Rentrepreneur - A new type of investing

Hi all,

I am seeking advice regarding a proposed idea I have - I want to lease out a property and then sublet it on AirBnB. I provide the owner with security of tenure and take the profit from the added risk of managing the property in this manner. Using data I have targeted specific areas and property types which I am positive could generate a significant return. I am seeking information on whether or not this would be legal if I did not disclose it to the owner? I.e. given that if any damage occurred to the property I would be liable is it still mandatory that I disclose this to the owner? I think in any case the property would be taken better care of in this situation because it would need to be regularly cleaned and presentable. I am hesitant to disclose this information because a) If I provide this information to the landlord it may give them cause to rent the property out on AirBnB in a similar arrangement to myself b) It will be impossible for me to find properties where agents or landlords will be happy for this arrangement, particularly given I am targeting specific areas with limited properties available.

Thank you for your feedback in advance.

- Ambrose

 

Subletting will get you evicted.

It's too risky for the owner of the property if damage is done. Insurance won't cover it.

 

What happens when you get a 'week long tenant' in for airbnb and then refuses to move out and refuses to pay rent?

pinkboy

 

I've seen this being done before, sometimes successfully, sometimes not.
Yes there are ways a landlord can be protected by landlord insurance.

I think you should disclose, it may or may not be grounds for eviction - so much more to it.

Give it a go - you will learn along the way.

 

Not true I'm covered by airbnb insurance

 

True yeh obviously it can't be grounds for eviction if I disclose it prior to leasing the property. Airbnb insurance protects me which in turn protects the landlord.

 

What does this cover exactly? If guest damages the house, refuses to leave, etc? If you read the fine print does it say you can take out the insurance if you're not the owner? How about the owners landlord & building insurance - will they be void in this kind of setup?

If you disclose it prior then you risk not getting accepted for the rental.

 

To be honest, this is something I've considered doing before, and I still might do it in the future.

But I have a very solid legal background that lets me navigate the legal risks better than the average bear. And there are a lot of legal risks - with the landlord, your short term stayers, and even planning law issues.

I wouldn't recommend it for most people unless you had some sort of solution for those risks.

 

Host Protection Insurance seems pretty reasonable and covers personal injury and building damage- https://www.airbnb.com.au/host-protection-insurance Might be a different story if you're not the actual owner of the property. Call them and ask them would be the easiest thing to do.

Obviously it's preferable and respectful to ask the landlord's permission and people have been evicted for doing what you want to do. You can say you want to sub-let but not mention Air BnB, you might be surprised how obliging they will be. Makes you less of a risk knowing there's another person contributing to the rent.

If it's an interstate landlord you might have better luck. As long as the max number of occupants on the tenancy agreement isn't exceeded and other council laws not compromised you'll be that bit safer.

A friend in the UK rents 2 2br houses beside each other and Air BnB's 3 of the rooms, raking it in! Neither landlord are aware of what she's doing. Will probably do it myself at some stage but the potential of an eviction notice will forever loom.

I always say it's easier to seek forgiveness than it is to ask for permission but when it involves the law...

 

Also if you're doing this in a strata titled property there may also be a bylaw or article forbidding short term rentals. Have a read of those first - it may not be in the owners power to allow it.

 

Thank you for that.

 

I have reviewed the terms and conditions of AirBnB Host Insurance Protection policy and there is defiantly protection.. See below

Eligible for coverage:
Accommodation is a residential or other property location that is owned or controlled by the host and listed on AirBnB

Host is a person or entity who lists their accommodation on Airbnb. Host also includes a person providing host related services.

 

I know a guy subletting 11 units on Airbnb (not in Australia) and it's his full time job. He's pretty confident the $1m insurance policy will cover any problems.

https://www.airbnb.com/guarantee

 

So how do I find these landlords willingly to enter these types of agreements...

Do you know how your friend finds landlords willing to enter these types of arrangements?

 

IMO, it's all good to say I have the appropriate insurance policies but a landlord needs to appreciate the risks involved. When disputes arise, things can get protracted. Perhaps a high rent may attract landlords with a view to potential risks. I think as Airbnb becomes more common, a win win situation may be readily recognised.

 

My name is ____ and I am contacting you in regards to the above advertised property located at ____

I am currently targeting specific property types to add to my portfolio and would like offer you a proposal. Under this arrangement I intend to lease your property under my name/company and will therefore be liable for all the standard conditions stipulated under a normal residential tenancy agreement. My intention is then to sublease your property through third party services across the period of our original agreement. I am protected under a $1,000,000 Hosting Insurance Policy and therefore this proposal presents minimal risk. In return I will offer you 5% above the original asking price ____ .

If this is of interest please feel free to contact me on ____ or ____ at your earliest convenience.

Kind Regards

 

Hi Ambrose
My suggestion would be to 1st look for the properties that are favourable to lending themselves to sublease not all properties are equal and some are more difficult to move then others so pick and area that you know well and one that is very easy to move to minimise your own risk. Then approach those landlords or owners with an offer and yes I would disclose that your intention would be to sublease. Ask ask ask you may get knocked back but keep asking and learning that is how you get any business off the ground
All the best X

 

A friend of mine does this to a degree. He is renting in Syndey for work but travels a lot and also heads home to Melbourne frequently. He often just puts his apartment on Airbnb and does quite well from it.

Not sure his landlord would be to impressed but no issues to date and usually the rent he recieves for short stays covers his personal flights and then some.