On today’s show we’re talking about another aspect of short term rentals.

I’m in the short term rental business. My partners and I operate our units legally and at a very high level. The consistent 5-star reviews are not an accident. They’re the result of hard work by our team and our staff on a daily basis.

Now, I don’t know about you, but my social media feed is filled with advertisements for training classes that advocate getting into the short term rental business.

The headline reads “Everything you need to become a property investor without owning any properties”

The ad goes on to say

This Exclusive Webinar will Show you how to RENT Properties, Not Buy them, and List them on Airbnb™and other short terms Rental Platforms, Just Working Part-Time.

Step by Step Blueprint, Easy to Follow Instructions on How to set up this Incredible Business with One Rental Property at a Time.

So I clicked on the ad.

The webpage invites you to an exclusive webinar. It’s amazing, the webinar starts in just 7 minutes from now. It’s my lucky day.

The web page invites me to

Join hundreds of people worldwide making money using other homes as short-term rentals. Many property owners earn up to five times the profit of traditional rental properties. Sign up to this exclusive FREE training webinar today!

The company claims to have cracked the code on how to rent properties and make money with them by listing them on Airbnb and other short rental websites.

In less than six months, Jimmy was earning 15,000 pounds per month (around $20,000 US Dollars) with just five rental properties and he was able to quit his job for now, Jimmy teaches other people how to do the exact same thing.

The web page has a live chat window. So I clicked on the live chat window.

Sarah in the chat windows asked me if I had any questions.

I asked Sarah how their system works around one small issue. You see in many jurisdictions, not all, but many, there are laws that prohibit subletting a property for more than you rent it for. So I asked Sarah how they get around the law that prohibits subletting a property for more than it is rented for.

The chat window confirmed that my question was delivered to Sarah. At that point, I’m guessing there must have been a technical issue, because I still have the chat window open and have not received any further correspondence with Sarah. I wonder what the problem might be.

Now I know that subletting an apartment on a short term rental platform has been a common practice a few years ago. In fact, there was a rash of these units appearing on the market in New York City. There was one unit in particular, located near Union Station and close to NYU in lower Manhattan. That property is owned by someone who is from out of town. The tenant never occupied the property. They set themselves up as an AirBnB host and despite the monthly rent of $3,500 per month, they were able to get a monthly profit by using someone else’s asset.

This particular host had done this with nearly a dozen properties in NYC. When NY instituted the new rules prohibiting short term rentals for an entire apartment, the host continued to operate.

When the city went to enforce the new bylaw that prohibits rentals of entire homes, the unsuspecting owner of the property received very hefty fines for the violation.

The key is for operators who want to get into the commercial end of the short term rental business to be aware of the marketplace they operate in. You need to understand the supply and demand dynamics of the market. What is the barrier to entry? And what are the regulations? Nobody ever built a sustainable business that operates outside the law. You might not like the law, and you might want to influence changes in the law. But the law still is the law.