Has anyone got any experience or thoughts on this? I’ve done a bit of research and it seems like it could work well…
You mean rental arbitrage? Rent a place and then turn around and list it on Airbnb? There are very few homeowners who will agree to this. Most leases have a no-subletting clause. If the homeowner wanted to do short-term rentals, why wouldn’t they be doing it themselves?
And would you plan to purchase short term rental insurance? Are you planning to pay a plumber and clean-up crew when the guests plug up the plumbing and flood the place, or would you call the landlord and expect them to fix it?
If your research consist of videos telling people how they can make tons of money doing rental arbitrage, forget it. Those people couldn’t care less if you succeed or fail- they just want hits on their blogs and youtube channels, which is how they make their money.
What @muddy said. In the very unlikely event that an owner would agree to this (and why should they?) who would be responsible for the business license, insurance, damage caused by guests, property taxes, etc. etc. etc?
As the owner of the business id obviously be responsible for my license, tax and insurance?!
Is there a point to this question?
Don’t you have to pay tax end buy insurance and get a business license with your owned properties? Why is this an issue in your mind when you’ll be doing that yourselves?!
LOL. Yeah, lots of people make money doing it. And they love to try to sell others on the idea. It’s usually against the terms of the lease but if you find a landlord who is fine with it, good for you.
Generally speaking, this forum is not friendly to rental arbitrage so don’t expect any helpful free advice here. You’ll have to rely on one of those ad laden Airbro sites.
Yes, of course there is a point to the question. Many people who are renters and want to Airbnb the entire home, or a portion of it, never consider those issues. They just think about how they are going to make a bunch of money.
There are plenty of tenants who list a room in the place they rented in contravention of their rental lease, and then get irate when the landlord tells them they can’t do that or gives them a notice of eviction. Those tenants don’t even acknowledge that they are running a business, they couch it as “just subsidizing my expensive rent”. And you’d better believe that if the guests cause damages, that they would call the landlord to say the toilet is plugged up, without mentioning that they were subletting and that the guests did the damage.
You may not fall into this attitude category, but many do, that’s why the point was made.
Renter’s insurance would not pay for damages if it’s a STR. For the property to be a LLC, you need to pay off the mortgage first. A mortgage company would not allow it and you can’t get a LLC on somebody’s else property.
If you wish to do Airbnb please buy a property to do so and don’t rent just to put the apartment on Airbnb. It’s not fair to the owner nor is it fair to the community. Sooner or later neighbors will complain and you’ll be shut down. You might be creating a difficult situation for the owner of the building.
As a landlord of a multi-unit building, just don’t do this. Depending on your location, the building owner could evict you and you’d owe the remainder of the lease money anyway. Plus decieving your landlord is bad karma, which usually comes back to bite you at some point.
If you want to make money with a short term rental, consider house hacking. Buy a small multi-family property that could use some updating, live in one unit and fix the other unit(s) up to rent out. If the place has a garage, rent that out as storage. Do youre own cleaning for extra money. As you’re able to rent out more units, more money to renovate/improve and finally more money to pay down your mortgage. I’m doing that now, though my property isn’t small, so renovations/improvements aren’t cheap.
Just read about someone getting a lease with landlords permission to do arbitrage, they got a cease and desist from the HOA, before their first guest! Now they want out of the lease and the landlord is refusing….
because not everyone CAN do abb.
there would have to be an agreement that this stuff if the responsibility of the abb host.
I personally am not keen on this model, but I can see how it would work well if you had an agreeable landlord.
I’m a landlord - I would never allow someone to do STRs on my property - far too much risk for me.
What research have you done that makes you conclude it would work well @Bosty64
Where I live standard landlord contracts forbid subletting.
Yeah, I tend to agree, I see nothing wrong with the concept.
The host just needs to make sure all the angles are covered, as has been mentioned, things like owner permission, insurance, responsibility and processes for handling any property damage etc.
wow shocked you see nothing wrong with the concept - are you a landlord @bobsburgers
I’m not shocked that you think that way
Be careful doing arbitrage. There are a lot of unscrupulous people out there.
In a new host Airbnb FB group stories of hosts asking for advice because they signed a lease with the owner but now find that STR is prohibited by HOA or City. They find themselves stuck in a lease they cannot use as planned & have invested thousands in furnishing.
The reason the owner wants someone else to do the rental is because they have no investment in preparing the listing & know it is a matter of time until it gets shut down. They will gladly collect the money from the host in the meantime.
The host is taking all the risk. If rentals don’t occur the host still has to pay the bills.
Don’t believe the YouTube videos. They either want to sell you something or want to collect the advertisements commissions or both.
if you were a landlord you would know exactly why it’s an incredibly risky way to let out a property @bobsburgers
actually it’s not just the person sub-letting who takes all the risk in this scenario @Annet3176
landlords are at risk of property damage, non payment of rent, building insurance not being valid, complaints from neighbours etc
What I was referring to was a scenario where the tenant turns around and lists the place as an str, without the owner’s knowledge.
This actually has happened quite a few times in my little touristy town. Happened to my neighbor. Their place isn’t normally a rental, but they had to go back to live in Canada one year for medical reasons. A young woman answered their rental ad, presented herself quite well, said she worked online from home, loved the place. They had her over several times, showing her how everything worked, had her over for dinner, my neighbor thought she was great.
A week after my neighbors left, a car came down my little dead end road, looking lost, I asked who they were looking for, the guy pulled out his phone, looked at it, and said “Casa de Taye”. The girl’s name, Taye, would be pronounced Ta-yay in Spanish, so it sounded like “Casa Detaille” (pronounced de-ta-yay) which would mean “Detail House”. I have lived here for 15 years, and said I had never heard of a house called that in this neighborhood. They turned around and went on their way.
The neighbor’s house isn’t on my street, it’s on the next one, I can’t see it from my place. But later that afternoon, the neighbor who lives next door to them, who is also a friend of mine, called me to say that Taye had driven off that morning, waving goodbye, saying that she had rented a place on the beach a 2 hour drive, and a boat ride from here, and would be back in a week. A few hours later, carloads of people started showing up, unloading luggage, going into the house, and there was a pool party going on (I could hear the blasting music from my place).
I then clued in to what the lost guy in the car had asked me, Googled “Casa de Taye”, and sure enough, found a link to an Airbnb listing of the house, which was snoozed. I called the homeowners in Canada, told them what was happening, they phoned Taye, who claimed they were her friends (not), they told her to get her ass back there and boot everyone out.
I know she did it at least 2 more times that season, but she was more circumspect about it.
This girl and 2 of her friends were doing this all over town- renting large homes with pools, saying they were going to live there, then turning around and subletting to vacationers. There were a couple other scammers doing the same thing.
When you (and separately, the property owner) start trying to find insurance, and you tell the insurance brokers/carriers that you are doing rental arbitrage, which you would be required to do if you expect them to honor the policy, let us know what they say. I’m really curious. Maybe it’s possible in some states with some carriers, but I’ve never even heard of a carrier that allowed it.
Bosty has previously said he is in London.