Question about a rental request I received

[Raj Shah]

Hi Everyone- 

I recently had a strange (or maybe not so strange) request arise. This question is not related to my current real estate investments. I live in buncombe county and we are getting ready to put our current home we live in on the market. We are going to put it on the market and if we are not getting offers around our asking price we will rent it. We live in a highly desirable neighborhood, great schools ( walkable) and walkable restaurants/shopping. While we are getting the house ready, we received a phone call from someone who wants to rent our house  for 36 months (at the rent we requested) and then buy it in 36 months. However, she wants to sublet it to someone else ( she does not currently have a renter willing to do this). While this is not what we would want to do, she sent us a contract. The contract is very vague and has no details around who covers the rent if she loses a renter. In addition, she can cancel the agreement at anytime but we as the owners cannot. It is not clear who would manage the property in the contract as well as multiple other details you would routinely see in a rental agreement. 

Has anyone come across offers like this and if so, are they legitimate? Do these people follow through on their end of the deal?

I am happy to share the details ( or lack thereof) of the contract.

Thanks for your help!

[JD Martin]

Don't do it. I know BC well - I've worked here for 20 years - and if you can't sell or rent at the rate you want on your own you are either grossly overpriced or there's something wrong with the house (what neighborhood are you in?).

What this person wants to do is known as "short term" or "air bnb" arbitrage. Basically it works like this: they become a "tenant" of your home, and then turn your house into a short term rental. You get the monthly rent you'd charge them, they pay the rent and whatever they can short-term rent your house for, they keep the overage. Essentially, it's a way of broke-*** people that don't have 5 cents to their name becoming "real estate investors" (I realize this last statement will rub some people the wrong way and I don't care). 

If you are OK with renting your house short-term, hire a PM to run it and do it yourself. You'll get all the money and none of the risk of someone who has no skin in your game from wearing out the house. I guarantee in BC, if you want to short term rental your house, you will make more money hiring a PM and doing it yourself than anything you'll get from this person, who wants to pay you like it's a long-term rental. 

The reason they want a 3 year lease is because some guru told them to lock up the property long-term to make their work worthwhile, or because they don't want to go through the trouble only for you to kick them out a year from now. A 3 year lease is more or less a bad idea anyway - you have no idea what happens in the next 3 years, and you are the only one really at risk since you can sue a broke joker for non-performance but you'll be unlikely to collect. They're never going to buy your house - that's just a ploy to get you to sign the contract. If they had any means whatsoever to buy it, they'd do it now instead of 3 years from now when prices are likely to be worse. 

Don't do it.