Rentrepreneur - A new type of investing

Here's a mind dump of all the things that come to mind as an (ex) Airbnb host:
- be very careful in Strata units. The reason we are ex-Airbnb hosts is because our strata flat out banned it. The apartment next to ours also banned it shortly after.
- Take into account the cost to set up (furniture, household goods etc)- As @Gockie said, it can be done reasonably cheap but does take a lot of work (and km)- especially driving all over your city to get that Gumtree bargain !
- We had about 30 guests over 6 months and originally I said the worst that happened was a small section of our blind came off. We have since received our electricity bill for our last guest (we receive them quarterly so it was a couple of months after they moved out) and it was $800! (compared to our usual $200)- seems they may have had both space heaters on 24/7....
- as most people have stated, generally lease agreements prohibit sub-letting. I have heard stories of agents walking in on airbnb guests for the property inspection which is bad for both !
- airbnb has a pretty good set up where you can vet your guests. There is no risk of not getting paid as Airbnb collects the money up front. You can also stipulate both a bond and cleaning fee if you like (as some others have mentioned). Plus, you can be strict about cancellation fees, even recouping the entire amount for last minute cancellations if need be !
- I know there are disaster stories every now and again about airbnb fiascos (I think there was one about someone opening a brothel in one!) but 99.9% of guests are excellent- this risk is further mitigated if you go for people that have reviews. We had a booking request once from a lady that had shocking reviews so needless to say, we did not accept that booking.
- Unless you stipulate minimum nights stay, it can be fairly time consuming !

 

Try to see the silver lining. All the issues pointed out are very important things to look out for rather than jumping in with just hope that everything will be alright!

Bottom line for any disruptive idea is to get away with it - legally or otherwise. Barring that the disrupter will get disrupted

 

I think the issue being raised here is that if the original poster follows through with this thinking his insurance covers him, what if the owners insurance needs to be used for some reason, but upon investigation their insurer does not cover them under the circumstances discussed here.

I believe this is a serious risk which will need to be considered and looked into to find a way to mitigate because the landlord may have a legal case against tenant if its not done openly with all parties agreeing.

 

I have stayed in many short term rentals while holidaying and they have all been immaculately kept. The companies who are experienced really set the ground rules in place and are exceptionally clear about the consequences of any breach. I treat the holiday home with just as much care as I do my own. I know that many people may not, but I think there are many people like me, who would.

They do have access to your credit card details and a bond, which I am not sure is the case with Air B&B. If this is not the case with Air B&B then there may be less of an incentive to do the right thing. I wonder if this can be worked around in anyway? (directed at the original poster, not you wylie

 

Is it really higher wear and tear? Or is this just a perception or fallacy we have bought into without testing it or experiencing ourselves? (I am not sure if you are speaking from experience here, if so, I accept what you have said to be true).

I have just heard the opposite from short term rental owners. The things I have heard are as follows
1) The tenant is usually hardly ever home...they are home far less than a full time occupant
2) They mostly eat out rather than cook - often times the oven has never been used
3) The tenant is hardly home to wear and tear the place
4) If great systems are in place with the cleaners any damage or signs of wear and tear are reported far sooner than the traditional route in some cases.

I do have some short term furnished rentals myself, but they are only a few years young, so I can't comment from any length of direct experience. Just thought this point was worthy of further discussion.

 

laziness. not seeing the opportunity. not knowing about other alternatives and not being motivated to investigate if other options exist.

 

I think everyone's objections and points are fantastic. It certainly helps with developing the business plan and risk mitigation strategy.
Great convo guys!!!

 

Why do you think it's irrelevant if we're discussing Airbnb's international host insurance? This guy is confident the policy provides the coverage he needs for peace of mind. Just like Australia's 2 million landlords have some confidence their insurance will cover them if a claim is made.

It's a publicity stunt. Airbnb put up this $1m policy after a host's home was vandalized to instill confidence. Pretty hard to cause $1m damage to a home but it shows they're willing to step up if someone has a guest who trashes their property.

Some good points there. I've done short term letting in the past (pre Airbnb days, I made a geocities website to advertise) and didn't have problems with high wear and tear. The only issue was high electricity bills from people running air con 24/7, even when they're out all day.

 

Theres a company in melbourne doing this called luxico. They list the properties on both airbnb and their own website for direct bookings.

From memory staff of 2 or 3 people, not sure if full time or not. I booked my airbnb in melb during cricket world cup through them.

They're a bit more expensive than comparables but i think the perceived lower risk from booking through an established and well reviewed company means some people are willing to pay it

 

I think you would be better off engaging the property owner directly and offering your "services" as a property manager of short term leases, then just taking a % of yield achieved above market rate. More to set up but more legit.
I know a lot of people that have a suitable property and have even tried the air bandb thing but could not be bothered with the upkeep and hassle of it all.
Another thing to build in to the business would be furniture that you "lease" to the owner to set up the place.
I also have a friend who goes to local artists and offers to display their work in her apartment and takes a commission on sales. Does quite well out of it. this could work for other household items (beauty products ect)

 

Yes I have been working on a concept in this area - there is already businesses outside Australia offering similar services but the size and scope of the market defiantly presents opportunity

 

What would everyone think as good location to do Airbnb? CBD/close to beach/trendy cafes?

 

I would think you got the locations right and these are the locations that cost a lot to buy.

 

Yes, but you can obviously rent them... a friend rented a studio at Manly beach, lived there but also airbnbed it for ~$180 per night. She made more via Airbnb than her actual rent. But she had to do a lot of cleaning and staying at friends places when it was rented.

 

What is the story with the cleaning side of things?

When I book to stay at a place through stays for example, we have to leave the house clean before we leave. This doesn't mean washing the sheets and vacuuming or anything, but the kitchen must be cleaned and the dishwasher run before we leave and garage emptied.

Are any of these rules typical for an air BnB place?

 

Asa renter are you listed on the national rental database as currently holding a lease?

I am wondering if under the scenario of holding multiple rental properties to lease out via a subtle arrangement if a Pm would do a rental check on you only to discover you're currently renting 5 other properties?

 

Each host makes their own rules. You should read the host rules before booking. For example, I ask my guests to empty the bins before they go, keep kitchen tidy etc. Because there's the rare circumstance where I may not be able to have the place cleaned the same day they depart, and I don't want the smell of garbage lingering in the property.

Many guests go above and beyond though, vacuuming the place after they stay, (I know one family who stayed 3 weeks and apparently the mother vacuumed every day), and stripping the bed of sheets. Some people even put a load on to wash the towels. Unnecessary, but appreciated. This sort of thing I would mention in my review of them so it ends up favourable.
You can mention that the guests werent tidy in your review but i'd do it in a subtle manner... the guests appeared to really enjoy their stay! There was one time I did see a distinct mark on the carpet from a cause I have no idea how it could have happened, and mentioned it to the guest. But happily, with a steam clean it came out. No problem.

I actually don't know this side of things, but it may not be a problem. Maybe go on the lease with different phone numbers? I would just make sure if I was to do it that the properties are not through the same rental agency!

 

I love the rewording to make it sound respectful - really enjoyed their stay...

 

My colleague who is state manager at EBM called me back about this issue - he said he'd find out for me when i raised it with him earlier.

He said they have short term product which should be used if renting your house out to Air BNB but that covers the situation of an owner doing and not the tenant doing it.

He said for the past 2 weeks EBM have been developing a new product with Air BNB in mind, but couldn't say yet whether it'd cover situations where the tenant is the host. He's going to add the feedback I had to the team and we'll see what comes of it.

As a PM, I don't want to accept a tenant doing this until I know whether my client is covered.

 

Saigon?