Airbnb Arbitrage – Should I rent out my property to an airbnb host?

Should you permit your tenant to rent out your property on Airbnb?

Each landlord has their opinion on whether Airbnb arbitrage is something to embrace or reject. However, the truth is that it’s neither purely good nor bad. Instead, it depends on how comfortable you are with the concept and the quality of the Airbnb host you take on as a tenant.

With the right host, Airbnb arbitrage poses no threat, and you can benefit from the arrangement. With the wrong host, you can experience all sorts of issues that can adversely impact your bottom line – and cause immense stress.

What to consider before allowing Airbnb arbitrage in your rental property

Let’s assume you’ve weighed both the pros and cons of Airbnb arbitrage and are considering accepting an Airbnb host as your tenant. In that case, it’s imperative to do extensive research to ensure the host you choose runs a successful Airbnb business operation.

As Mackenzie points out, “If you do your due diligence, as you always should when finding the right tenant to put in the property, and ask the right questions, you’ll verify very quickly if this person has a legitimate business, has systems in place, or is a fly-by-the-night individual who’s trying to make a quick buck.”

Here are some of the critical factors to evaluate when screening an Airbnb host:

Website

Pretty much every business today has a website, so be sure to check how Airbnb host presents themselves online. A serious host should have a professional, well-organized website with helpful content that conveys a consistent brand. These are clues that suggest the individual or company takes their business seriously.

Licensing and regulations

Each municipality has regulations that govern the operation of short-term rentals. You’ll need to become familiar with them to ensure you and the Airbnb host aren’t breaking any rules. Otherwise, you end up paying a hefty fine or face a lawsuit.

Many jurisdictions require an Airbnb host to register their business, obtain a licence, and adhere to specific bylaws, so verify that your host meets these requirements. Also, ensure they can legally operate an Airbnb business in your district – zoning regulations may prohibit short-term rentals in some regions of your city.

One thing to note is that some municipalities have a primary-residence requirement. This regulation specifies that the Airbnb host must live in your rental to operate their arbitrage business legally.

Most municipalities classify short-term rentals as those were the tenancy lasts 30 consecutive days or less. Tenancy periods that exceed this limit are typically subject to different regulations.

Liability insurance

To shield yourself from lawsuits and costly repair bills, ask the Airbnb host if they have their own liability insurance. If something goes wrong, their insurance provider will step in to cover any claims involving injuries or property damage.

Some short-term rental platforms sell liability insurance policies, which the Airbnb host may carry. For example, Airbnb offers AirCover for Hosts, which provides up to $1 million in coverage.

 Suppose your tenant doesn’t have short-term rental insurance. In that case, you can purchase the coverage personally, adding it to your homeowner’s insurance policy. Still, an Airbnb host with liability insurance indicates they’re trustworthy, professional, and reliable.

Social media presence

Like a sleek and professional website, you can garner crucial information about an Airbnb host’s business by examining their social media presence. Online visibility is vital for any company today, so a legitimate Airbnb host will likely use social media for marketing their business effectively.

Check out LinkedIn, Facebook, Twitter, and other social media websites to see how the Airbnb host presents themselves:

• •  Is their brand, messaging, and overall content consistent across each platform (and their website)
  • Are they active on each platform, posting regular messages and responding to inquiries?
  • Do they engage with their clients, landlords, and others within their industry? 

Airbnb profile

If your tenant purports to run an Airbnb arbitrage business, they should be visible on Airbnb’s website. Ask them to provide a link to their Airbnb profile (or whichever platform they use) and review it to determine how effective they are as hosts. Be sure to look at the following:

• •  Length of business history – the longer they’ve been around, the better, as it indicates they have plenty of experience running short-term rentals.
  • Reviews – are most customers raving about their service, leaving five-star reviews? If so, that’s a good sign.
  • Level of detail – a profile that provides loads of helpful information, including plenty of pictures, shows the host has nothing to hide.
  • Response rate and time – some short-term rental platforms show how quickly the host responds to inquiries. A fast response time indicates punctuality and solid communication, a positive attribute you want in a host. You can also test their timeliness by emailing or texting them several times and seeing how quickly they respond.