Landlords: Latest Strategy to Increase Rental Revenues

by Chris on December 21, 2015

Airbnb.

That name has become something of a household word, especially in rental homes. For tenants, Airbnb is synonymous with extra income. For landlords, it represents increased liability and property damage.

 tenant screeningAirbnb offers an online platform for advertising nightly accommodations to travelers. That might mean a spare room in an apartment, or use of the couch for the night.

A steady stream of overnight, vacationing guests from different time zones is a nightmare for other tenants and for landlords who often are unaware that their rental has become short-term lodging for strangers.

The horror stories abound: damage in the tens of thousands of dollars and no way to track down the perpetrators, many of whom live in other countries. Recently, a landlord in New York discovered that his tenants, using sheetrock and curtains, had converted a three-bedroom apartment into a 10-bed ‘hotel’ where they could earn as much as $350 per night.

Is Your Rental Property on Airbnb?

One tactic landlords use to prevent tenants from exploiting their lease agreements by renting out beds is to include language that ties the practice to eviction. However, that policy may be difficult to police. For instance, Airbnb ads do not list addresses, and it takes a bit of detective work to find out if a tenant is breaking the rules — that is, unless the neighbors are complaining.

According to a recent news report, three mega-landlords are pursuing a different strategy, one that will force tenants to share the wealth.

Representing just under a quarter of a million rental units, these landlords purportedly are engaged in active discussions directly with Airbnb in order to hammer out a “win-win” where tenants would be allowed to use the vacation rental service so long as the landlords receive a share of the revenue.

While such as strategy has some obvious advantages, it is not without controversy. Short-term rentals are prohibited in some major cities, including New York City, and landlords who participate in a revenue share soon could find themselves on the wrong side of the law.

In addition, long-term tenant retention could suffer in light of any potential increase in noise complaints and security risks.

In fact, it’s this security issue that presents perhaps the biggest challenge to both landlords and host tenants. Tenant screening is a crucial step in apartment leasing, but this practice falls through the cracks when it comes to renting to overnight guests online. While it may appear to host tenants that no one could cause significant damage in a period of 24 hours, that theory has been tested time and time again. From identify theft to guests who won’t leave, total destruction of a unit to negligence lawsuits for injuries on the premises, legal tangles are a part of the vacation-rental landscape.

Even if a host tenant does see the need to screen guests, most do not know how to run a tenant background check, nor do they have the authority to obtain consumer reports. It’s easy to fool someone when tenant screening is done online. Except for checking credit card information, cross-referencing social media accounts, or being allowed to publish a negative rating of a guest after the fact, there is little in place in terms of a system to assist host tenants in screening their overnight guests.

That may be a risk that is not worth taking.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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