Leasing Apartments for Airbnb

[Austin Joseph]

Does anyone in the Austin, TX area lease apartments with the sole purpose of listing them on Airbnb? I'm an apartment locator and heard of another agent that has been working with a gentleman that does just that. I was originally under the impression that this practice was illegal, but I was told that you can get around this by acquiring the apartments under an LLC. If anyone has done this before let me know because I'm curious and would love to learn more.

[David Ivy]

@Austin Joseph

You're describing a situation where someone leases a single apartment unit for $1,800/mo. (for example) and then makes income off the spread between the $1,800/mo. and the $3,000/mo. (for example) income from leasing the unit through AirBnB. Is that right?

If someone wants to do this all above-board, then renting out a unit in a commercial multifamily property (condos, apartments, etc.) in Austin requires a "Type 3" permit. In order to get this permit, the applicant needs to own the unit being used as a short-term rental: "Ownership information on your application must match the deed as recorded with the Travis County Clerk's office or Williamson County Clerk's office." However, that's not the case when someone merely leases an apartment unit. The lessee's name is not on the deed for the unit. The owner is the one who has to apply and sign the application. Therefore, as I understand it, the City of Austin does not allow the type of short-term rental you describe.

Note that this only applies to AirBnB-style rentals for periods of less than 30 consecutive days. As far as I know, if you always lease for 30+ days, then you're not covered by Austin's STR ordinance and don't need a permit or pay the associated city occupancy tax.

That said, I can't imagine any landlord or apartment owner being okay with the short-term AirBnB subleasing you describe, even if it's 30+ days. As a locator, you're familiar with the leases used by Austin area apartment communities. Typically, those that will allow a tenant to assign or sublet the lease to someone else require the landlord's written consent, over which they nearly always have 100% discretion. If it's not specifically forbidden in the lease, then I'd imagine they certainly would's forbid putting one of their units on AirBnB. Have you asked any apartment managers about this?