Should You Let Tenants Airbnb Your Rental?

Added: 2026-05-30

[00:00:00]Rental arbitrage is when a tenant wants to rent a property long-term and then they actually rent it out short-term. I don't know anyone that slowly accelerates in a rental car. It's pedal to the floor. You know, it does it it doesn't it doesn't matter where you're headed. And so I kind of feel like Airbnb's tend [music] to get treated the exact same way.

[00:00:22]>> Welcome to the Landlord Lens. I'm Sheamus and I'm joined today by fellow landlord and co-worker Raj.

[00:00:28]>> Hey Sheamus.

[00:00:29]>> Raj, today we're going to talk about rental arbitrage. This is a concept that I embarrassingly wasn't really aware of.

[00:00:37]So, do you mind informing me and our audience what is it?

[00:00:41]>> Rental arbitrage is when a tenant wants to rent a property long-term or says so at least on the lease agreement and then they actually rent it out short-term. Um like usually on Airbnb or VRBO and they make that difference. So they rent it out for like $3,000 and then they're making $5,000 on that through short-term rental and they're keeping that $2,000.

[00:01:01]>> Wow. So what that makes me want to do right now is go on Airbnb and search for all my rental properties that I think are long-term right now. So but what is what is what is incentivizing tenants to do this?

[00:01:13]>> They want to make money. It's a side hustle. It's a way to you know, they have maybe a full-time job, part-time job and they're just looking for some extra income.

[00:01:23]Some people might want to do this over and over again month to month and they were planning this from the start and some people will just find themselves a situation where they might be short on rent and they're like, how can I make money?

[00:01:35]You know, it's a side hustle. I mean I rented out my car once and I could see myself in a situation potentially doing this.

[00:01:41]>> Yeah, and as as someone who's short-term rented their primary when on vacation or out of town, I definitely get it. But from a standpoint of a landlord, is this is this allowed? Like is this something that should happen?

[00:01:58]>> I'm a landlord myself and I would you know, there's you're opening yourself up to liability for yourself as a landlord if your tenant is doing this. You could your insurance could drop if the the insurance company finds out about it.

[00:02:10]Maybe there's HOA restrictions against this and then you start to get fines.

[00:02:13]Maybe there's licensing required.

[00:02:16]Um so, we want to do this on the up and up but tenants um you know, may think otherwise and just try to make it happen, make it work for their situation.

[00:02:25]>> All right, so then as a landlord I'm definitely going to go back over at least agreement. Look for things like whether or not they're allowed to operate a business out of uh out of my rental, whether or not they're allowed to sublet it.

[00:02:36]Uh it feels important to specify uh short-term rentals specifically in there.

[00:02:44]Um if if that's allowed or not going to be allowed, are there other things that I should be watching for if I don't want to allow this activity?

[00:02:52]>> Uh if you don't want to allow this activity, locking up in your lease agreement and just like don't just bury it in your lease agreement. Talk to your tenant about it when you're when you're getting them into the property. Just like you should walk them through everything else that that is important to you. That hey, this is not allowed. I don't want uh you to sublet this property and to rent it on this.

[00:03:11]>> Makes sense. So, I'll slot that into my talk track right after no smoking inside the property for example. Um the other thing that's interesting about this that I imagine could get the landlord into hot water is I know where my property is, there's a lot of restrictions on short-term rentals. So, you have to have a license um and so I imagine as a landlord if you aren't um paying attention to this, you could even be susceptible to uh fees and things like that for operating a short-term rental without a license in a specific area.

[00:03:44]>> Yeah, um so there are a lot of districts that actually pay attention to the listings that are on Airbnb and they'll notice like there's no license for this.

[00:03:52]There's a license number supposed to be there and it's not there and then they'll go do an investigation. They'll start to put fines on your property and then by the time you find out about this, there could be already several fines weighed against you.

[00:04:04]Uh then you have to go fight those things. So yeah, it's going to put you in some some of the tricky situation.

[00:04:09]>> Why though would landlords uh want to do this? Like what what's what's the pro for for allowing your tenant to do this?

