If you're a renter, there is good news and bad news about renting out your apartment short-term though websites such as Airbnb, HomeAway, VRBO, or FlipKey. The good news is that, depending on where you live, you can make real money with such rentals. The bad news is that you could get evicted.
Here are some things renters should do before engaging in short-term hosting.
First, read your lease. It undoubtedly has a provision that says something like the following: “Tenant shall not sublet all or any part of the premises without Landlord’s prior written consent.” “Sublet” means you rent out all or part of the apartment—whether for a few days or longer. If you violate this provision, or a lease clause limiting guest stays, your landlord can evict you.
If you’re a good tenant, your landlord may not be anxious to evict you and may let you off with a warning and a promise not to do any more short-term hosting. On the other hand, if you live in a rent-controlled apartment and are paying a below-market rent, your landlord may be looking for any legal excuse to evict you and get new tenants at a higher—perhaps much higher—rent. This has already happened to renters in cities with rent control like San Francisco and New York. In one case, for example, a tenant who listed his San Francisco apartment on Airbnb received an eviction notice from his landlord even though he never actually hosted anyone.
Many local zoning or land use laws restrict or prohibit short-term rental hosting. Research your local laws before you even think about renting out your apartment. For details, see the Nolo article Legal Restrictions to Renting Your Home on Airbnb or Other Rental Services. Links to the short-term rental laws for many cities are on Airbnb's Responsible Hosting page.
If your local laws prohibit short-term hosting, you should forget about it. If you’re very anxious to host, you could work to get such laws changed.
Most local laws don't flat out prohibit short-term rentals. Instead, they impose various restrictions on them. For example, you may be allowed to rent out your unit only for a limited number of days per year--90 or 120 days are common limits. You may also be required to register with your city or county and pay a registration or license fee. Make sure to comply with all your local requirements before you list your apartment for short-term rental.
Many renters who do short-term hosting never tell their landlords about it. This is like playing Russian Roulette with your lease. It may work out okay if your guests cause no problems and your neighbors don’t complain to your landlord. The landlord may never even find out about your Airbnb guests, especially if your landlord lives out of town and rarely stops by the rental. On the other hand, if neighbors complain or the landlord otherwise discovers what you’re doing, you could be in trouble.
Instead of taking this chance, you should talk to the landlord and get his or her permission before you ever list your apartment on Airbnb or another short-term hosting site. (See How to Sublet a Rental Unit for more on the subject.)
In order to get your landlord to agree, you’ll probably have to take steps to make it worth your landlord's while. Obviously, one way to do this is to offer to split with your landlord part of the money you earn. In one reported case, for example, a San Francisco landlord agreed to permit his tenants to list their rented home on Airbnb in return for 20% of the money the Airbnb guest paid, after cleaning expenses. Alternatively, you could offer to pay your landlord a higher rent if he or she lets you earn extra income through short-term hosting.
There are other things you can do as well to make your landlord more amenable to your short-term hosting. For example, your landlord may give you permission to host so long as you promise to do so only on an occasional basis, rather than all the time. If your landlord is worried that your guests could cause problems and bother the neighbors, you could rent out only a portion of your apartment, rather than the entire unit. That way, you’ll be present to deal with the guests.
If you do get your landlord’s permission to short-term host, be sure to summarize your agreement in writing. If you don't have it already, you should also obtain renters' insurance with plenty of liability coverage. If your landlord wants to increase his or her own insurance coverage because of your frequent paying guests, you could offer to pay all or part of the cost. For details on insurance issues involved with short-term rentals, see Insurance Questions When Renting Out Your Home Short Term.
If your landlord won’t agree to permit you to short-term host, don’t do it. The extra money you might earn likely won’t make up for getting evicted.
Make sure you pay all required taxes and fees your state, city, county, or other government agency imposes on short-term rentals. Local occupancy taxes are ordinarily paid by the guests who pay for short-term rentals, not the hosts who provide them. This is the same as hotel occupancy taxes that are paid by a hotel’s guests. The hosts’ role is ordinarily limited to collecting the taxes from their guests and remitting them to the appropriate state and/or local agency. You may be required to register with your city or county, or obtain a business license, before collecting and remitting these taxes. In some areas, Airbnb or other hosting platforms will take care of calculating, collecting, and remitting local occupancy tax on your behalf. You can find excellent summaries of the state and local short-term rental tax rules for each state on the Avalara website. You should also check your local government’s website for information about these local taxes.
Finally, you should always carefully screen your Airbnb, HomeAway, FlipKey, and similar guests. This is by far the best way to avoid problems that can lead to evictions or problems in your rental. In one case, for example, a comedian rented his New York City studio apartment through Airbnb only to discover that the guest used the unit to host a “BBW panty raid party” to which he charged the public admission. The apartment was ransacked and the comic’s landlord started eviction proceedings. Had the comic Googled the Gmail address and phone number the guest had provided him during their correspondence on Airbnb, he would discovered a tweet advertising such a party.
More thorough screening may be warranted, for example, if you are renting your apartment out on a long-term basis. In this case, it makes sense to run a credit report and screen your subtenants the way landlords screen new tenants. See the Nolo article How to Screen and Select Tenants FAQ for more on the subject.