Do you own a second home that you rarely use? If you’re not renting it out, then you might be missing out on additional income that can supplement your expenses or can perhaps be used to purchase another home for sale.
If you want to rent out your vacation home, here are several essential things that you have to consider first:
1. Are you going to use the home?
If you use the vacation home a few times a year, renting it out for long-term tenants might be out of the question. Hence, you have to think about your plans for the home both in the immediate and faraway future. Do you want to use the vacation home at any time this year? If not, you can open your rental to tenants who want longer leases. However, keep in mind that the longer your house is occupied, the more maintenance that you have to do to keep it in good shape.
2. Is the vacation home ready to rent?
Putting your home on Airbnb, HomeStay, or other similar renting apps is a great way to find short-term renters and earn additional income. However, you have to ensure that your home is ready to accept guests in terms of safety, comfort, and aesthetics.
Before putting your home up for rent, address possible problems such as:
- Safety issues: faulty electrical wiring, broken floor tiles, uneven surfaces, inadequate lighting, poor security features, etc.
- Cosmetic issues: as peeling paint, cracks in the ceiling, outdated furniture, dirty flooring, etc.
- Comfort issues: uncomfortable beds, uneven temperatures, faulty heating and cooling, poor ventilation, etc.
If your vacation home has any pressing safety issues, you are required to perform the necessary repairs before putting the house up for rent. On the other hand, improving the appearance and comfort of the place helps attract guests to your rental.
3. Who is going to maintain the home?
Are you going to be the one to clean the house before and after each guest leaves? How about the basic preventative maintenance tasks? And routine checking whenever the house is unoccupied? If you are unable to carry out these tasks, you also have to factor in the fees of hiring people to do them for you.
4. How are guests going to check in?
If you don’t live near your vacation home, how are guests going to check in the unit? Using keyless entry or having a key lockbox at the door are two standard options. Alternatively, you can pay a neighbor to let guests into the house with a spare key. But in any case, proper communication is vital to ensure that guests have a smooth check-in and check-out experience.
5. What taxes do you have to pay?
Depending on your locality, you might be required to pay resort or occupancy taxes if you decide to rent out your vacation home. Check with your city or town to find out if you are required to pay certain fees or taxes, then hire someone to take care of it if you are too busy to do so yourself.
6. Are you ready for the possible risks?
- Damage to your property, whether intentional or accidental
- Lawsuits when a guest is injured on your property
- Criminal activities i.e., illicit drug use
- General wear and tear
To protect yourself against financial obligations when something is damaged on your property, charge a security deposit that can cover possible damage. Moreover, don’t rent out your property without securing homeowner’s insurance or a rental homeowner’s policy. These policies will protect you in case of accidents that happen on your property.
7. Can you market your property?
Do you have the time or skills to market your rental property? If not, factor in the costs that come with hiring a marketing person to manage your rental listing online and answer inquiries of potential guests. You can also hire a freelancer to do this, especially if you are renting the property on and off.
Renting out your vacation home is an excellent way to maximize your investment and earn additional income. However, keep in mind that putting up your home for rent comes with many challenges and risks that you have to be ready for. Hence, before you rent out your vacation home, evaluate all the pros and cons thoroughly.