Horror stories detailing tenants illegally subleasing their homes on Airbnb, a vacation rental website, have unfortunately become increasingly common. In fact, the issue got so bad that the Gothamist reported late last year that, in New York, “55% of Airbnb’s users [were] renting out their entire apartments while they’re gone, rather than a single room when present, which for most residents [was] against the law.” While the influx of Airbnb cases last year has certainly left many landlords with a bad taste in their mouths, the company’s new Friendly Building Program might cause you to reconsider.
What Is the Airbnb Friendly Buildings Program and Why Should I Care?
Airbnb’s new program enables property owners like you to authorize their tenants to sublease (or “home share”) on Airbnb while reaping a percentage of the tenant’s profits and setting the terms. This means you’ll be able to set things like: for how long the property can be on Airbnb, blackout dates for when your tenant can’t list the property, and pet policies. You’ll also be able to set your required percentage of income, which Fortune states is typically 5-15%. This can be a great boost of income on top of the monthly rental payments you already receive. While Airbnb is currently only accepting applications for properties in select U.S. cities like San Jose, CA, Philadelphia and Nashville, TN, this could be a great solution for landlords who routinely see their property on Airbnb. The company also provides Host Protection Insurance, which covers “eligible third-party claims against Airbnb, hosts, and landlords (as additional insureds) related to both property damage and bodily injury”, protecting against liability claims of up to $1 million dollars.
Some Potential Pros and Cons:
- Background Screening
While earlier this year when we wrote this article, Airbnb had no tenant screening measures (previously relying on their “community of honest travelers and hosts”), the company has resolved that. Every host and user is screened for public state and county criminal records and for sex offender records. They also are checked through the terrorist watch list (OFAC). According to Airbnb’s FAQ, users who have convictions for violent crimes, certain sexual offenses, felony drug-related offenses, fraud or dishonesty offenses, certain theft offenses, offenses involving property damage, and invasion of privacy offenses are removed.
Airbnb only runs background checks on U.S.-based guests, which means that all overseas Airbnb guests are unchecked. If your property is in a large city that attracts a lot of tourism, this can be a huge factor. Additionally, Airbnb only runs a background check on the person booking the stay, as its part of the account verification process. Anyone that accompanies the guest is not screen, regardless of if they’re U.S.-based or not. Finally, it goes without saying, that you and your tenants will not be able to review any of the background reports.
- Relying on your Tenant’s Judgement
While leaving the guest approval process up to your tenants can be frightening, it’s important to note that your tenants are just as invested in selecting a low-risk and courteous guest. They are letting someone live in their home (with all their personal possessions) for a few days, after all. This is where Airbnb’s guest review system comes into play. Guests who have stayed with other hosts get rated at the end of the stay, and this can help your tenants choose guests who have previously proven they’re respectful.
Considering that Airbnb was hit with a discrimination lawsuit in May and a study from Harvard backs that there is an issue, it’s understandable if you’re warry of having your tenants approving guests. No one wants to break the Fair Housing Act (FHA) or have a lawsuit on their hands.
- A New “Amenity”
Airbnb encourages landlords to think of the program as a cost-free amenity. By using the Airbnb Friendly Buildings Program, they urge that you can actually improve your relationship with your tenants while attracting applicants who have flexible lifestyles.
While the website states that “the program can also help bring in and retain tenants”, it’s difficult to believe that applicants that are attracted to leaving their home for significant time for profit are interested in long-term retention or building a good relationship with their landlord.
Things to Consider Before Applying
If you’re interested in applying for Airbnb’s Friendly Buildings Program, then you’ll need to look up your city’s laws and regulations on short-term vacation rentals. You can do so here. You’ll also want to discuss the program with your current tenants. If your tenants aren’t interested in the program to begin with, then all your effort will be wasted. If your property does get accepted into the program after you apply, you’ll need to submit your terms with Airbnb (to be approved) and revise your tenant’s lease.
While the Airbnb Friendly Buildings Program offers the opportunity to make additional revenue, there are quite a few factors that you’ll need to consider before applying. Regardless, if you aren’t comfortable with having new people living in your property, then this program is not for you. If a couple new faces don’t faze you, then you might want to consider what this opportunity might have in store for you.
Have you had a tenant that legally sublet on Airbnb or other websites before? How was your experience?
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