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Should Real Estate Investors Be Wary of Airbnb?

Hotel Room InteriorOn paper, Airbnb is a concern for hotels — and not for apartment complex owners. Currently valuated at $31 billion, it has become the go-to platform for home-sharing since 2008, empowering everyone to host guests for short-term stays and earn money on the side.

However, it has been instrumental in the misfortune of many real estate investors recently. Many homeowners faced steep fines after their tenants illegally listed their homes and apartment units on Airbnb. If you’re looking for a company that offers San Diego or Salt Lake City property management services, Froerer Real Estate says that it pays to know how Airbnb could harm your investment:

How Big a Problem is It?

One of the more famous incidents is the case of Drew Grewal of Miami Beach. He’s been fined by the city nearly half a million dollars after his place was listed on Airbnb by his long-term tenants without his knowledge. This happened even though the lease contract that doesn’t allow his property to be used for transient occupancy.

Why is It Still a Problem?

Grewal’s case is just one of many. Some cities across United States have strict laws prohibiting short-term rentals. Moreover, Airbnb has yet to list properties in areas that don’t allow them. Plus, the tech startup was slow to remove listings that are being questions by property owners themselves.

What is the Solution?

Apart from hiring a hands-on property manager to watch over your real estate investment, consider applying for Airbnb’s Friendly Buildings program. If your property is located in a zone where short-term rentals are legal, this program helps legitimize any hosting activity your tenant might do. It allows you to get a share from the revenue from each stay and establish short-term rental requirements in the first place.

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Investing in real estate is full of risks, and services, like Airbnb, even increases the number of uncertainties you might face in this business. Exercise due diligence to find a reputable property manager you can rely on to avoid Airbnb-related problems down the road.

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