Tales From the Landlord: AirBnb ?

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Submitted by Coronita on February 19, 2016 - 11:43pm

I thought I'd share an interesting story that just happened. So one properties is vacant, and I've been taking my time to find a good tenant. So I found this tenant, who seems to be really good. And so I started the paperwork.

And then somewhere along the line, he mentioned that he would be having lots of business colleagues that come over and stay with him regularly, and asked if that was ok. I didn't think anything of it, and so sure, none of my business who you have over and stays occasionally.

So then we get to the lease agreement, and that's when we ran into disagreement. Basically, in my lease agreement, I specifically state "no subletting or short term rentals to anyone not named on the original lease"....The person asked me to remove it since he explained to me some of his colleagues he might be charging them to stay with him and some he may not. He also mentioned that he did a lot of research and that subletting wasn't illegal where my property was. I told him that while subletting isn't illegal, I just don't want to do it and that there are restrictions for short term rentals where the property is. We ended up parting ways, because I refused to change the lease clause and he really wanted me to change the lease clause. Oh well.

But in thinking about it, I was trying to figure out what why he needed that lease clause? Any ideas?

I'm guessing what the person was trying to do was he was going to list my house on AirBnb as a short term rental, and probably he either needed a lease that permitted him to sublet or he needed a lease that allows subletting, so that he can get the required license(s) from the city to get a permit to run a short term rental.

Thoughts?

Submitted by scaredyclassic on February 20, 2016 - 9:30am.

Odds

Pimp .07 perc.
Airbnb 97.93 perc.

Submitted by spdrun on February 20, 2016 - 9:35am.

What's the other 2%? Drug dealer? Meth lab? Safe house for illegal immigrants? Private rave venue?

Submitted by scaredyclassic on February 20, 2016 - 10:25am.

Crazy worried about all contingencies dude. 2 perc.

Submitted by ltsddd on February 20, 2016 - 11:11am.

Nothing to think about. Run in the opposite direction as fast as you can. The troubles this guy will bring will claim the rest of what little hair you have left.

Submitted by FlyerInHi on February 20, 2016 - 11:18am.

flu wrote:
He also mentioned that he did a lot of research and that subletting wasn't illegal where my property was. I told him that while subletting isn't illegal, I just don't want to do it and that there are restrictions for short term rentals where the property is.

Subletting is never illegal. It's just a private contract between parties.

What about short-term rental restrictions? From the HOA or the municipality?

Submitted by henrysd on February 20, 2016 - 11:42am.

I would do the same to walk away from the lease. Sublease basically shift tenant screening authority from landlord to tenant, which can bring unqualified people into the house. I wouldn't allow things like that.

Submitted by Coronita on February 20, 2016 - 4:05pm.

Thanks all for the comments. I never had an interest in allowing any sort of subletting, and I thought I was pretty clear initially when I talked to all tenants to be. But this one was interesting because he first started out asking me if it was ok if he occasionally has business associates stay with him. I didn't think anything of it and thought it was fine. I did find it weird that he's a techie for a big company, and that he would have so many business associates that he would want to live with him.

Another thing. He tried to assure me that he would find a cleaning person and gardener every week and keep the place pristine (also, this was odd because I was including a gardener already).

And finally when I sent him a draft lease agreement, out of all the things I think he might have objected to, the only thing he objected to was my clause about subleasing was prohibited. He wanted me to change it, because according to his words, even though he doesn't consider what he was going to do a sublease, he wanted to make sure it wouldn't conflict with the lease. I objected and said the sublease clause I never removed, ever and that I I won't change that.

That got me thinking that if he really wanted to do it, he probably could do it without telling me...So I was curious why was he asking me explicitly for consent.

I'm guessing the reason why is because, in order to be able to run a short term rental/AirBNB business for a home that doesn't belong to, he probably needed to provide proof from the landlord that it was ok to do this. I'm guessing that's one of the conditions of AirBNB rentals. And I'm guessing that in order to get a mandatory permit in the city to have a short term rental, part of the application for that license requires the person to provide proof that the landlord approves.

Submitted by bearishgurl on February 20, 2016 - 4:18pm.

flu wrote:
. . . I'm guessing the reason why is because, in order to be able to run a short term rental/AirBNB business for a home that doesn't belong to, he probably needed to provide proof from the landlord that it was ok to do this. I'm guessing that's one of the conditions of AirBNB rentals. And I'm guessing that in order to get a mandatory permit in the city to have a short term rental, part of the application for that license requires the person to provide proof that the landlord approves.
Yes, my kid and their partner ran an AirBnB bedroom and adjacent bath (with kitchen privileges) for about 3 years in their rent-controlled 4 bdrm SF flat. Their LL lives in the bldg and agreed to it.

