Have you ever used
Airbnb? It’s the online service that helps you find lodging in rooms, entire
homes, and even castles and igloos around the world.
It sounds like a great
deal for families who want to travel, but can’t afford to buy every meal out
and pay for two hotel rooms. I know my nephew and five of his friends rented a
three-bedroom apartment in NY for a fraction of what a moderate-priced hotel
would have cost.
Just for a comparison
I could relate to, I found a room in my area of Palm Beach County through
Airbnb for two people 5 minutes from the beach and 1 minute from the golf
course for $142 a night in February (the height of the tourist season). A
top-rated hotel on the beach will cost at least twice that amount.
If you’re thinking of
converting an empty property into a vacation rental to pick up extra money, better
do your homework. Municipalities are cracking down on landlords who do exactly
that. San Francisco, for one, is seeking civil penalties of up to $20 per day
for Planning Code violations; up to $2,500 for each unlawful business act;
disgorgement of illegally obtained profits; and attorney’s fees.
I’m going to assume
that if you, as a smart landlord, have turned your properties into short-term
rentals you’ve abided by the laws in your area.
But what if your
tenant snubs his nose at the law and turns your home into a vacation rental?
First off, neighbors and
HOAs might have a problem with random people coming and going with their
luggage at all hours. Drug dealings, prostitution? Imaginations can run wild.
Copies of keys floating around could cause security concerns in an apartment building,
too.
Then there is the
issue of extra wear and tear on your property.
Suppose you discover
your tenant is subletting, and you kick him out? I read about a landlord who
evicted a tenant for renting a room to an Airbnb guest for 30 days. The tenant
left, but the Airbnb guest wouldn’t budge until his 30 days was up because he
wasn’t part of the lease. Imagine moving back into your home and having a new
roommate!
An even worse
situation is going on in New York where a tenant has amassed $250,000 in fines
for illegally turning her apartment into a hotel. The landlord is getting hit
with fines, too … $61,000 at the last count.
Although I don’t put
much faith in leases, make sure they include no-sublet clauses in case you end
up in court. Also, in the rental application ask how many people will occupy
the home, and put that in the lease, too. And on your monthly inspection if it
looks as though more people are living there than agreed, immediately remind
the tenant of the violation in writing.
For more ideas on how
to better manage your rental properties, order a copy of my latest book, What
You Must Know BEFORE Becoming a Greedy Landlord.
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