According to RealPage, rent across the United States increased by 13.9% as of November 2021. If you are an aspiring investor who is still renting, you might have a harder time building your portfolio. The good news is, there is a way for you to start investing in real estate without owning a home.
Subleasing on Airbnb has grown in potential and popularity ever since companies started letting their employees work remotely. They can then rent an Airbnb elsewhere and work from there for a few months.
In this article, you will read all about subleasing Airbnb:
- What it is and how it works
- Its benefits and risks
- Can you sublet on Airbnb? Two major ways you can tell
- Tips on how to convince your landlord to let you sublet your rented property on Airbnb
- A quick start guide on how to begin subletting on Airbnb
Keep reading if you have been considering this real estate investment strategy but are not sure where to start.
How Subleasing Airbnb Works
Subletting Airbnb works similarly to hosting a normal Airbnb rental. You will list your home on the platform to rent out the space. However, instead of letting the guest stay for just one or a few nights, you will offer monthly rentals. These can last from 28 days to six months. Long term sublet, which is a minimum of six months, is possible as well.
This does not mean, however, that subleasing Airbnb is the same as traditional sublet. You may ask your guests to sign an Airbnb sublease agreement. But they cannot enter into a rental agreement with your landlord.
Additionally, you can also sublet only a portion of your space. An Airbnb monthly rental also includes all bills and utilities within the total reservation price. Your guest should not be paying for anything else on the apartment other than what the platform has charged them.
Benefits of Subleasing Airbnb
There are several benefits to taking on this investment strategy:
If you are not yet aware by now, there is a lot of money to be made on Airbnb. This is why many real estate investors have short-term rentals in their portfolios. Whether you are just renting out an extra room or the entire space, the guest will pay for their stay. You can then use this extra income to save up for your next Airbnb investment property.
Monetizing Unused Space
If you have to go out of town often, subleasing Airbnb whenever you are away can help you keep your lease and even pay for it. Or if you have a spare bedroom that you do not use, you can sublet that while you are still living in the unit. Either way, you will be able to pay your rent and even turn a profit even when you are not residing there.
By subletting through a platform like Airbnb, you do not have to worry about chasing down your guest to collect rent every month. The platform will automatically charge your guest’s credit card at the beginning of their stay. So you will just have to wait for your portion of the money (after Airbnb deducts its fees and taxes) to be deposited into your account. The rental website has other features to support you as well, such as:
- Guest identification and other requirements: Guests are required to give their personal details, payment information, and sometimes even government IDs in order to book on the platform.
- Guest profiles and reviews: You can check out the profiles and other hosts’ reviews about your potential guests before accepting their reservations.
- Host damage protection: Airbnb has an insurance product called AirCover, which will provide you with up to $1 million in damage protection in case a guest damages your home or belongings.
You will not be getting the same amount of support if you advertise your listing on Craigslist or Facebook Marketplace.
As an Airbnb host, you will have to spend time and money answering your guests’ questions and requests, offering complimentary items, and cleaning the area after each stay. But because your guest will stay for at least one month, you do not have to deal with new people every few days.
Less Strict Regulations
Many cities, including the big metro areas, have implemented strict short-term rental policies that make you pay more taxes and go through stringent registration processes. But since you will be subletting your home for at least one month, you will not have to adhere to these regulations.
Risks of Subleasing Airbnb
There are also a couple of big disadvantages to subletting on Airbnb:
If you are not allowed to sublet your apartment but you went ahead and did it anyway, you and your guest could get evicted. And even if your lease allows subletting, it might also be worded in such a way that your landlord has to screen every guest first or that they will bind the sublease to the terms of the original lease. If you do not follow the terms written on the lease, you could get evicted.
If your guests damage the property, or if they get injured while on the premises, your landlord as the property owner will have to pay for those. This is because your guests are bound by Airbnb’s terms and conditions, not your lease agreement. Therefore, they are not covered under your landlord’s insurance policy. If this happens, your landlord could sue you for the damages plus legal fees.
Aside from your landlord, you also have to confirm that Airbnbs are legal in your area. Even if you have permission, if it turns out that hosting Airbnb is illegal in your community or requires a license to operate, then both you and your landlord will get in trouble. Not only will you get evicted and probably sued in small claims court by your landlord, but you might also get banned from hosting an Airbnb in the city.
Fortunately, these serious risks are completely avoidable.
How to Tell if Subleasing Airbnb Is Allowed
When determining if you can sublet on Airbnb, you need to look at two factors: the community where you are renting and your landlord.
Many major cities allow residents to rent out a part of their homes as long as they live there as well. But there are also others that allow you to list the entire apartment or house without having to occupy the same space. Municipalities may also have different sets of regulations for short-term rentals and monthly rentals.
But even if your city allows it, the HOA in your community, if there is one, may not. Not following their rules may make your landlord liable to pay fines, which would get you in hot water as well. So make sure to review your community’s bylaws or contact your local government about this matter.
As for your landlord, you have to talk to them and get their permission. Your lease likely contains a provision that requires your landlord’s consent before subletting. It might also be phrased in such a way that prohibits you from advertising on the platform. Airbnb illegal subletting is not worth it. Not only will it damage your relationship with your landlord, but they might even kick you out and sue you.
However, it can be intimidating to talk to your landlord about subleasing on Airbnb. To help you, we wrote down a step-by-step guide on how to get your landlord’s permission in the next section.
