AirBnB – Threat or Opportunity?

Richard Horne 20/09/2018

Would you let your tenant list a room in your rental property and make money off it through AirBnB? In a recent discussion on an Australian Property management chatroom, the (almost…!) unanimous response was NO! No, no, no, no, no, no, no, NOOOOOOOO! Not on your life! Never!

And the reasons behind these slightly knee-jerky reactions? Oh, the usual:

  • It’s subletting
  • Who’s liable for damage?
  • What about insurance?
  • What if they do drugs?

 

AirBnB – It’s Not All Bad

Here’s a mental exercise for you. You’ll find it easier if you’ve already experienced booking a place through AirBnB, and you also own a rental property.

  1. Think of your rental property. Picture it in your mind. The main living area, the kitchen, the bedroom, and how your current tenants had the place looking at the last inspection (you do inspections regularly, right?). Their furniture, belongings, and pictures on the walls.
  2. Now imagine that you’re searching for an AirBnB place to stay. The place that you’re visualising now pops up on the AirBnB website as available. Would you pay $100+ a night to rent that room in your rental property?

Suspend your disbelief for moment and consider this. For your tenant to get anybody to come stay in the spare room at your rental property for a short term (2 to 5 days), they’d most likely have to have the place looking pretty tidy and well looked after. That’s a good thing, surely? Especially if they’re charging $100 and upwards per night. Your rental property would have to be neat, tidy, clean and attractive, or else their AirBnB career is going to be very short.

What’s the Risk with AirBnB?

Now let’s look at the risk of an AirBnB client damaging your rental property in this same scenario. AirBnB users generally aim to preserve and improve their online reputations by being model short term tenants – clean, courteous, tidy, polite. The reciprocal review system that AirBnB uses is very similar to Uber and other online services.

If an AirBnB user makes a booking and then turns up smoking weed on the doorstep and finishes their first night’s stay after a heavy drinking session down the pub, their AirBnB possibilities are going to dry up real quick too. They’ll amass bad reviews very quickly and find it nigh on impossible to secure another AirBnB property anywhere in the world.

Of course as a rental property owner, you can build into your Tenancy Agreement a clause that states your tenant cannot rent out part or all of your property through services like AirBnB, therefor you can enforce that clause through the Tenancy Tribunal. It’s great that you have that choice, and I’d encourage you to use it if you want to avoid this happening.

However, I’ve done a lot of research on this, and read or heard a lot of differing and interesting views on how this could work, and my thoughts have changed a bit.

There is an Upside!

It occurs to me that there could be a couple of upsides to allowing your tenant to AirBnB your rental.

  1. Your tenants will have to keep your rental property very clean, very tidy and attractive; more so than if they were just continuing to rent the place and live there. If they don’t, they simply won’t get any bookings.
  1. Your tenants could make a bit of extra money, and that should mean there’s less chance of arrears happening, and your rent cashflow will be all the more stable and reliable. That’s what every landlord wants.

Now ask yourself this – is your objection to someone AirBnB’ing a room in your property for insurance, safety, or legal reasons? Or do you just resent that you’re not getting a cut from them making money off the back of your property?

What do YOU think?

I’d love to know what you think (please email me your thoughts) because this is a debate that has some way to go. In the current rental drought that Wellington is experiencing, allowing tenants to list rooms on AirBnB might go some way towards helping improve things.