How to create value and get owners permission to short term sublet

I like your out of the box approach and it's not without it's merits - probably appeal to more of a micromanaging type however seems like a lot more work for the landlord, also we do a lot of last minute travel so if they are not responsive, we miss out.

 

That's assuming you don't walk on and leave the property owner with the mess to deal with afterwards.
Just because you won't doesn't mean others will. Good tenants can turn bad.

 

I've seen properties that are about 5 years old that have been leased by Person A, Person A then subleases to multiple people in an in and out arrangement (similar to an AirBnB arrangement).

Example:
Person leases property at $400 per week.
They then set up the property to be leased at $200 per bed.
They do as minimum upkeep as possible - the place can be very run down over the course of a few years. Person A then walks away and finds a new property and leaves the owner with a mess - a brand new apartment now feels like a 30 year old apartment due to lack of upkeep. Owner can't really dispute as these head renters are professionals who do this for a living and know the rules well enough to argue its simply "wear and tear".

To restore the house back to its former glory requires
1. A bucket load of cleaning
2. Patching of walls
3. Repaint
4. Replacement of kitchen (appliances / restoration of missing doors etc).

Doesn't sound like a lot, but can cost around $20k if outsourcing the whole thing. For an AirBNB, its simple enough where it gets close to that point to move out and onto the next property. Minimal impact on the AirBNB host, but greater impact on the owner.

 

@neK points out why my concerns would be with a tenant engaging in short term leasing would be.

My position is simply that as a landlord, short term leasing poses risks over and above a long term tenant. Insurance and good will might mitigate this a little, but any experienced landlord will tell you that bond an insurance rarely cover all expenses after a bad event.

Therefore in order to assume that risk, I'm going to want to take the extra profit. I'm also going to want to manage the arrangement to mitigate the risk to my asset. The benefit to the tenant is they get to go on holidays and potentially have a reduced rental expense whilst away, their risk is their furniture (mitigated with secure storage).

Another solution of course is to buy your own home and do whatever you want with it. That sounds a little nasty but as long as you're a tenant, there's going to be limits on what you can do with the property you're living in.

 

I simply would not allow it. If I wanted short term tenants, I would put the property on Airbnb, not seek a fixed term tenant.

What is the point of vetting prospective tenants and taking care to rent to a satisfactory applicant, then turn around and allow them to on-rent to just about anyone? How can the original tenant keep an eye on things from overseas, particularly if something goes wrong?

Not sure what part the PM would play in such an arrangement.

Things go sour, bond insufficient, any further amount owing becomes a civil matter with resultant legal costs to try to recoup.
Marg

 

Honestly that seems to be you picking an extreme example. I'm not talking about doing some sort of multiple room backpackers arrangement, and neither was the OP. I wouldn't agree to sublet on those terms - because I wouldn't want to do that with long stay tenants either.

What's the issue with the sort of arrangement the OP was suggesting?

 

@thatbum
Risk outweights reward.
The property owner runs the risk the property may be damaged. And while the intention of the OP is to make it a win/win situation, there are no guarantees they won't walk away when the going gets tough and leave the property owner with the mess.

 

@Awesome Adventure Couple Something doesn't make sense. If you were after a base whilst you travel etc....why do you need one Airbnb in Qld and another in WA? 2 bases? And all that responsibility whilst you're overseas?

It doesn't add up.

Either your story isn't quite on the level or you guys haven't thought this through.

 

I agree with @thatbum that this is a very extreme example. The rating system on airbnb keeps hosts (and guests) VERY vigilant- even a 4 star review can have airbnb get you in trouble. As such, we are pedantic about keeping our airbnb properties (which we own, so this is more about airbnb in general rather than the merits of the OP's case). Because we have constant guest turnover, our property is cleaned (professionally) multiple times per week. Any damage is rectified immediately. I compare that to our other properties which we have on normal rental, where they are inspected every 3 months (if that) and who knows what the tenant is doing to them in the interim!

As an example which I think I have posted before- in our traditional rental, our tenants kept 3 dogs- we did not approve them. Once we found out, we told them they could not keep them- but the dogs were doing damage in the interim (and I think they still didn't get rid of them). If an airbnb guest brings a dog along- we'd find out almost immediately- keeping the damage at bay.

 

@jodes - Extreme example? Probably for AirBNB. But its actually quite common.

The difference here is that YOU own the property. You know its cheaper to fix something while its small as opposed to letting it get worse.
The question is whether someone who actually DOESN'T own the property will do the same. Some people will, some people won't.

Another example is a rental car. Some people will take care of their own cars, but give them a rental car and they'll thrash the absolute crap out of it.

This is why i suggested i would consider it if there was a very large bond paid upfront by the renters, and @Peter_Tersteeg suggested that the property owner take care of the AirBNB and take all the profits and the long term tenants get a reduction in rent for the period they aren't there.

 

Neither of which are probably lawful actually.

That's my point. Its the same as the risks in renting out for a normal long stay tenant. I don't agree that the risks are necessarily worse in a scenario where your tenant is doing some short stay subletting.

And anecdotally I've certainly had more bad experiences with long stay tenants than short stay ones.

 

Hi Wylie - we have considered this but we'd prefer not to live with strangers when we are at home, the idea being we'd sublet while we are away. We both work full time remotely so not ideal for a shared environment.

 

Have you had a look at the votes---that would tell you something ...

 

We don't live a traditional lifestyle, we work remotely full time, travel frequently and we prefer to stay out of the cold. Also this is all currently theoretical at present, getting some input so we can decide best course of action.

 

It tells me people have different opinions but most are risk-averse, which is totally to be expected. Long term rentals are traditionally low risk. However this discussion has also let me know there are some homeowners out there who are open to doing things differently.

 

I went through this a few years ago when I was doing the management myself for 20 years plus..The tenant after about 5 weeks was also a fly in fly out worker ----and sublet the property out to one of her mates who never paid the rent well not to me and would come back every few weeks for a few days then fly out again..Insurance will be your first big problem as the reg lease will be in your name not the people you sub-lease too and that within the insurance contract gives the title holder zero cover as the first question the insurance will ask is for a copy of the reg lease ..You may find someone who will agree to these terms but insurance wise it will become a nightmare..

 

@willair I believe it will depend by state but there are insurance options at the homeowner level that cover subletting, which is another reason we'd like to have the owners permission so there is peace of mind for everyone involved.