As you probably know by now, Airbnb has become incredibly popular. It’s fast, easy, cost effective, and relatively safe for both hosts and guests.
Have you ever considered the possibility that your tenants might sublet your property on Airbnb? Or maybe they want to but are too afraid to ask?
It’s worthwhile for you to have a firm stance on tenants and their use of Airbnb and similar sites.
First off, it’s essential to note that you probably have the right to evict your tenants if they choose to host Airbnb guests without your permission.
Unless you have a lease agreement that specifically allows for subletting, there’s likely a clause that says something along the lines of, “Tenant shall not sublet all or any part of the premises without first contacting the Landlord and obtaining written consent.”
It doesn’t matter if the tenant rents just one room of a four-bedroom apartment, or the “guest” stays no more than a single night. Subletting is subletting, whether it’s for one day or one month. Tenants who violate this provision legally expose themselves to the risk of eviction.
Whether you choose to pursue eviction is one thing. That can be a long and thorny road to travel, and you’re probably better off giving a warning and keeping a close eye on the situation in the future.
If you’ve caught one of your tenants subletting your property through a site like Airbnb, however, you may have wondered, “What are the costs and benefits of letting my tenants host guests?”
Let’s take an hard look at both sides of the issue.
Airbnb and the Innkeeper Model
Let’s start with the biggest advantage of allowing your tenants to use sites like Airbnb, HomeAway, and Couchsurfing. It’s what Al Williamson, a successful landlord and entrepreneur, calls the Innkeeper Model.
“In an Innkeeper Model, the landlord handles the Airbnb financial interfaces and the tenant, the innkeeper, handles the physical aspects of hosting,” Williamson writes. In other words, the landlord and the tenant work together to maximize the profitability of the property.
“Under this scenario, the tenant would perform housekeeping, bellhop and information desk services; the landlord would handle front desk financial matters,” he says. What happens is the tenant pays his or her standard rent as usual, but receives a monthly check from the landlord when guests stay at the property that particular month.
The easiest solution would be to split the profits 50-50, but you could design a more unusual payment structure that reflects the amount of work and energy put in by each party.
The innkeeper model may sound great, but it’s a fairly idealistic approach to the situation, unfortunately. After all, how many times are you and your tenant going to be on the same page when it comes to using these sites and fairly distributing profits? And do you trust your tenants to play such a significant role in a complex financial and legal matter?
As a landlord, your worst nightmare isn’t that you might develop an ineffective innkeeper model. What’s more of a potential issue would be if tenants sublet without your knowing.
This gives you no control over who is staying at your property and ultimately opens you to a slew of potential legal problems. Dozens of people could be passing through your property in any given month, and essentially eliminating any ability you have to screen them effectively and protect your rental property.
If something were to go wrong, the liability might ultimately fall on your shoulders, even if you knew nothing about what was going on. This is a risk a prudent landlord wouldn’t take.
So there’s a case for choosing to allow or deny the use of subletting through sites like Airbnb. But if you’re willing to put in a little extra effort, and believe your tenants are responsible enough to work with you, it could be profitable to meet them in the middle and permit them to sublet in this manner … with certain conditions.
You’ll have to work through the logistics and legalities of the subletting. Here are some tips for how you and your tenant can maximize the profitability of the property:
• Make communication a priority. Communication needs to be a major priority when it comes to subletting. Not only do you have to communicate with your tenant, but the tenant has to be able to communicate with you and the guest. Quick replies are important to Airbnb guests, so ensure responsiveness is a priority.
• Focus on the details. It’s the small things that set successful Airbnb listings apart from unsuccessful ones. If you’re going to rent on Airbnb, you might as well go all out. This means writing detailed descriptions, adding perks, and including vibrant pictures that show guests precisely what they’ll be getting. (One useful note: Airbnb works with local freelance photographers to provide free professional photos at no charge to you).
• Ensure the property is clean. Until you’re confident that your tenant has everything under control from a housekeeping point of view, it may behoove you to check the property before guests arrive. Everything should be clean and organized if you want to increase the chances of your guests posting a positive review.
• Set the right price. Don’t get too greedy with your per-night rate or you’ll end up with very few guests. It’s better to charge a little less than you think your property is worth and earn some positive reviews than it is to overcharge and have disgruntled guests who decide you ripped them off.
Green Residential Property Management
At Green Residential, we’re committed to providing Houston landlords with the tools and resources they need to succeed. Whether you’re a first-time landlord or an experienced investor with dozens of properties in your portfolio, you can benefit from having the support and assistance of one of the premiere property management companies in the industry.
For additional information regarding our services, please contact us today. We’d be happy to walk you through common issues, including the subject of this article.