You want to know the number one question I get asked, over and over?
I want to rent on Airbnb, but I have a landlord. How do I approach them and get permission to rent out my space?
I’ll admit, that question is a bit of a doozie but let’s walk through it.
I, like many others, do not own my Airbnb property. I rent it.
And, like anyone in that situation, it is not up entirely to me to rent out the property. At the end of the day, your property owner decides if your Airbnb dreams sink or float.
Do it the right way
It’s a pretty big conversation…and if you’re going to be successful, you’re going to need to be prepared.
You might think to yourself:
“What’s the big deal?”
“Why would my landlord care?”
That’s a common first reaction and it’s the number 1 reason why so many people rent on Airbnb WITHOUT telling their landlords. (Note that’s NOT a good idea!)
While going under the radar might work for a while, it’s inevitably going to blow up in your face.
In that case, you stand to lose a lot more than your rental money…you could get evicted and have to find a new property to live in entirely.
Now what’s ironic about that situation, and the way so many hosts go about it, is that your landlord might have actually been open to the idea of renting to you. You never asked so you’ll never know.
If they end up finding out about Airbnb by “catching you”, you’ve eroded any potential goodwill you could have had to work with in the first place.
If you try to approach the conversation AFTER you’ve been caught, your odds of getting permission are going to be dramatically lower.
So you want to do it the right way…correct? Of course you do.
Let’s get your Airbnb unit Landlord-Approved!
Get into the mind of an Airbnb landlord
First off, you do not stand a chance of negotiating with your landlord if you do not understand the position they are coming from.
You must clearly understand how a landlord uniquely sees Airbnb.
Put yourself in the shoes of your landlord and try to think about the things that influence their decisions and how they see their properties.
If you don’t know much about rental properties, let me fill you in.
Landlords see their long-term rental properties (properties that are under 1,2, 3+ year contracts) as a low risk, and modest source of income.
Some landlords make a lot of money off properties, and some make only side income. But one thing that does not change: landlords see long-term rental income as low risk.
Now, imagine you own a property. Chances are you put a lot of effort into renovating it and you’ve signed your first tenant for 2 years.
Whether or not you’re a great landlord, active in helping the tenant enjoy their stay, or if you’re still investing in your property…it’s still going to make you the same amount of money every month for the term of your tenants lease.
So most landlords, logically, do not see the need to invest a ton of time and energy into their properties – they see it as a long term, fixed income stream. Any extra effort spent on the rental can often be seen a waste of time.
The worst-case scenario for a landlord is losing a tenant or property damage. Tenants can be replaced and insurance can be purchased to cover property damage…check and check.
You’re still the property owner: Now imagine your tenant approaches you and asks if they can let a large number of strangers come in and out of their space for their own profit.
Your property just went from low risk and modest income to HIGH risk and modest income.
Airbnb Landlord Risks
So how is it now “high risk” for landlords? Well, its at least “riskier” for multiple reasons:
- While Airbnb does verify guests, there is still potential for bad-apple guests that cause property damage, harass neighbors, or create theft (if you don’t believe me search “Airbnb orgy”).
- In many city municipalities, short-term rentals are illegal and can be subject to fines if caught.
But here’s the biggest one:
- Landlords are required to have homeowners insurance for their building that covers anything that could go wrong.
Homeowners insurance will deny ANY and all claims in the case that they find out the space was being rented like a business. Yes…Airbnb is a business.
Even worse…they could completely cancel the landlords insurance entirely (causing the ENTIRE building to then be illegal).
And let me remind you, they are taking this risk now with NO potential upside. It simply will not make sense for them.
In very few circumstances will a landlord be ok with you renting on Airbnb without at least getting something in return.
Make a conversation game plan
Now that you understand why, in fact, landlords do care about Airbnb rentals…it’s time to make a game plan.
In order to get a YES, you’re going to have to be prepared to change the risk/income equation for them. Now that doesn’t necessarily mean paying more rent, but in many cases that’s all it takes.
Be aware of your relative position before you enter the conversation:
- How long have you been a tenant?
- Have you been a good tenant?
- How old is your landlord? Do you think they’ve even heard of Airbnb?
- How quickly do you think they could find a new long-term tenant? Is it a hot rental market?
- Do you share space with other tenants who could be affected?
- Are you rent controlled?
- Does the landlord have multiple properties?
Being in a strong negotiation position means:
- You’ve been a tenant for a long time
- The landlord is more comfortable with you
- The landlord is familiar with Airbnb
- The landlord has only a few properties
- …and the worse the rental market – the better your position
If you’re in a strong position, it might only take a little bit of compromise to get a yes.
If you’re in a weak position, it could take a lot, and getting a YES might take some creativity.
