Until now, Baron blogged extensively about static- or traditional term leasing options for property owners. However, this focus on traditional leasing may have been short-sighted. ‘Hotel-like’ short-term rentals- and temporary property ownership transfer opportunities trend well in 2022. Below Baron outlines a few possible advantages and pitfalls of each of these markets.
hourly, daily rentals – AirBnB.com
If your home has a couch, and you manage to post it with an inviting photo, you may be able to rent it (just the couch), hourly. Expectations for accommodations continues to evolve, and these options are open in every neighborhood. Is this missed a rental opportunity some landlords would never consider, or simply a temporary social media phenomena? Baron encounters and ever-increasing group of satisfied landlords rave and rant about: meeting people, sharing experiences, and developing a social media presence with new market lessees.
payment upfront rental options – Scraye.com
Although several companies share the ‘cash upfront model, the main advantage is just that: It’s appeal is mainly for those needing a cash in a hurry. If a landlord searched and approved tenants, why wouldn’t it be better to cash-out the remaining lease term upfront (or for a small discount?) However, property owners should be aware of the disadvantages as well (see below):
- hidden surcharges,
- being locked into a 6 month, 1 year or longer contract.
- inability to screen tenants
- waiving rights to include/ or disallow leasing provisions
- negotiate exceptions/rent increases during the contract term
- possible secondary and/or tertiary subleasing of your rental
As a landlord, Baron recalls a negative final property inspection experience with a certain tenant who was screened and accepted years earlier by an ‘upfront-payment’ management company. Since Baron had no previous relation with the tenant during the move-in in, the outgoing turn-over-, years later did not go smoothly. The outgoing tenant sought the original company to mediate damages caused by the tenant. This is something to think about if a landlord ever desires to direct manage in the future.
sublease to others to manage – AirBnB and others
In this option, the expected functions of managing your property shift entirely to others. In exchange for these responsibilities, companies often guarantee income regardless of whether they locate tenants, handle cleaning/furnishing/turnovers and protect your property during transitions.
Rental insurance companies, on short notice, often need to find places for their policyholders. They will reach out to listings offering a sublease options. Making your property available to these firms provides guarantees for owners and those in need. It’s a win-win. Owners deal with a reliable company, help a family in need and the outgoing make-ready will be a smooth a silk: often including no-cost remodeling upgrades, and the ability to deal with a disinterested large company not willing to quibble about costs or unexpected exit timelines.
Considerations
- Your comfort in allowing these attractive rental options. Would certain types of rental options cause anxiety? Would a live-in guest work well for your situation? What about personal timing in your life?
- Do the math. Does it make financial sense?
- Insurance. Is your homeowner policy silent or explicit on these matters? (certain pets, short-term rentals occupants)
- Who pays utilities, taxes & other fees?
- Home Owner Associations limitations on renters. City/Municipality limitations.
- (to a lesser extent) your community relations. How would your neighbors react, and does this matter to you?
- Ability to reinstate your ownership rights after the agreement is made.
Epilogue & closing remarks
As of the writing of this brief blog, both housing and rental markets are red-hot. Owners accept windfall profits when selling or leasing. Owners are able to raise both new leases and renewal old ones without objections. The market is changing. Expectations of leasing clients are also changing, and this reality will be a future focus in a forthcoming blog. However for now, life is good for owners. Baron suggests landlords consider and explore potentially exciting and flexible options of non-traditional leasing.