How to rent out your home
Millions of homeowners worldwide now rent out a room, rooms or their entire home, helping this niche in the sharing economy become a multibillion dollar business, thanks to sites such as Airbnb, VRBO, Homeaway and TripAdvisor. Some hosts do this to earn extra income to supplement their main jobs while others make a full-time business out of buying up homes, apartments, or even entire multifamily buildings for investment, furnishing them, securing renters and never living on the premises.
Just how easy is it to hop on the bandwagon? Very — if you have an extra bed, a desirable location, and a willingness to host strangers. However, as easy as it is, it is important is to be realistic about your expectations. Many guests may be respectful of your home and appreciative of your hospitality but you’re also likely to encounter some who aren’t along the way. And even if you have lovely accommodations and charge the right rate, you may not always find paying guests. The competition is increasing. But, as with dating, post good accurate photos of your premises, write a good story about your home and its location, check out the competition for pricing, and you may have a lot of paying guests show up.
That said, here are helpful guidelines you should consider.
1. Decide if you want to welcome strangers. Weigh the pros and cons. Among the pros. You will meet nice people from around the world who prefer to stay in a home. You’ll also be able to deduct and depreciate expenses, according to the advice of your accountant or financial planner. Among the cons. You will be opening your door to people you don’t know who will use your beds, linens, appliances, coffee maker and even peer into your medicine cabinets just like Steve Martin did in the remake of “Father of the Bride.”
2. Find out if your building, city or village permits renting. Many condo and cooperative buildings won’t or limit the number of days and weeks per year. Many towns and cities are cutting back on what they allow such as only 90 days a year or 30 consecutive days.In Nashville, Tenn., its Metropolitan Council, which represents both the city and county, has been weighing a moratorium to stop Airbnb and similar businesses from growing further by setting limits or restrictions. A bill, 608, was filed this year that would ban non-owner occupied short-term rental properties in residential zones. It would also phase out over three years these properties. Short-term is defined by less than 30 consecutive days. No decision has yet been reached by the 40 member council, says one member, Jim Shulman. “These rentals started showing up several years ago and some attempts were made to add regulations through legislation to avoid drunken parties and other things. Yet, at the same time, our city is growing and tourism is increasing, and there aren’t enough hotel rooms,” he says. At this time, the bill is pending and the state legislature is not in session until January to add its input. Meanwhile, the vice-mayor of Nashville, who runs the Metro Council, put together a five-person committee to try to come up with a solution that would please everyone. Their goal is to get proper regulations in place so the state legislature wouldn’t have to be involved, Shulman adds. In many larger cities like New York, many cooperative and condominium multifamily dwelling buildings have already taken steps and don’t permit rentals at all. For example, “The NYS Multiple Dwelling Law prohibiting short-term rentals (unless a permanent occupant is present during the stay) always applies,” according to a question and answer on Street Easy, an online site. The response further explains, “There is no ‘unless the condo by-laws or co-op proprietary lease permit it’ clause.” The bottom line: Do your research so you stay within the law, whether it’s your city, community, building or Homeowners Association (HOA) setting any rules and restrictions.
3. Ask your insurance agent if your coverage adequately covers damage to your property or possessions and accidents that happen to guests on site. Also check with the rental company if it offers extra liability coverage. Be sure you don’t leave out possessions you don’t want used or damaged such as valuable rugs that might get red wine spills; jewelry and other eye candy that might be taken; and family heirloom linens you don’t want used at all. Finally, be sure your premises are safe for visitors with adequate lighting, good railings to hang on to with stairs, and mats under carpeting that adhere so there are no falls.
4. Decide if you’ll stay or vacate. Some hosts prefer just to rent a room or rooms and serve as a gracious host or hostess—picture Bob Newhart on the old series about an innkeeper, his wife and friends. Others don’t want to know what guests are doing in their home and prefer to vacate. Some of this latter group like being on site to greet guests first while others use a key system with code so the guests just show up and enter on their own.
5. Check out your accommodations as if you were staying. Is the mattress comfy; do you have Wi-Fi that works; do all appliances work including the air conditioning and furnace system; did you leave some room in the refrigerator for their food and condiments; did you leave out an iron, fresh shampoo, toothpaste and towels for their comfort; are any closets or drawers locked that you don’t want them to use? The best hosts test all as if their home was akin to a car being taken out for a spin.
6. Decide the price you charge or your rate per night, week or month. This is a biggie and why you are in business, not just to make friends. Check the competition for how much it charges, and decide whether you will charge $150 or $500 or more. You may also want to adjust rates—charge more at the busiest times and decrease your rate in off-peak times, as well as give a slight discount for longer stays of maybe a month or more. If you have a lovely pool, you might want to request a bigger fee since they’ll be using it, maybe turning up the heater and using your towels. Add in dollars, too, for cleaning your home before they come and after. Also, include any occupancy tax you must pay your town or county so you don’t have to pay these yourself. Insist on a refundable deposit in advance. And finally, know that there are some rental programs that are more equivalent to a home exchange. You have guests stay in your home and you fly off to their home in Paris. You won’t make money but you will get an almost free or less costly vacation in the location of your dreams.
And know that you can always test the waters. Have a few guests stay and decide if this is for you.
Next up: Part 2 of 3 — “So You Want to Rent Out Your Home: A Baker’s Dozen of Reasons to Help You Decide and Be a Great Host, or Channeling the Inner Bob Newhart”