Consider what you can offer to your landlord
On the income side:
- You can offer to extend your lease
- You can offer to pay more…a flat rate or a % of Airbnb earnings
- You can offer to pre-pay rent up front
On the risk side:
- You can explain to them how the Airbnb $1,000,000 insurance guarantee works
- You can offer to purchase your own vacation rental insurance (anywhere from $80 – $200 / month typically)
- Read more about Airbnb Liability Insurance
- You can offer to limit the rentals to certain times and certain groups
- You can guarantee that you’ll only be renting private rooms and will be present throughout the stays
- You can amend your rental contract to offer coverage of certain damages yourself
- You can increase the size of your security deposit
Now, this is by no means an exhaustive list of options, but they are the options that I have seen work in the past.
In my experience, these are the things landlords care about + or – a couple potential curveballs.
Be prepared to know what you think you can offer them and what you think it will cost to address their concerns.
Start the conversation with your landlord
The way I’ve explored it, there are two options to bring this up. One is directly with your landlord, the other is what I call the “nuclear option”.
If you think you have enough rapport with your landlord, then try approaching them directly.
My suggestion is that your main focus is simply starting a dialogue and not treating this like a business pitch.
Keep it simple. A landlord will not approve what they cannot understand and if you pile on information, they will get confused.
Try emailing them or talking in person like this:
“Hi Mr. Landlord,
I’ve recently been introduced to Airbnb when I went on my trip to Paris. Its an amazing service.
I was wondering if you had an opinion about Airbnb?”
By simply asking their opinion, you don’t prime them for confrontation and you open up a conversation simply pertaining to what they KNOW about Airbnb.
Once you’ve established what they know and think, you can have a much easier time at explaining it to them and dispelling the myths to them.
In the same conversation, I would attempt to bring up 2 things:
- You’re exploring the opportunity, but wanted to be respectful and ask their opinion first.
- Establish that there is a solid reason why you are interested and would benefit from Airbnb.
- Explain that it will help you pay rent, meet bills, or improve your life in some way.
- Let them know that to the landlord this sounds risky, and that you’re willing to find a way to make it MORE than worth their while.
Then take it from there and start deploying your compromise options from above.
Landlord not open to Airbnb?
Here’s the nuclear option…
If your landlord isn’t receptive to this idea find out who their legal counsel is.
In 90% of cases, landlords will have SOME legal counsel that they work with on contracts, insurance, tenants rights, etc.
Either contact their lawyer and state your case, or seek out your own lawyer to explain your case.
As legal counsel to your landlord, it is their duty to represent the landlord’s best interest.
If there is an opportunity to make them more money, and is within the local laws, they’re going to obligated to present it for you.
It is much harder for a landlord to say “no” when his or her own legal counsel says, “This is legal and it can work”.
Post Contributed by Evan Kimbrell.
Thanks for the info. I’m surprised by the lack of comments on this topic. I just wanted to share my experience on this topic.
Six months ago, I signed a lease for an apartment to be used specifically for short term rentals. I only signed a six month lease because I wanted to minimize any financial risk if this didn’t work out.
I was completely transparent, opened up a direct line of communication with my neighbors and kept in contact with the property management company. Everything was smooth sailing. In fact, things were going so smoothly that I was added to a “waiting list” for another unit. Bookings were great, no noise complaints, no issues, etc.
About 60 days before the lease was up, I contacted the property manager to ask what the renewal process was and to ask where I was on that waiting list. I never got a response so I called several times, left voice mails, all with no response.
Then, I received a “Request for Possession” letter in the mail stating my lease ended on such and such date at midnight. At first, I thought, okay, I just need to renew the lease.
In the meantime, I have spent thousands of dollars on professional photographers, videographers, a website, smart phone app, listing fees, virtual checkin, virtual welcome guides and general marketing. I was ready to grow this into a real business!
After continuing to receive no return phone calls, no response to emails, I decided to contact a lawyer. My goal was to find out my rights, find out what options I had, if any, and ultimately, make a deal with the owner directly that would make it worth his while and at the same time allow me to keep doing what I was doing.
As a side note, 50% of the apartments in the building were being used for short term rentals. I had a single unit but there were three other companies or groups who each had 4+ units.
So far, the attorney reached out to the owner who said short term guests didn’t have the same respect for the property that long term guests had. Anyone who’s been doing this for any length of time knows this is total BS, at least it was in my case. I’ve had nothing but pleasant guests who have had the utmost respect. In addition, I bet my place stayed way cleaner than any long term tenant’s apartment. Not to mention, I had my own supplemental $2M commercial insurance policy that protected every one and everything.
My attorney has only a few days before the end of the lease and is still trying to work something out. I’ve offered to rent every unit on the same floor, in the entire building and offered to pay more rent and/or pay the owner a cut of the profits.
So far, it doesn’t look promising. I’m trying to be optimistic but have bookings that go many months into the future. I’ve been looking for alternative units but it’s either not allowed, they already have too many units being used for that purpose, the HOA doesn’t allow it, etc.
It seems to me this is a new industry, it’s in high demand and is only going to grow. A smart landlord seizes opportunities vs resist change.
I get the concerns, don’t get me wrong, but there are workable solutions. It just seems to me that an owner can rent to tenants who disguize their true intentions, constantly evicting people and being paranoid or they could embrace the change, make some extra money and be done with it.