Lease property to AirBnB professional?

Question

I have a rental property in a suburb of Houston and I have been approached to lease my house to an investor with a lot AirBnB experience. They will use the property for their AirBnB business. They have excellent reviews on AirBnB but they own all of their current properties. They will sign a 2 year lease and leave the refrigerator. The refrigerator has no value to me but its part of the deal. The rent we have discussed is a little below market value. There is an appeal of a 2 year lease for me as I am not able to manage the property as easily since I live out of state. The major selling point for me is they have to maintain the house in an excellent condition to keep tenants coming to their properties. They will take care of minor repairs.

Does anyone have experience with this or suggestions on this arrangement?

Michael McKay · Answer

I have this arrangement with several landlords and they are all happy with the deal. I pay market rent and handle the minor repairs, which the owners love because I'm not calling them about a leaking toilet like a regular tenant would. I also have my cleaning crew in each unit regularly, who notifies me of anything that needs to be fixed. By having a regular eye on things, small maintenance issues are addressed right away and don't become bigger problems down the line.

If your tenant is truly a professional short-stay operator I wouldn't be concerned. Here's a few things I'd address with them/look into to make sure you are covered:

• Do they have commercial insurance that specifically covers short-term rentals?
• What is their screening process for guests?
• Research the local laws around rentals of less than 30 days in your area
• How do they avoid parties from happening outside of guest screening? We have noise detection devices in each unit that notify us of noise over a certain level for 3 minutes or more.

Hope this helps!

Tyler Work · Answer

Hey @Michelle Zarlengo I'm going to disagree with some of the other responses here.  I'm a little biased since I do LTR here in Denver, but I think short term rentals can actually be LESS wear and tear on the property due to it being cleaned 5-10 times per month by a professional cleaning service, and the need for it to be in great condition for fear of the host getting bad reviews.  I'm not really sure why people assume that guests only staying a few nights destroy a property, typically they are out exploring and not even in the house at all.  In addition, the appliances rarely get used as guests frequently eat out, and don't do laundry at the property.

I pay market rate for all of my properties and agree with @Michael McKay, my landlords are all very happy with the deal.

Craig Curelop · Answer

@Michelle Zarlengo - It all depends on what you want out of your rental. If you want the highest possible return from this property, then put it up on AirBnb yourself. This is going to be A LOT more work and there will be a learning curve learning how to run an AirBnb long distance.

If you want to achieve market rents (or maybe a little more) with less work, then doing this makes sense. This guy is likely running a business (do your due diligence) and if there is one landlord he ticks off by not paying rent or not being an ideal tenant, his business is gone.

With these kind of rentals, your property gets cleaned at least once a week and there's really no time for much damage to be done.

This is certainly a new concept and it makes a lot of sense. The property owners are happy because they get their rent every month with little to no work and essentially free property management. The short term rental business is happy because they get to put in the work to make some additional income on a monthly basis.

Nathan Gesner · Answer

I think you're making a mistake. Why would they lease your house if they own all their others? I don't live in Houston but from what I've read, it's better to buy if you are staying for more than two years.

If they are so successful with AirBnB, that means they are leasing your property below market and then making a huge profit on it. Why not do that yourself? Find a property management company that handles vacation rentals and let them take care of it for you. You can get all the benefits of regular cleaning and inspections but earn a higher return.

If you decide to go with them, I would counter back and ask for a percentage of their profit each month. It doesn't make sense to let them turn a profit using your investment.

Carolyn Fuller · Answer

Also, as the owner of the property, you will be held liable if anything goes south. Generally, if the property is being rented on the short term rental market year-round, it can be considered commercial use by insurance companies and homeowner's insurance will not necessarily cover you.

Effram Barrett · Answer

I figured it would be close to IAH. I live on 59 N and the beltway close to the airport as well. That area is prime for Airbnb being so close to the airport. I would love to help in any way I can if you need boots on the ground here!

Michelle Zarlengo · Answer

@Effram Barrett Its in Humble 2 minutes from 1960 and 59. It really is a great location for IAH and other amenities. I think the house is great for airbnb but I am not able to manage a short term rental at this time.

Effram Barrett · Answer

What area of Houston is it in if you don't mind me asking?

Thomas S. · Answer

You should be taking a percentage of their business on top of full market rent and only be renting M2M. You are being taken advantage of.

Make sure you inform your insurance company and investigate to insure airbnb is legal in your area.

Kevin Wood · Answer

@Michelle Zarlengo if you are interested in AirBnb I would just let someone property management for you. I have four AirBnb properties and about to add my 5th. I'm a super host and we manage for others @20% property management. Even with the higher property management fee required you often will make above market. If you don't want to deal with it at all or get cut of the profits I would do what @Stefanie K. suggests.

Lease property to AirBnB professional?

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