Property Investors Beware: The Airbnb Phenomenon

 Understanding the Airbnb Rental Trend in Raleigh

Consider this: You’re a property investor and just rented your beautiful 2-bedroom condo to a wonderful couple. They pay the rent on time. They keep the place clean and tidy. They never seem to have any issues with the property. Essentially, you hit tenant gold! However, there is a catch…it seems these “wonderful” tenants are using your unit as an Airbnb with none of the risks of homeownership but with all the rewards of making a sizable profit. 

Say…WHAT? 😲 While you may be thinking this hypothetical situation seems immoral and downright shady, we are seeing a trend in the Raleigh rental market where long-term rental contracts are being turned into short-term Airbnb agreements. 

What is Airbnb?

This new rental phenomenon is based on the business model of Airbnb. “Air Bed and Breakfast” is a service that lets property owners rent out their space to travelers looking for accommodations in a specific location. Airbnb offers people an easy, relatively stress-free way to earn an income on a property while also allowing guests to have a cheaper and homier vacation stay. 

Bad for the Investor: Great for the Tenant

At Oak City Properties, we’re seeing the Airbnb trend emerging in the Raleigh rental market. From an investor’s point of view, there is an element of risk when purchasing a property and the overhead that goes with it. To circumnavigate these risks, “companies” or individuals secure long-term rental contracts for a property and then rent those units as an Airbnb. This business model allows for none of the risks associated with homeownership but all of the rewards of renting it out. Ideally, the individual makes a monthly rental amount in a few days, and the rest of the Airbnb income goes into the bank as profit.   

A Flawed System

The Airbnb “rental” scheme allows tenants to play the system, BUT the overall design is flawed. Here’s why:  

  • Local zoning laws determine how a property can be used, including rules regarding construction, business and short-term rentals of 30 days or less. These city regulations enforce laws to limit this type of interaction between tenant and landlord. In addition, every state has their own set of laws and they differ based on the rental regulations. 
  • Many lease agreements do not permit the tenant to sublease or rent out the unit. A property manager or landlord may explicitly state this action will mean the termination of the lease. 

Protect Yourself as a Property Investor

Hosting an Airbnb can be risky for both the tenant and the landlord because there is absolutely no vetting process — anyone can and will be able to have access to and stay in the property. Take into consideration the high turnover rate partnered with the increased risk of property damage, and you have a recipe for disaster. While the host can require a guest to sign a contract before staying in the property, they can’t enforce any of the terms and will get no help from the Airbnb company if anything were to go wrong. 

The best way for property investors to protect themselves from this trend is to hire a Property Management Company that can stay up to date on the state regulations/laws and help navigate these uncharted waters. When you hire a property management company, a specific person is assigned to your unit(s) to oversee the proper running of your rental property. The individual is there to deal with tenant concerns, keep you abreast of everything happening to your home, and deal with maintenance and repairs. The property manager is also there to help with potential problems that may arise from issues like the Airbnb rental trend. 

Let Oak City Properties Help

At Oak City Properties, we’ve streamlined the experience of purchasing and owning investment properties through a trusted and reliable mindset built on decades of measured success. Our real estate and investment professionals are ready to help you manage your most significant assets through a hands-on approach that focuses on consistently generating results. 

Want to learn more about our commitment to effective real estate investing and property management? Contact us or give us a call at (919) 232-9222. Feel free to also check out our website at or check out our Facebook Page

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