Written by: Jorge Contreras, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
If you’re thinking about transitioning from being an employee to an entrepreneur, starting an Airbnb business can be an amazing side hustle.
However, most people who don’t own properties find it hard to start. And they’re stuck because they think it’s not possible at all. But what if there’s a way to start even without buying properties?
Yep. And it comes by the name – Subleasing.
Subleasing is an Airbnb strategy where you get in contact with property owners and pitch the idea that you’ll rent their properties and utilize them as short-term rentals.
There’s obviously a lot more that goes into it but just know that it’s 100% legal and you’ll even get the property owner’s permission in writing.
Why try Subleasing?
First, you must realize that Subleasing is not the end but the means to an end. We don't want to sublease forever. What we want is long-term wealth by owning tons of real estate.
But here’s the reality – most people DON’T own properties and don’t have enough means to buy real estate either (at least not yet). So, in this case, subleasing can be a great alternative as it can get your feet wet in the business without needing too much capital.
Just look for a studio, a one-bedroom apartment, or a two-bedroom house with a $1,500-monthly rent. Pay for the first month's deposit, set up the furniture, and add in a few decors. Then once you get professional pictures taken for your upload on Airbnb, you’ll be up and running in no time!
You see, you can get all of these done even if your budget is just within the $7,000 to $15,000 range. In fact, you can use this property to grow your capital and accelerate your cash flow and then start buying tons of real estate once you’re ready.
But will landlords allow us to use their properties as short-term rentals?
Short answer: YES, because most property owners just want passive income themselves.
Here’s a clearer picture:
There’s a big chance that the barber shops, nail salons, and restaurants within your city are only renting their spaces. Does that mean that the building owners are in the barber, nail salon, or restaurant business themselves? Well, most of the time they’re not.
These property owners just receive rent from their tenants and they’re happy with this set-up because most of them don’t want to be involved in anything that requires operations, anyway.
That’s the same with Airbnb.
In fact, some of these landlords frown at the idea of an Airbnb business because they just don’t want to go through the hassle of cleaning their property whenever guests arrive or leave.
But you know what? Here’s a little secret: When you become an Airbnb entrepreneur, you can easily automate all these things, so you also get passive income for yourself!
So how does Subleasing practically work?
Typically, we sign a lease agreement for 12 months to rent the property which allows us to run our short-term rental business. And what comes with this is a clause saying that we can have control over the locks.
Some owners allow you to use their property for short-term rental but won't allow you to change the locks and that’s why you really need to get their permission in writing.
Important Reminder:
If you want to build a sustainable and scalable business, never do the business behind the landlord's back. Your business will be short-lived if you get caught. Why go through all the work and spend all that time and money only for it to be short-lived, right?
Bottom line: Do it correctly and with permission in writing from the very beginning.
So now that you already have an idea of how subleasing really works, it’s time to get down to business.
Here are the 3 Steps to Starting an Airbnb Business through Subleasing:
As with anything, you need to create your plan of action to achieve your goals and that’s why it’s important to take this step by step.
Step 1. Check city ordinances
Step 2. Make sure your property fits our Airbnb criteria
Step 3. Know What to Avoid
Step 1. Check City Ordinances
The first thing you want to do to make sure that you are operating in the right area is to check the city ordinances.
I recommend that you go on Google and type “Building Departments in the city of (insert the city that you want to get into business in)”. A phone number is going to come up. Call them and ask what their short-term rental ordinances are. For this you’re going to get 3 possible answers:
Possibility No.1 The city doesn't regulate Airbnbs or short-term rentals.
This means that the city doesn’t require a permit and you can go ahead and launch.
Possibility No.2 The city requires a permit to launch.
Some places require permits before you can upload the property to Airbnb and for others, you can get the permit after launching. The way to know surely is to ask.
Possibility No.3 The city doesn’t allow short-term rentals because they're banned in the area.
In my experience, about 3% of cities don't allow short-term rentals at all but the rest of the 97% either don't need a permit or will allow you to launch with a permit.
Now if you’ve made sure that the city, you’re planning to put your business in allows short-term rentals, it’s time for the next step – check if it fits our Airbnb criteria.
Step 2. Make sure your property fits our Airbnb criteria
Not all properties are created equal and that is true even if you’re just looking to sublease them. So here are the four things to consider to ensure that your property is up to par.
Must be within your budget.
First, you need to make sure that you’re getting quality for your intended capital.
If your budget is a bit on the low end, you can go for an apartment or a house that is 700 square feet or more with 2 bedrooms and 1 bathroom.
But if you have extra capital and you want to go bigger right off the bat, you can go ahead and shoot for an 1100 square feet house with 3 bedrooms, and 2 bathrooms.
Must have Air Conditioning and Heat.
Make sure your guests are comfortable whatever the season, so it would be best to rent a property that already has air conditioning and heating systems installed.
Must be renovated.
It should already be renovated because we do not want to renovate a property that we do not own.
Must have parking for two vehicles or more.
This is for ease of access for visitors who have vehicles.
So, let's recap. Here’s what you want for a good Sublease:
You’re looking for a 700 square feet house or apartment with 2 bedroom ‒ 1 bathroom, or a 3 bedroom ‒ 2 bathroom, 1100 square feet property with parking for two vehicles. It must be renovated and have AC and heat.
Bonus: You can also look for properties that already have furniture and appliances. These places will keep a lot of money in your pocket.
Step 3. Know What to Avoid
Now that you know what to look for, you also need to know what to avoid.
Avoid properties that are on the main street.
These properties are not very safe. Some drivers go for about 60 to 70 miles per hour on the main highway and you don’t want your guests to feel like they’re in danger every time a speeding driver passes by.
Avoid properties that are near a train station or a train track.
These places can be very loud and disturbing. Imagine if there's a family that just got into your Airbnb. They're super tired from all the travel and they just want to rest but a train comes in and disturbs their peace. Would they still recommend your place or book with you again? Not very likely.
So, avoid properties that are less than half a mile from these train stations.
Now that we’ve properly laid out all the things you need to do to start a sublease, it’s time to do the actual work! Because after all, knowledge without action is like having no knowledge at all.
So go ahead and start prospecting for locations, talk to landlords, launch on Airbnb, accelerate your cash flow, get your profit, start buying your own properties, and ultimately create long-term wealth and financial freedom for yourself and your loved ones.
You got this!
If you want to learn more about Subleasing and starting your Airbnb business from scratch, you can also download and check out our free ebook here.
Follow me on Facebook, Instagram, LinkedIn, and visit my website for more info!
Jorge Contreras, Executive Contributor Brainz Magazine
From poverty to a million-dollar business, Jorge Contreras is a real estate investor and coach. He started his real estate journey over 10 years ago, and he launched his Airbnb business 5 years ago. Before that, Jorge was overworked and underpaid. He barely had time to spend with his family, and his business wasn't exactly thriving. Once he got into real estate, he realized the potential, especially with Airbnb and short-term rentals. When he became a millionaire, before the age of 30, he decided to share his knowledge with all the people who have the need to spend more time with their families and less time working. Jorge has already helped over 3000+ people reach their goals with Airbnb.
