Want to Make Extra Cash with a Short-Term Rental? 3 Things to Do First
You may be able to make some extra cash by renting out your extra space to tourists looking for an alternative to impersonal chain hotels. However, before you put mints on the pillows and list your address online, here are a few things that you need to do to make sure that your short-term rental venture succeeds.
Find Out If It's Legal
Some local governments have ordinances that prohibit short-term rentals, so check your city ordinances and county and state laws before proceeding with any plans to rent out your property. Find out what the minimum length of time that a lease is allowed to run for in your area. If your city forbids leases that last less than a month, you may still be able to accommodate seasonal visitors, for example, but not renters who only want to stay a week.
If you live in a complex or housing development with a homeowner's association, be sure that you check their bylaws as well. While a homeowner's association's rules are not the same as government laws, there are still consequences for breaking the rules. You may be subject to fines or even a lien on your property if you're caught breaking the rules.
Meet with the Neighbors
If you get the green light from your local government and any homeowner's association that you're accountable to, your next step should be to discuss your plan with your neighbors. While they technically have no say in whether you rent out space on your own property, an irate neighbor can make life very difficult for you, and make your property very unattractive to any potential renter.
Make sure that you have a plan in place to address any concerns that your neighbors may have. For example, they may want to know how you'll ensure that no one disturbs the peace in the neighborhood or trespasses on their property, how you'll screen tenants, and how you might get rid of any problem tenants. If you don't have answers to these kinds of questions, then you're not ready to be a renter just yet. Working with an agency that facilitates short-term rentals can help – they have experts who know how to help you handle these concerns.
Make Sure You're Insured
Opening your home to strangers can be a fantastic experience, but in some cases, it can also be an expensive experience. You need to contact your homeowner's insurance company and find out how well you're covered in the event that a renter damages your home or is injured in your home. You may need to increase your coverage, and you'll need to figure the increase in your premium into the cost of renting out the space.
Some agencies that specialize in connecting renters with short-term vacation rentals may offer coverage for a small fee, or even for free. Take advantage of any extra coverage you can get, but you should consider it supplemental to your own homeowner's insurance.
Short-term rentals aren't profitable for every homeowner, so don't buy property with extra space solely for the potential rental income. However, if you plan carefully, follow the local laws, maintain friendly relationships with the neighbors, and protect yourself from liability, you may find that being a short-term rental landlord is very profitable for you.