SHORT-TERM RENTALS – HOW DOES THAT AFFECT YOU?
It seems only natural now that when people look into vacations, they not only search websites for hotels, but they also research short-term rentals. For example, it is commonplace that people going to Flagstaff will stay at a VRBO – vacation rental by owner – or an Airbnb property. These may provide a more comfortable stay than your average hotel and can often be a better price. Therefore, people often think of how this new technology affects the hotel industry – but they forget that it also forgets the rental industry.
If you are a “traditional” landlord entering into year-long leases, you have to consider how this new industry affects your business: Do you want to start engaging in short-term rentals? Do you want to allow your tenants to do so? What process or procedure do you have to prevent your tenant from subleasing a property to people on vacation?
Unless you have the infrastructure set up and the appropriate vacation rental documents, most landlords should not get into the business of short-term leases and they won’t want their tenants to do so either. A landlord that allows her tenants to sublease on Airbnb or VRBO is asking for a lot more uncertainty with her investment. The landlord/owner of the property will not have vetted prospective short-term tenants and will not have control over what is going on within the property. This means that there could be significant damage to the property which was not accounted for or there may be increased liability with countless people coming to the property. Finally, it is possible (depending upon the number of units you have) that by opening the home to the public, the property must be compliant with the Americans with Disability Act, not just the Fair Housing Act. This means that there may be significant structural changes that are needed to the property.
If you decide you do not want your tenant to dabble in the short-term rental market, that should be explicitly set forth in your lease. A good lease should prohibit any type of subleasing, which would include short-term rentals. That, however, doesn’t solve the problem. The problem facing landlords of single family homes is how to enforce this rule and ban short-term subleases, when the landlord doesn’t have a manager on-site that sees everything that occurs. They need to be more creative in terms of “having eyes and ears on the ground.” For example, it is very helpful if the landlord has a good relationship with the neighbors to keep her advised of unusual behavior or to periodically do searches for that property address on applicable websites. If a report is made, and if it can be substantiated after research is done, the landlord should act by sending a 10-day notice for noncompliance with the lease. Only if the problem continues after the 10-day notice expires, should the landlord then file an eviction.