The Go-Getter’s Guide to Creating a Successful Vacation Rental
You work hard enough as it is. It’s time to put your house to work for you. The vacation rental industry has rapidly increased in value and demand over the past several years. Right now is the time to buy into it if you can. But renting out your home, whether it be long-term or short-term, entails planning, preparing, and lots of hard work. Miss a step, and you can end up wasting lots of time and money. Done properly, it can ultimately be a very financially rewarding process. If you’re ready to step foot into the world of Airbnb, or are just considering the potential of turning your property into a vacation rental, here’s what you need to know:
Is Your Home Suitable for a Vacation Rental?
Just because you have a house or condo doesn’t necessarily mean other people want to stay in it. Before you invest your time and money into turning your place into a rental consider the following three questions:
- Is your home in a desirable location?
- Does your home have any unique features and/or amenities that would make it particularly desirable?
- Is it close to popular attractions or restaurants in your town?
To ensure your home is rentable, answer the questions above honestly. If there are other homes in your neighborhood that are listed as vacation rentals, that is a good sign. Search the homes in your area on Airbnb and see what amenities they have. Can you compete? Can you offer something different but just as desirable? If your home is lacking in certain areas, are you willing to add or upgrade amenities in order to make your home more desirable?
Is it Legal to Rent Out Your Home?
This is a step you do not want to overlook. Do all the research that you can to ensure you’re following the laws when renting out your home. To avoid fines and court dates in your future, mind all city and county codes. A simple internet search or a quick visit to your city's main office can give you most of the information you need to make sure you have the green light.
If you own your home:
Consider the terms of your mortgage to ensure there are no restrictions on renting out the home (especially within the first or second year of owning the home). Call your lender to clarify anything that is unclear about renting out your home. Additionally, you’ll want to refer to any homeowners’ associations regulations on renting and subletting. Although HOAs can be like that annoying pain in your side that comes when you run a couple of miles, they can have the power to levy fines against your and your property, so you’ll want to take them seriously.
If you are a renter:
If you’re considering subletting the home you are currently living in, pay close attention to your lease as there is almost certainly language on subletting. Always consult with your landlord before moving forward.
What Type of Rental Do You Want?
You may just want to rent your home out for a few weeks here and there or you might decide turn it into a permanent rental property. Depending on what you’re leaning towards and what's best for your family, you’ll want to refer to the local laws again. Some cities (New York City, for example) prohibit short-term rentals of less than 30 days. The laws vary widely from place to place, some even making the use of sites like Airbnb illegal to use in the area.
When considering lease terms, carefully think about whether you want to lease out your entire home or only a bedroom or two.
Some key points to consider:
- Are you able to make strangers feel welcome in your home while you are living there as well?
- Are you and your family comfortable engaging with strangers?
- Are you able to accept the risk of people entering and leaving your home, sometimes at odd hours?
- If renting out your entire home, are you prepared for the reality that your home and landscaping will eventually need maintenance from substantial wear and tear and even possible damage caused by others?
If you decide to move forward with using your home or property as a vacation rental, it's always important to remember to:
- Keep detailed records. Remember that rental income is taxable, so stay organized with detailed records. Thankfully, many of the expenses you will incur preparing your home to rent are tax deductible. Keep record of all funds you spend, as well as income brought in by the rental. There are various software programs available that are designed specifically to help manage rental properties.
- Get a rental permit. Rental permits are not required in all cities, especially for the short-term rentals. But, as a result of the growth in rental trends, cities are creating new forms of regulation. Know what kind of permits are needed to rent out all or part of your home in your specific area, keeping in mind that the process to get a permit approved can be extensive and take a considerable amount of time.
- Update insurance policies. While renting out your house, you’re going to need to update or add Landlord Insurance. Depending on whether you’re doing short or long term arrangements, the coverage will differ.
What Does Your Property Need as a Vacation Rental?
- Keyless Lock. A keyless lock, like one where you enter a code or a bluetooth internet “key” that a visitor can access on his/her smart phone, is a convenient way to provide entry to the house without the hassle of having to meet someone in person or hiring a property manager to meet the person if you are not local. Wifi locks can also be a useful way to ensure your doors are locked after a guest has checked out of the residence.
- Home Monitoring System. A home monitoring system, such as Nest Home Monitoring, is a simple way to watch over your property without having to be present. Nest thermostats, smoke detectors, and security cameras (both indoor and outdoor) can be accessed through your smartphone, tablet or other internet capable device to give you on-demand peace of mind. Whether you want to be notified when guests leave or just be alerted when something goes wrong, these type of digital monitoring systems can not only be convenient but save you money. (Case in point: Let's say the guests left the air conditioner on high when they left. With one of these systems, you can simply turn it down or off using your phone from anywhere in the world).
- Welcome Book with Information.Having information about the property the moment guests arrive is always a good idea. It’s smart to list basic property amenities and how to operate them, as well as to include your rental and checkout policies. You can also include a list of local attractions, directions to the nearest hospitals, dining options, and emergency contact information. If you’re feeling extra generous, you could put together a nice gift basket with local farmer's market finds or a bottle (or two) of wine. And if you don't have a way for guests to make coffee in the morning, fix that ASAP.
Once you’ve sorted through all the legal and upkeep matters, you’ve got the leasing terms clearly outlined, and you're comfortable with the procedures you’ve developed for your guests, you’re ready to list your house! YAY! If you’re leasing your home long-term, you may have decided to hire a property manager, which can be a very smart idea. If you’ve opted not to hire a landlord or manager, here are the next steps to listing your house (or rooms) for rent:
- Take High Quality Photos. If you don’t have a good quality camera, you might want to consider hiring a photographer to take photos of your home. A local photographer that specializes in real estate photography knows what angles to shoot photos from in order to make your home look most appealing. You’ll want to include pictures of all the desirable amenities and fancy upgrades your home has to offer.
- Written Description of Property and Amenities. This is your chance you really “sell” your property. Let potential renters know what they will love about your place and why they would want to choose it over other local properties.
- Screen Guests Carefully. Inviting strangers into your rental home always comes with potential risks, especially if you’ve chose to only rent out one room while you’re still living there. You literally never know who’s sleeping just feet away from you. Some helpful ideas to consider are:
- Speak to each potential on the phone or in person (in a public setting) before accepting a booking. Casually ask about the purpose of their stay, how many people will staying at the property, and whether or not the person has used a vacation rental before.
- Check out their social media profiles.
- Search other online rental sites for reviews on the guest.
- Ask for a deposit. The typical deposit for a vacation rental is 15%-20% of the rental fee upfront. This is to help pre-screen guests and to hold them accountable for any damages that may occur.
So what are you waiting for, go- getter? Take this handy guide and start considering letting your house make money for you!
About the Author
Alex is a momma of two and a military wife currently living in North Carolina. A professional realtor and real estate guru, Alex is also a talented content writer for Buzzy Blogs.