If you have ever thought of getting into real estate investing but did not think this was possible as a renter, an Airbnb sublet might be your answer. To take advantage of this lucrative opportunity, you have to have a willing landlord and a city that is friendly to the idea. You only need an extra room to get started finding long-term Airbnb tenants.
What is Airbnb Subletting?
Airbnb is one of the largest platforms in the world when it comes to finding accommodations. It gives you an alternative to the traditional hotel or motel. With over 6 million hosts worldwide, it is the first place people search when they need to find a long-term or short-term place to stay. Some Airbnb hosts run profitable businesses, and many of them do not even own a piece of property themselves.
Airbnb subletting is when you are renting from a landlord, and you decide to lease to another person while continuing to rent. It is like a rental agreement within a rental agreement. This is an excellent choice for those who are away for extended time or have more room than they can use. Airbnb subletting is different from traditional renting in many ways.
The first and most important thing to consider is that you will still be subject to your obligations to your current lease with your landlord. If you are responsible for all or part of the utilities, then you will have to pay for them out of your profits. There is also some extra bookkeeping involved. If you do not want to keep the books and taxes on your Airbnb subletting business, you can always outsource the bookkeeping rather than doing it in-house.
What Legal and Ethical Considerations Impact Airbnb Subletting?
Renting out your space on Airbnb is not a decision that should be taken lightly. The first consideration is whether your landlord will allow you to sublet at all. Also, some cities do not allow sublets. If your property is part of a Homeowners Association, they might not allow it either. The first thing you must determine is if there are any restrictions on subletting.
It is important to be transparent with your landlord and let them know what you plan to do. If you do not, then you might be breaking your lease and could be evicted. You must also become familiar with Airbnb’s policies on subletting. It is also a good idea to discuss your plans with your neighbors.
Is Subletting an Airbnb Profitable?
Subletting your home or part of your home on Airbnb can be profitable, but it depends on several factors. The first is location. If you live in a city that has a high population of business travelers or local vacation destinations, the prospects can be promising. Another factor that affects how much you can charge is the neighborhood. The type of property can also affect what you can charge. For instance, a single room in the attic will be rented for less than a whole apartment in a desirable condo.
An Airbnb sublet is a business, and you will have expenses involved that will affect your profits. For instance, you will still have to cover your rent and utilities. Airbnb has fees involved, and you might have maintenance or upkeep that is listed in your rental agreement with your landlord. For instance, if you have to do your yard work and mowing, then you will have to continue to do that or hire someone else. Depending on your normal lease, you might also have extra garbage collection fees to account for in your price.
Whether your Airbnb sublet is profitable depends on whether your expenses are less than what you could reasonably charge in your neighborhood for your type of property. The first thing you need to do before you sublet is to account for any costs that you would have to pay. Then, you could go up on the Airbnb site and see what similar properties in your area charge for rent.
The Biggest Risks and How to Mitigate Them
Some of the biggest risks in an Airbnb sublet are liabilities caused by your tenants. Property damage is one of the biggest concerns, and you will need to work this out with your landlord. You might be required to have additional insurance to mitigate the risks to your landlord. Another consideration is your guest’s behavior. It will reflect poorly on you if your neighbors have to call the police or city for the actions of your guests.
It is important to have a clear agreement that outlines the house rules and consequences for breaking them. You need to screen your guests carefully. Doing only long-term rentals can help to mitigate these risks. The most important thing to remember when considering a potential tenant is that you will ultimately have to pay for their actions.
An Airbnb subletting business can be a lucrative business, but it is also seasonal. You can expect to have more guests in the summer than during the winter months. Also, events in your local area can affect demand for your property.
What Are Some Alternatives to Airbnb Subletting?
Airbnb subletting might not be the right choice for you, even if you are allowed to do it. It might be that your expenses would be more than demand or the amount of rent you can charge in your area. If subletting an Airbnb is not possible or the best option for you, then you might try finding “sublease apartments.” This will be likely to bring up apartments with landlords who are friendly toward Airbnb subletting. You also might try to find something through local vacation rental companies. Extended Stay America specializes in long-term accommodations and might be able to help you.
How to Run a Profitable Airbnb Sublet
Of course, when subletting an Airbnb, it is important to keep costs down, but you do not want to neglect things that will cause your guests to have an unpleasant stay. It is also important to make the photos of your space and its descriptions sound enticing. The most important factor is making sure you are honest and do not over-inflate the facts.
The most important consideration in the listing is that when the guest arrives, they see exactly what the description led them to believe. Research pricing in your area for similar properties and make sure your charges are in line. Successful Airbnb hosts think about how to make their guests more comfortable.
Final Thoughts
An Airbnb sublet can be a profitable and highly lucrative endeavor, but only if you do your due diligence first. You must make sure to consider legal compliance and quality management to get those excellent reviews and repeat customers. The most important factors in a successful Airbnb sublet are to think like your guests and to be informed about the pitfalls and risks before you sign up. Contact us now to get started with a one-on-one strategy session with one of our tax experts.
