease. This will deter most people from listing your property for rent. However, it’s still possible that some people will list their spare room under the radar. To catch these listings, you can check the Airbnb website and search for your property.
The more people you have living on your property, the bigger the chance of damage. With Airbnb guests, the potential for damage increases exponentially. Short-term guests, especially people just staying for one night, don’t have any reason to be extra cautious about causing damage. While there are some people who are always respectful, that’s not the case with many Airbnb guests.
You can find horror stories all over the internet about properties that have been trashed by guests and people have even had their property stolen. Many guests use their rentals to host a party, and that doesn’t usually turn out well.
Letting unverified strangers stay in your property is always a bad idea. It’s like renting to a tenant without performing a background check. If your tenants rent to Airbnb guests, it’s only a matter of time before you end up with massive property damage. At that point, you’ll probably want to evict your tenant and use their security deposit to cover as much damage as possible. However, many homeowners have discovered damage that greatly exceeds their tenant’s security deposit, so it’s important to do whatever it takes to prevent Airbnb listings in the first place.
It’s no secret that squatters know they have more rights than they should, and many take advantage of this. Airbnb is particularly dangerous for collecting squatters since it allows them to establish a presence in a property for a certain period of time.
It’s bad enough when a homeowner has to deal with a squatter, but if your renters encounter this situation, the situation could be worse. For example, if a squatter takes over your rental, your tenant might sue you for being displaced from their home if you don’t pay for their hotel accommodations.
To get rid of a squatter, you have to go through the court system and file an official eviction lawsuit. This isn’t fair, but it’s the only way to protect yourself from being sued by the squatter.
This is why smart Airbnb hosts have their guests sign a vacation rental agreement on top of agreeing to the listing terms. It’s the only way to support an eviction case if a guest decides to squat. Unfortunately, when your tenants are the ones listing your property on Airbnb, they’re not likely creating additional contracts. If you need to remove someone from the property, you’ll have a tough battle ahead.
You purchased your property to generate investment income for yourself, and it’s unfair for your tenant to make money from your hard work. It wouldn’t even be fair if they split the income with you because after taxes, you wouldn’t even get much.
Most tenants list their spare rooms on Airbnb because they want some side cash or need help paying the rent and know they can’t get another long-term renter without your permission. To renters, it seems like an easy way to generate money, but it’s just too risky for you to allow.
Hiring a property manager is the best way to prevent illegal subletting through Airbnb and other forms of lease violations. A professional, experienced property manager will make sure prospective tenants know that listing your property on Airbnb will be grounds for an immediate eviction. They’ll also follow through with any lease violations to make sure your tenants are following the rules. Most of all, they’ll screen applicants and hold high standards to ensure you get the best quality tenants.
We are a Houston property management company that specializes in managing tenants for Houston landlords. Whether you only need a few services or you’d like a full-service property management package, we have you covered. Contact us today for a free property analysis to learn how our services can help you become a more efficient and profitable landlord.
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