[00:04:16]>> You can make more money. Um it's Tell me more. So like um I'm a short-term rental landlord myself. I have a couple properties on Airbnb. Um but there's a and and it's going it's been going well, but it could be going better or maybe it becomes too much maintenance for me to to do. There's a lot of communication that you need to happen with guests and problems happen.

[00:04:39]Um so instead of doing a long-term rental, I could find somebody who wants to do arbitrage um and say like hey, you rent out the property for me for $5,000.

[00:04:51]Um and and then you go maybe make $7,000 and um I get more money than if I just rented it out to a long-term renter who doesn't have this upside. So I'm making a little bit more on my rental income and they're making some.

[00:05:06]So there's upside for us both. Um so like that's something that my wife and I could consider because we have furniture in the property. It's already ready, but we're just a little tired of it um and we could do a long-term rental, but like I said, it's we're not going to make as much money as if somebody else came in and said, I'll basically manage it for you. Um so yeah, it's you could look at arbitrage that way as well.

[00:05:29]>> So Raj, let's say I do want to allow this rental arbitrage situation. What should I add to my lease or an addendum to cover it?

[00:05:36]>> So first and foremost like a lease agreement is to protect you legally, but you want to really trust that person just on a relationship level. Do are they going to respect the property? Are they going to follow the rules that you put in the lease agreement?

[00:05:50]Um are they going to work with you if things change, if the laws change in the area? Um so maybe you want to try it out honestly with them just being a regular renter of yours for some time and then seeing how that relationship goes.

[00:06:02]Um but some things you can do to lease agreement are first of all, you should increase your rent to compensate like we talked about. Uh you should have a security deposit that also accounts for this. Um written permissions um that talk about this sort of of thing.

[00:06:16]So subletting, Airbnb, whatever words you want to use there.

[00:06:20]Um you should talk about uh unauthorized occupants, guest limits, noise rules, the things that you know, you don't want your neighbors to be pissed off and that to come back to you and you have to find a new tenant. Um parking rules, permits, uh insurance requirements, cleaning standards. You also want to be able to revoke the permission to do this in case things go wrong or you get cold feet or or whatever happens, the laws change.

[00:06:43]>> Wow. Well, this clear lease language I guess is really difference between control and absolute chaos uh in in your property. And I think it's also a good reminder that those of us that when we are about to to issue a new lease, you know, are going to a dusty filing cabinet and pulling one out to take a fresh look at rules, regulations, make sure that we're intimately familiar with it and it covers everything we need for our property.

[00:07:10]>> Sheamus, why does this freak you out a little bit?

[00:07:13]>> Yeah, cuz from my perspective, one of the big parts of screening and selecting your tenant is you're choosing who's going to live there, right? So you have an understanding of the people that are going to be on the property. Uh you have an understanding of the the wear and tear. Will there be pets, right? Um you don't have to worry about a rotating cast of individuals that increases complaints with your neighbors and things like that. So there's a level of consistency that I've really come to value as being a long-term landlord that this doesn't provide which definitely has me has me on edge not to mention just wear and tear right I don't know anyone that slowly accelerates in a rental car right it's pedal to the floor you know it does it it does it it doesn't matter where you're headed and so I kind of feel like airbnb's tend to get treated the exact same way.

[00:08:05]>> That's fair. I think that if you didn't sign up for that didn't go in in with the expectations that it was going to be rented out on Airbnb and that that's a definitely a downside but if you you know have negotiated that as part of your lease and you you compensated for that by asking for more rent then you can make up for that in the long term right by doing those you know putting in that extra paint or working on those floors at the time of of lease turnover.

[00:08:31]>> Yeah that makes that makes a ton of sense it's really just I guess a matter of am I ready to lose control.

[00:08:37]>> Yeah.

[00:08:38]>> Now I'm sure some of you have a rental arbitrage story whether you permitted it or maybe a tenant was doing it behind your back we'd love to hear you sound off in the comments to understand what your experience is with it.

[00:08:51]>> As always like and subscribe.