Here are 5 things you need to know before renting your home out on a short-term site:
Discover the laws
From city to city the laws regarding short-term rentals can change. Before you list a property do your due diligence to ensure you’re staying inside the law. If the property is in an HOA, you will need permission from them as well. The sites you use to list homes for short-term renting won’t tell you the laws for your area. Recently, some communities or cities have required homeowners to be licensed as a bed and breakfast in order to use their home as a short-term rental. Research your local zoning and ordinances to make sure you won’t end up being fined and losing your profit.
Don’t forget you’re required to claim income from a short-term rental -- yes, you will be required to pay taxes. Many sites where you can rent a property for a short-term will send you a statement of income at the end of the year, but regardless, you are responsible for tracking and reporting earnings. Don’t forget to keep track of expenses which may qualify for a deduction. Consult your accountant before moving forward to ensure you keep proper records.
Cover ongoing expenses
You probably already know this real secret: houses don’t maintain themselves. Whether sitting vacant or occupied, homes need to be kept up. The same is true with short-term rentals, but on a new level. You’ll need to make enough to cover cleaning expenses, paper products and potential damages. Most sites will allow, even encourage charging a cleaning fee. Renters aren’t worried about wastefulness, so overestimate the cost of these expenses to cover your costs.
Most homeowner’s insurance policies won’t cover short-term rentals. Before listing your property, call your insurance agent to verify or update your policy. Remember to add this to the costs so you’ll be covered by the rents you collect.
Consider a property manager
If you’re renting an out of town property on a regular basis, this all may sound like a lot to keep up with. Hiring a property manager may help you sleep better at night, knowing things are taken care of and the books are in order. Your agent may have relationships with property managers in other states, so give them a call for a trusted referral.
Using your property as a short-term rental can be a fun and relatively painless way to make some extra income. Many users reported covering the costs of their vacations simply by renting out their home while they were away. If you do the math and proper research you can have a successful rental.