I'm pretty sure that AirBnB requires LL approval from a tenant to conduct this biz in their rented dwelling.

Submitted by Hobie on February 20, 2016 - 9:13pm.

Your gut feeling saved your bacon big time!! nice!!

Submitted by barnaby33 on February 22, 2016 - 5:19pm.

Airbnb has never asked me anything like that. I rent a room in my home. They don't ask about ownership or whether it's legal.
Josh

Submitted by spdrun on February 22, 2016 - 5:36pm.

Even if AirBnB did, what would stop someone from pimping the place on Craigslist or whatever? Glad the OP dodged that one.

Submitted by Coronita on February 22, 2016 - 8:53pm.

spdrun wrote:
Even if AirBnB did, what would stop someone from pimping the place on Craigslist or whatever? Glad the OP dodged that one.

Legality. I believe If you approved of the sublet, you really don't have any recourse. If your lease specifically said no subletting, and your tenant did sublet, I believe you can terminate their lease immediately and sue for damages. Then again, I'm not a lawyer, so hopefully I never have to have a need for one.

Also, this opens a whole new ball game wrto liability. Your homeowner's insurance probably excludes subletters, and even if your tenant carried renter's insurance, I doubt that it would cover the subletters too.

Submitted by spdrun on February 22, 2016 - 9:04pm.

You're assuming that such a tenant would give a flip about legality.

Submitted by Coronita on February 22, 2016 - 10:24pm.

spdrun wrote:
You're assuming that such a tenant would give a flip about legality.

Someone with a pretty high credit score probably would, which is probably also why I don't generally consider people with a credit score less than 740. As an added bonus, if the person works at a large employer, things get a lot more interesting once you start to really get into legality.

Submitted by no_such_reality on February 23, 2016 - 10:48am.

ltsdd wrote:
Nothing to think about. Run in the opposite direction as fast as you can. The troubles this guy will bring will claim the rest of what little hair you have left.

While I tend to agree with the above, open a discussion wit him if he's really going to live there or merely run a rent arbitrage between short and long term rates. Say you're willing to allow the later if you are believe his business plan is sound.

Then have him show you the numbers. Modify the lease, if you want to allow, increase the security deposit and right terms that makes him responsible for excess damage caused.

It's an interesting model for young singles, rent a nice two bedroom in a hipster area, and over half or more of the rent by having 'guests' two or more weekends a month.

Submitted by spdrun on February 23, 2016 - 10:56am.

Someone with a pretty high credit score probably would, which is probably also why I don't generally consider people with a credit score less than 740. As an added bonus, if the person works at a large employer, things get a lot more interesting once you start to really get into legality.

If he's intending to sublet a rental, he's already shown his attitude to be "f**k the rules." Credit score, employer, or not.

Personally, I hope he found a place to rent out, just as long as it's not yours. Or mine. Got to admire anarchic entrepreneurship.

Submitted by no_such_reality on February 23, 2016 - 11:22am.

spdrun wrote:

Someone with a pretty high credit score probably would, which is probably also why I don't generally consider people with a credit score less than 740. As an added bonus, if the person works at a large employer, things get a lot more interesting once you start to really get into legality.

If he's intending to sublet a rental, he's already shown his attitude to be "f**k the rules." Credit score, employer, or not.

Personally, I hope he found a place to rent out, just as long as it's not yours. Or mine. Got to admire anarchic entrepreneurship.

He asked for the subletting term to be removed that's pretty up and up. A sleaseball would rent and attempt to list without any of the information he's provided.

Frankly, I don't really see any difference in what he's doing and a corporation selling a bond. A corporation pledges to provide a cash flow to then use the asset (money) in higher risk activities for greater return. He's doing the same.

Submitted by FlyerInHi on February 23, 2016 - 11:52am.

no_such_reality wrote:
ltsdd wrote:
Nothing to think about. Run in the opposite direction as fast as you can. The troubles this guy will bring will claim the rest of what little hair you have left.

While I tend to agree with the above, open a discussion wit him if he's really going to live there or merely run a rent arbitrage between short and long term rates. Say you're willing to allow the later if you are believe his business plan is sound.

Then have him show you the numbers. Modify the lease, if you want to allow, increase the security deposit and right terms that makes him responsible for excess damage caused.

It's an interesting model for young singles, rent a nice two bedroom in a hipster area, and over half or more of the rent by having 'guests' two or more weekends a month.

I agree with NSR. Let people design the contracts that work for them, and come up with new ways of living/using real estate.

We need to separate what is legal (housing laws in the municipalities) from private contracts between the parties.

I'm surprised people are not more upset about how government restricts our land use.

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