Sub-letting

[Hasan78]

Hi everyone! 

I am considering starting an airbnb business by sub-lettings and I was wondering where would be the easiest places to get approved, best cities/countries for doing so? 

Your help would be highly appreciated! 

[Sarah977]

@Hasan78  If you mean renting a place yourself and then listing it on Airbnb, there are very few landlords and home owners who would be open to this, anywhere. 

It isn't your home, and when you rent through Airbnb, there are none of the safeguards that landlords usually use when deciding whether to accept a tenant, like references, a security deposit, background checks, etc. 

Nor will a homeowner's regular insurance cover short term rentals. What would you plan to do if Airbnb guests cause hundreds or thousands of dollars worth of damage?

[Hasan78]

Hi Sarah! 

Thanks a lot for your response.

Can't I run these safeguards on each guest? Isn't there any insurance that covers short term rent?

[Sarah977]

@Hasan78 Yes there is insurance that covers strs. It isn't cheap. And I don't think that as a renter who is subletting, you could get it.

No, you really have no way to do background checks on Airbnb guests. Airbnb doesn't even require that guests list their full name. You can ask to see ID before admitting guests to your property, but you can't ask for it when they book. 

The Airbnb so-called security deposit is a joke- they don't charge it the guest when they book, or put a hold on the guest's credit card. If a guest causes damage, you have to tequest the guest to pay up, most refuse, then you have to try to get Airbnb to cover it, which is fraught with frustration and is often unsuccessful.

And if you try to charge guests cash for a security deposit or anything else when they arrive, Airbnb can delist you for that.

Big professional property management companies with tons of listings have different rules they can play by, but regular hosts, no.

What you could explore is being a co-host for off-site hosts. In other words, you manage the listings, and deal with the guests for them. That can take on various forms- some hosts want a co-host to look after everything, schedule cleaners, keep up the maintenance, some may just want someone who could deal with issues that come up during a guest's stay, and meet and greet the guests.

[Hasan78]

 Are there any methods of approaching homeowners to co-host for them and ways of convincing them?

Also would buying to let mortgages ideal for airbnb businesses?

Thanks once again for all the useful information Sarah

[Anonymous]

@Hasan78 I would not recommend buying a new property if you'd depend on short term rentals to cover the mortgage. There's no guarantee that an Airbnb listing will hit its occupancy targets in an unpredictable tourism market, and cities around the world are increasingly introducing new regulations to push STRs back into the residential housing supply.

If you have a spare room in your own home that you can furnish for overnight guests and rent out as a Private Room, this would be one way to train yourself in hospitality and build up a reputation on your profile. Co-hosting is another possibility, but just as with any job, you need to be able to demonstrate your skills and expertise up front if you want someone to trust you with their home and livelihood. 

[Mike-And-Jane0]

@Hasan78 A buy to let mortgage would be a more sensible approach than sub letting. Having said it is more sensible it is still extremely risky as your market could dry up for a year or more as has happened recently. Also you will need to fully furnish and equip the property which is not cheap.

I would suggest there are easier get rich quick schemes out there that might be more suitable to you.

[Helen3]

@Hasan78  @Mike-And-Jane0  you can't use a buy to let mortgage for STRs.

@Hasan78  you can get a holiday let mortgage 

I have long term rentals as well as STRs and I would never let someone use them for STRs and have a clause which prevents sub-letting of any kind.

[Karol22]

I'm surprised to see so many negative comments here about this topic. @Hasan78  You can definitely approach landlords with a lease agreement that allows you to sub-lease. There are plenty of them that are fine with it as long as they are dealing with a professional person who operates with the proper insurances and terms. There are insurance policies that cover this, it's called a commercial general liability policy, talk with your insurance provider. There are also plenty of small businesses that do this - it's called rental arbitrage - and it is indeed a thing. Not all landlords are okay with it, but there are definitely those who are fine with it. It's a matter of finding a good fit. I'll say this though... don't expect anyone to tell you where to do it, you need to do your own number crunching and research.

[Helen3]

Hello @Karol22 

Respectfully you don't know what the UK rental market is like and it's not true to say there are plenty of UK landlords happy for people to take out a lease and sub-let for the STR market. Also from your profile you are not a host yourself so where does your knowledge of the success or otherwise of the arbitrage market come from?

It's standard here to have no sub letting in our ASL leases which would obviously preclude using the property for  STRs.

Yes there are people in the UK that do arbitrage but it's certainly not as common in the UK as it is in the US.

You also don't mention how risky it is to do this and how many doing this got burnt during Covid as they had expensive leases to pay for plus bills and council tax and no way to recoup the money as we were in lockdown for much of the last year. 

@Hasan78 would you be able to pay for the lease, council tax and bills if you didn't get the bookings you wanted ? 

[Karol22]

@Helen3, there's no need for the stern tone. The purpose of community forums is to learn that there are other perspectives in the industry and things to learn from others. There are plenty of people who agree to rental arbitrage, including in the UK. I get that you may not be a landlord that would agree to such a contract, but it exists and it's more common than you think. It's standard in many places to have no subletting in leases, yet still, there's plenty of landlords who sign with permission to sublease. And of course, there are risks in everything, there are risks in owning the property, there are risks in rental arbitrage, there's even risks in property management. I'd argue the most risk is taking on ownership of the property. Also, I host with my husband on his Airbnb account, I have a ton of experience in this industry, so let's keep a light tone please.

[Helen3]

No stern tone @Karol22 

I was polite and professional.

Normally when you co-host for another host it shows up on your profile - strangely it doesn't on yours - so I can only make assumptions based on your profile.

As you state arbitrage is more common in the UK than I think -  it would be great to see the stats you have on this. 

[Karol22]

Relax @Helen3 . There's no need to set myself up as a co-host of my own husband's host account (we share the account). Look, I understand you're a level 10 contributor of the forum but it really doesn't mean you know everything about every landlord in the UK. Also, it doesn't hurt to lighten up a bit and avoid making assumptions about people you don't know. I'm not going to fetch stats for you, I really don't mind at all if you want to hold on to your beliefs. Again, this is a community forum for people to learn from others - this doesn't mean I do your homework for you.

[Sarah977]

@Karol22  If you state something as fact that someone questions, giving a source for the validity of your statement isn't called doing someone's homework for them.

[Karol22]

I get it @Sarah977 and you make a fair point. If it helps, I've seen the contracts and I have friends in UK who have worked out plenty of rental arbitrage agreements with owners. They are my source. But unfortunately they wouldn't agree to me publishing their stats on a public forum. To add to context, they approach landlords with their own agreements for the lease. The contract combines clauses similar to what you might see in a commercial lease but applied to a residential agreement. Their contracts have a sublease clause, commercial general liability insurance requirement clause, early move out clause, and other clauses one might not see in a traditional residential lease agreement. They are professionals, they have lawyers construct these agreements for them and they have signed plenty of landlords in the UK. The landlords get a lot out of the agreement as well, which is why they sign. I'm sorry I cannot provide their stats and I understand that doesn't help validate what I'm saying.

@Hasan78I can tell you for sure that renting a property to sublease (rental arbitrage) is very much a valid business model in the UK. Just be sure to get a good lawyer to construct your rental agreement, get the proper insurances and safeguards for your operations and be upfront and honest with every landlord you approach. Many landlords will never sign such an agreement. But with the proper incentives, there are plenty that do.