The 1-year lease a thing of the past: CEO

The 12-month rental may be a thing of the past now that Airbnb and the sharing economy have helped homeowners and renters make money while they're not at home, according to one start-up CEO.

"So we rent out for 12 months because that's the way it's always been done," said Sean Conway, chief executive of Pillow, a company that connects homeowners with potential guests through vacation rental services like Airbnb, HomeAway and TripAdvisor.

"The new way is implementing technology and whether it's three months or seven days at a time ... you should be able to cut up a lease in whatever time fragment you want," Conway said in an interview with CNBC.

Considering factors like seasonality, popularity and area events, Conway's firm employs an algorithm to help determine the best pricing and listing options for those looking to rent out their residences, and handles booking and other logistics.

Pillow Homes provides sheets and linens for their rentals.
Jeniece Pettitt | CNBC
Pillow Homes provides sheets and linens for their rentals.

In exchange, hosts may pay a fee that amounts to 15 percent of what a property is rented for. Some short-term rental hosts can also opt to receive a flat monthly payment which accounts for any fees.

But each corner of the sharing economy faces its own legal concerns. As ride-hailing companies like Uber and Lyft have been challenged by city laws and taxi drivers' associations, companies like Airbnb and their users could face complicated renting, business licensing and other rules that can differ from city to city.

Both Pillow and Airbnb note that homeowners are responsible for understanding the laws that affect their short-term rentals.

"Local governments understand the beneficial impact of short-term rentals in their communities," a Pillow spokesperson wrote in an email, noting that Airbnb brought an additional $56 million to the local economy in San Francisco.