Vacation rentals and the STR space are an exciting way to make money. But if you don’t handle the legal side of this side hustle/business, you could find yourself in trouble, fast, and worse, no longer receiving that income. One of the most important legal hurdles to overcome for those who don’t own a property but want to use it for Airbnb or other platforms is permission from the landlord.
Local Laws and Lease
But before you even have that conversation, you need to make sure that vacation rentals are legal in your municipality, and under what conditions.
You also need to make sure such a possibility isn’t already excluded in your lease, by such a clause, for example:
“Tenant shall not sublet all or any part of the premises
without Landlord’s prior written consent.”
If the local laws don’t prohibit you from hosting, and your lease doesn’t have such a clause (or something close to it) you can move to the next step. Even if there is a specific exclusion, you can still move to the next step as part of a persuasive case for your landlord to give prior written consent.
This is not a “better to ask forgiveness than permission” situation. Do not start hosting a vacation rental until you’ve cleared it with your landlord.
Prepare for Communication
Ideally, you’ve got a pre-existing relationship with your landlord beyond simply paying rent. This doesn’t mean that you are necessarily best friends and hanging out all the time, just that you occasionally have communication about the property and have worked together on solutions before. If you don’t have a relationship already, that’s okay, you just need to anticipate possible concerns.
Remember that a landlord likes having rent paid on-time with no complaints and no damages. You’ve got the rent part handled, so how to deal with complaints?
Regarding complaints, get buy-in from your neighbors. Make sure they are okay with having guests come and go. They can be real allies or enemies in this process so don’t neglect to have those conversations. Let them know why you are hoping to host and the type of guest you plan to have.
Regarding damages, look to the various platforms you are using, like Airbnb or VRBO and find out what their coverages are for damages. Also check your renter’s insurance to make sure there isn’t a specific exclusion for vacation rental.
Once you’ve got all your information together, local laws and lease, input from neighbors, insurance information, you’re ready to present to your landlord.
This doesn’t need to be a Powerpoint presentation in a rented office space. Whatever the pre-existing relationship might be, this could be as simple as an email or phone call or even an in-person meeting. What is key is conveying that you’ve thought through possibilities and want to make sure the landlord is satisfied.
If your landlord accepts, great!
If the answer is a no, ask if there are any circumstances that would change that. If you still get a no, then that’s the end of the line for pursuing a STR.
But if the answer is a “maybe, if,” you’re probably going to get follow-up questions that will help to mitigate risk. This can include:
- Maximum stay lengths
- Number of stays per month limits
- Limits on pets
- A particular screening process
Think about the answers to these questions before your conversation so you can look prepared.
If they continue to waver, and if you’ve calculated that it can still make sense, consider offering some form of profit-sharing. Yes, you are doing almost all the work, but it is the landlord’s property after all. It’s not the craziest thing for he/she to ask for some residual income as part of the new increased risk you are adding by opening a STR.
This content originally appeared in our twice-monthly Guest Book Newsletter.
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