Air BNBing Apartment Units

[Monique803]

Hello Everyone,

This is our first year doing Airbnb. It has definitely been trail and error. My husband and I decided to lease out apartment units (in our business name, to keep it professional and legal) and our goal is to have 10 units by the end of the year. Well, I am not seeing how this is going to work, at this point. We currently have 5, and would have had 7, but was told that we breached the lease agreement because we had it listed on Airbnb. They told us that "it's okay to have your business clients stay, but you can not list it on Airbnb". Well, I am not knowing what to do at this point. We put this in our business name, because they told us it was okay to sublet, if it's in our business name. This has put us out of a lot of money, because when they put you out, they charge you for 2 months additional rent. 

Has anyone else had this problem? Is it better to acquire houses instead of apartments?

Thanks

Monique

[Laura2592]

@Monique803  do you own these units or are you renting them to then re-rent on ABB?

If you own them I don't see what the issue is unless there is some HOA or condo covenant about how you can use them. That is likely codified in your docs and would be part of your purchase. Stinks to be stuck with a bunch of investment properties you can't use in the way you want, but that is what due diligence is for prior to sale.

If you are trying to sublease as an ABB your landlord/actual property owner sets the terms in the lease. If they don't want you to do this, it looks like you have a lot of rent to pay or risk eviction. 

Either way you need to do this research before signing any contract. 

[Sarah977]

@Laura2592  They are renters, not owners.

@Monique803  You do not have a right to list on Airbnb if you are subletting. You should have been upfront about your plans to use the units for Airbnb before you got into this.

[Monique803]

Hi Sarah977,

Thanks for your reply, the problem was that I was upfront about my plans, I don't only use it for Airbnb. I explained all this in the initial consultation and they told me, in order to sublet, I would need to put it in my business name to get around all the legality. But we are out of that unit now. Going forward, is it better to do Rental Arbitrage on houses rather than apartments?

[Laura2592]

@Monique803  its best to own any property you plan to use for Airbnb. Rental arbitrage is incredibly risky. With the ABB business model under fire in many jurisdictions across the country, I can't even imagine putting my hard earned money into a rental arbitrage situation where the landlord holds all the power as well as having to deal with the general issues that come with hosting. I would try to get out of this ASAP. Sounds like you are learning that the hard way. 

[Mike-And-Jane0]

@Monique803 Apparently you were professional enough to put it in your business' name but not professional enough to read your rental agreement! What does your agreement actually say with respect to use of the property?

[Hilary79]

Unless it is in writing on your lease agreement that putting it on Airbnb is prohibited, you can do it.  They cannot change the rules arbitrarily.  Just expect that your lease won't be renewed.

[Laura2592]

@Hilary79 not true. We were landlords for many years and there was always a generic blanket statement in our leases that we had the right to prohibit any use of the space not explicitly mentioned in the lease. Most leases have this sort of landlord protection. Its like "other duties as assigned" in a job description. Most leases are also very clear on whether or not a tenant has the right to sublet and the conditions around subletting. If @Monique803  is being told to cease and desist her ABB rentals as a result of the lease agreement she should do so unless she wants to be taken to court or evicted from her spaces. 

A lease is a contract. Its imperative that all parties understand what they are agreeing to before it is signed. 

[John5097]

In general short term rental STR requires different zoning and insurance from long term rental. The other tenants should also be aware units in the same complex or building would be STR, as there is higher risk with it. Likewise if you decide to purchase your own property most homeowners insurance excludes STR. Most cities have put in place restrictions so companies can’t swoop in a convert a swath of apartments or houses to be rented out short term to help maintain affordable housing. I can also find being too ambitious can be problematic at times.