Wednesday, September 06, 2017

Tenants Screw Landlords: Renters Use Airbnb To Run Illegal Flop Houses, Subletting Homes To Travelers, Sticking Unwitting Property Owners With Huge Tab For City Fines, Legal Bills

In Miami Beach, Florida, CNBC reports:
  • Drew Grewal faced fines of nearly half a million dollars because his Miami Beach home was being listed illegally on Airbnb.

    In Miami Beach — as in New York, San Diego and many other U.S. cities — short-term rentals of the kind facilitated by Airbnb, VRBO, Tripadvisor and others are strictly limited. Laws, fees and taxes vary regionally, but fines for violations are typically high. In Miami Beach, the fines run at $20,000 for a first violation and rise from there.

    When the first notice arrived on Jan. 19, Grewal thought the city of Miami Beach must be mistaken. He hadn't used Airbnb as a host in years. Then it dawned on him that his long-term tenants might be responsible, despite a clause in their lease barring them from using his place for transient occupancy.

    An agent checked up on the property for him and confirmed his suspicions. The yard had been trashed, with some patio furniture shredded. Somebody had installed electronic locks — presumably so guests could check in and out.
    ***
    After he evicted his tenants, Grewal says, he noticed some of his furniture missing, including a distinct purple futon and a white couch. He says he saw both items later appear in two other Miami Beach listings on Airbnb.

    "This was just one more kick in the face. Like here – throw some furniture out with all the other money I was spending to fix this," Grewal said.

    The listing that had been pulled down from Airbnb appeared with the same photos and copy on a site called Vacayo.com. It turns out that Grewal's tenants, Isabel Berney and Temitope "Truth" Oladapo, were behind that site — Oladapo registered the domain, and Berney lists herself as the company's co-founder on her LinkedIn page.
    ***
    Grewal's misery has plenty of company. Other homeowners and real estate professionals are facing similar troubles in Miami Beach and beyond.

    A long-time real estate investor in Miami Beach, Rula Giosmas, told CNBC she had Airbnb-related problems at two of her four properties there. In the most extreme case, she thought she had rented out her place to a nice couple with a kid moving from New York.

    Her tenants in this house? Oladapo and Berney, according to correspondence viewed by CNBC.

    (Giosmas did not know the other landlord quoted in this story, Grewal, at the time, but the two have been in touch after Grewal saw his missing purple futon in photos on a listing for her home on Airbnb.)

    Within a couple of months, the plumbing at her property had been clogged. Giosmas sent a plumber out, who suggested she may want to drop by for an inspection.

    When she did, she says she found the place had been outfitted with smart locks and security cameras, presumably so the tenants could remotely let guests and a maid service in and out of the property — or keep inspectors and landlords locked out.

    The place was also crammed with cheap furniture, double beds in every room, and had signs taped up throughout the house admonishing guests not to throw parties or make loud noises, she says.

    Knowing that short-term rentals were not allowed in this zone of the city, she checked Miami Beach records for any notices on the property. She found that the city was fining her $20,000 for short-term rental violations there.

    Giosmas says she lost more than four months' rent to the tenants who were running what she said was "like a flop house" out of her property. And she lost the faith of her neighbors who complained about raucous guests who left trash strewn around the neighborhood. "They had dozens of bags of trash on the side of the house that hadn't been picked up."

    When Giosmas reached out to Airbnb with the listing, the company told her she needed to talk to the hosts (her tenants) to resolve the issue, she says. But within five days, she estimates, the company took the listing down.

    Still, she's not pleased. "It's a huge scam," she told CNBC of her experiences with renters illegally subletting their places to travelers. "And the city sticks the owners with the fees. Airbnb, VRBO and the rest of them are like real estate cancer."

    She is still working on getting tens of thousands of dollars in fines resolved with Miami Beach. And as with Grewal, payments to lawyers have also cost her thousands.

    In a statement provided to CNBC, Airbnb placed the blame on the city.

    "The Miami Beach fines are outrageously punitive and simply bad policy. They've initiated significant confusion among the residents and, worst of all, turned neighbors against neighbors. We advocate strongly on behalf of our hosts for fair home sharing regulations in order to ensure that the laws are simple and understandable for everyone."

    The problem isn't limited to Miami Beach, however.

    In San Diego, two real estate professionals who asked to remain unnamed said homeowners' associations have been plagued by long-term tenants turning houses into "youth hostels" in the area, typically using Airbnb to book guests.

    One, in the San Diego suburb of Coronado, told CNBC, "It's a no-margin bed-and-breakfast for them. Homeowners are getting fined by their HOA, and sometimes the city, having to hire property managers and lawyers to deal with it all. They're losing their livelihoods. They rely on rent to pay mortgages. And they didn't count on all these expenses."

    Airbnb did not comment on the alleged incidents in San Diego.
    ***
    Meanwhile, both Grewal and Giosmas tell CNBC the experience led them to sell their houses before they wanted to.

    Following months of lost rent, Grewal sold his Miami Beach property and says he accepted a price 10 to 15 percent lower than he would have sought under different circumstances.

    Giosmas said she sold off two properties in Miami Beach already and is listing her other two. She lamented, "After 26 years here, I'm trying to get off the beach. I felt like my house was prostituted."
For the story, see These homeowners faced an Airbnb nightmare as renters left them facing huge fines and angry neighbors (Homeowners in Miami Beach tell CNBC that they've faced huge fines from the city when tenants in their properties listed them illegally on Airbnb; Airbnb told property owners it was not responsible for vetting whether properties are allowed to be listed for short-term rentals; Airbnb was slow to take the listings down, and has not instituted the most obvious long-term fix: banning property listings in ZIP codes where cities don't allow them).

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