Pros & Cons of the New Airbnb Friendly Buildings Program

rental housing industry trends applyconnect

Pros & Cons of the New Airbnb Friendly Buildings Program

SHARE:

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

Pros

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.

Cons

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

Pros

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.

Cons

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”

Pros

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.

Cons

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?

Let us know in the comments section below and be sure to subscribe!

Subscribe!

Categories

Subscribe for more news and tips!

Share with your friends!

Share on Facebook
Share on Twitter
Share on Linkdin
Share via Email

More Articles from ApplyConnect

6 Replies to “Pros & Cons of the New Airbnb Friendly Buildings Program”

  1. Airbnb has approached us about their Friendly Buildings Program. Our policy is that tenants cannot sublet all or part of their unit for long or short periods. We have many concerns about the Airbnb program.

    We host a class each year for CIC to teach our owners how to read a credit report because there’s more to the applicant’s history than just a credit score and a background check. Having applicants approved by a third party is not an acceptable process, not knowing if they would meet our standards. As mentioned in the article, there is no information provided on guests who accompany the short-term tenant.

      1. No, we don’t have a separate policy for this specific breach of lease. However, it would be handle like any other violation of the agreement. We would serve the tenant with a “3-Day Notice to Perform or Quit”. This form puts the tenant on notice that they have three days to remedy the violation.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe for more news and tips!

Share with your friends!

Share on Facebook
Share on Twitter
Share on Linkdin
Share via Email

More Articles from ApplyConnect

Blog Topics

Click the dropdown

6 Replies to “Pros & Cons of the New Airbnb Friendly Buildings Program”

  1. Airbnb has approached us about their Friendly Buildings Program. Our policy is that tenants cannot sublet all or part of their unit for long or short periods. We have many concerns about the Airbnb program.

    We host a class each year for CIC to teach our owners how to read a credit report because there’s more to the applicant’s history than just a credit score and a background check. Having applicants approved by a third party is not an acceptable process, not knowing if they would meet our standards. As mentioned in the article, there is no information provided on guests who accompany the short-term tenant.

      1. No, we don’t have a separate policy for this specific breach of lease. However, it would be handle like any other violation of the agreement. We would serve the tenant with a “3-Day Notice to Perform or Quit”. This form puts the tenant on notice that they have three days to remedy the violation.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Get Started with ApplyConnect!

The nation’s most trusted tenant screening for real estate agents, landlords, and property managers. No cost background checks available 24/7.

©2018 ApplyConnect. All rights reserved

ApplyConnect marks used herein are trademarks or registered trademarks of applyconnect.com. Other product and company names mentioned herein are the property of their respective owners.

Get Started with ApplyConnect!

The nation’s most trusted tenant screening for real estate agents, landlords, and property managers. No cost background checks available 24/7.

©2018 ApplyConnect. All rights reserved

ApplyConnect marks used herein are trademarks or registered trademarks of applyconnect.com. Other product and company names mentioned herein are the property of their respective owners.