If you live in an area that has a fair amount of tourism or appeal to visitors for weekend travel, the idea of turning your home into a vacation rental for a little extra cash might be tempting. It can certainly go a long way toward paying off the mortgage on a second home or vacation home of your own – especially if it is a home that would otherwise sit empty for days or weeks at a time.
Here are some important considerations when making your home a vacation rental.
Assessing the Opportunity
The first thing you want to do is check out the local market for the type of vacation rental you would be offering. You want to look at the availability of rental homes, key details about the rental homes, and the prices people charge for renting out their home to visitors. Don’t forget to check out hotel prices in the area as well as vacation home rentals.
You want your home to be an affordable and viable alternative to hotels for families, couples, and small groups interested in your area. Checking out the prices of other options gives you the tools you need to create a rental price for your home that is competitive, but fair.
Tips for Renting Out Your Home
There are many things you should consider doing if you want to transform your home into a vacation rental, including the following:
- Hire a management service. They will deal with things like the vetting of guests, listing your home online and other details and legalities on your behalf for a small percentage of booking fees.
- Invest in a quality and reputable cleaning service. That will save you the hassle of cleaning after one guest and before the next and can ensure that your rental property is in showroom shape when new guests arrive.
- Make sure that renting your home to visitors is permissible in your city and, if applicable, your homeowners association and lender.
- Invest in adequate liability insurance. Also, check with your insurance company to make sure that you are protected from damage done by guests renting your home as well.
- Advertise your home for rent. There are numerous opportunities to advertise vacation rentals that are free or highly affordable, including sites like Craigslist, Airbnb, and Home Away.
- Vet your renters. To ensure you are renting to reputable tenants, use a property management service that can do the vetting for you.
- Get the right kind of insurance coverage. That protects you and your guests should something terrible occur during their stay.
- Create a list of ground rules for tenants to follow. Rules on pets, smoking, or additional guests are the big hitters. Also, remember to stock your home with a few necessities they are free to use (bath linens, sheets, cleaning products, garbage bags, basic kitchen supplies, and other items to keep your place tidy.)
To recap, protecting yourself is critical. The right type of insurance coverage, a property management team that specializes in vacation real estate, vetting tenants, and keeping your property clean and in a good state of repair.
The dollar signs of vacation rentals are certainly appealing. Don’t let them interfere with a few essential practicalities before you dive right in. These tips will help.