Leasing homes to then sublet through Airbnb? Viable business?

[Eric Moeller]

Hey all!

I wanted to get this conversation started to see if any investors out there are currently sandwich leasing properties for the main purpose of subletting through Airbnb. 

I came across a landlord who is looking to rent her home here in San Diego for $2,700 a month. I ran the property through my Airbnb formula and I figured if I sublet this home through Airbnb I would be able to bring in $1,500 a month ABOVE rent, management and reserves. This is crazy to me and made me this would be a great model to explore. (yes, I considered vacancy, management, reserves, staging and local fees into my projections) 

Has anyone done this before? Have you leased a home with the purpose of subletting exclusively through Airbnb? What has worked? What was the biggest surprise? We're landlords kept in the dark or aware of the subletting? What is the benefit for the landlord? Did you cut them in on the profits? 

I have a million questions so lets get this one rolling....

Eric D. Moeller

Koda Homes

[Andy Whitcomb]

@Eric Moeller  I have been doing this in Seattle, but it is more like a partnership with the property owner.  Everything is fully disclosed upfront, and we pay market rent PLUS a 20% profit share to the owner.  The only thing the property owner asks is that we run everything above the board and legit, so among other things, we have some serious insurance coverage on both property and liability.  It works great for us in Seattle, as we clear $15k a month in profit (during high season) AFTER all expenses (including rent and profit share).  The owners love it so much that they want us to take over two more homes in the area, and have offered to partner with us on buying more.   Of course, like many cities, Seattle is exploring legislature to limit or outright ban this sort of activity because the hotels have been greasing the pockets of the politicians.  So, we are keeping a close eye on that, and have even written it into our leases that if legislation changes to prohibit us, then we are not obligated to fulfill our lease term.