How to Convince Your Landlord to Let You Start Subleasing Airbnb
After confirming that hosting on Airbnb is allowed in your area, your landlord is your final hurdle to getting started on real estate investing.
Understand Your Landlord
Before you approach them about your idea, you must first see things from your landlord’s perspective. Why would they object to letting you sublet their property on Airbnb when they can benefit as well?
Usually, landlords prefer to manage long-term rentals because these are low-risk investments that generate a modest amount of income, depending on the area. Buying a rental property then renovating and marketing it as well as screening tenants require a lot of time and money. They would not want to lose good tenants or deal with troublesome ones, which would increase the chances of either happening when you start doing monthly rentals.
They might also be wary of being approached by someone they barely know, especially if they are presented with an opportunity that would increase the risk of their investment. But if you have been renting from them for at least one year, always paid on time, and have generally been a good tenant, then they are likely to hear you out. Otherwise, you might want to build a good relationship with them first before bringing this up.
Your landlord might also be against Airbnb. Or they already have many rental properties and do not see the point of increasing the risk of their investment for a moderate increase in income.
Prepare Your Pitch
Once you have thought about what your landlord might object to, it is time to prepare your pitch. When getting your landlord’s permission, be ready to negotiate instead of simply talking about it.
When preparing, you need to arm yourself with knowledge about the market. Perhaps the long-term rental market is not doing well in your area, so your landlord could make money from monthly rentals instead. Or your location attracts a lot of tourism and thus has high Airbnb occupancy rates.
You might want to do your research by using a tool like Mashvisor’s Property Analysis Report, which can give you insights into your neighborhood about its potential on Airbnb. Our analytics include:
- Cash on cash return
- Airbnb rental income per month
- Occupancy rate
Knowing these numbers will help you communicate more clearly about the opportunity you are presenting to your landlord. The more you know about the market, the stronger your leverage, and the less you will have to compromise to get their permission. Start out your 7-day free trial with Mashvisor now.
Talk to Your Landlord
When you are ready, find the time to talk to them in person. You might have to set an appointment or invite them over for coffee, but the important thing is that you handle this face-to-face. You do not want to miss out on any nonverbal signals they might give out if you talk over the phone or via email.
Ask them if they have heard about Airbnb. If they said yes, follow up with what they think about the platform. If they are not opposed to the platform’s operations, ask if they have considered running an Airbnb before. This might lead to them opening up about any objections they may have. For example, maybe they have tried hosting an Airbnb but they do not like how hands-on it can be and want to stick to earning passive income through long-term rentals.
Take note of whatever is making them hesitate, but do not counterargue yet. Doing so might turn off your landlord from talking with you. Instead, ask them if they would be open to letting you sublease Airbnb, either a part of or your entire apartment. Here, you can start mentioning how it can be a win-win for both of you. You could also address their objections during this time.
Remind your landlord about how you have been a good tenant and that you always paid on time, but subletting would help pay your bills as well as improve your life. You can also offer your landlord certain benefits or help mitigate their risks.
What to Offer Your Landlord
- A share in the profits, either a fixed amount or percentage
- More income on Airbnb for monthly rentals; mention the estimated income you found on Mashvisor
- Airbnb’s $1 million property damage protection called AirCover
- Pay for separate insurance and handle the necessary business registration and taxes
- Extend your lease with them for another year
- Pay your entire lease upfront or for several months in advance
- Schedule professional cleaning once a month
- Handle the advertising and hosting duties
- Check your guests’ profiles and reviews before deciding whether to accept their reservation
- If you will not live in the apartment that you are subletting, visit the property frequently to check on your guests
- Require damage deposit from your guests
- Answer the landlord’s calls anytime
- You will only sublet for at least one month and not offer short-term rentals
- Renovate and maintain the place on your dime
If your landlord still has not accepted your proposal even after all of the concessions you made, ask them to think about it for a week before making their final decision. You could also mention that you might have to look for another lease if you will not be able to sublet, but only if you can afford to follow through with it.
But if they say yes, you can prepare your home for subletting. Get the place professionally cleaned, remodel it if needed, take good photos, compose a good write-up, and list it on Airbnb. It may take some time to get your first booking, but once you have it, you can focus on providing a good service to get a five-star review, which would then get you more bookings.
Discover Your Neighborhood’s Airbnb Potential With Mashvisor
Subleasing Airbnb is a great start for aspiring investors who do not yet have enough capital to buy an investment property. You could choose to sublet the entire space or just a part of your unit. This will help you make more money without doing a lot of work since Airbnb will collect payments on your behalf. You will also not have to spend as much time hosting as you would with short-term rentals, since guests staying for a month usually require less assistance.
But aside from knowing whether Airbnbs are legal in your area, you must also get your landlord’s approval before listing your apartment on the platform. Otherwise, you will risk yourself getting evicted and even sued. And if this happens to you, might have a difficult time finding another apartment to lease.
To avoid these costly mistakes, it is important to do your research before approaching your landlord. Once you have confirmed that you are legally permitted to host an Airbnb in your community, you must then check the profit potential of your apartment. Calculating your monthly income, cash on cash returns, occupancy rate, and more requires a specialized tool that can get real data straight from Airbnb. Mashvisor can help you get this done.
Get access to our real estate investment tools by clicking here to sign up for a 7-day free trial at Mashvisor today, followed by 15% off for life.