Rent out Your Vacation Home
For years, Europeans have rented out their homes for a few months a year while they traveled or vacationed along the Mediterranean. The idea of short term rentals of the family home is catching on in the U.S. as well. Europeans enjoy the services of rental agents who handle the bookings, scheduling and collection of rents -- not so in the U.S. So how do you protect your property and enjoy the freedom and cash flow a short term rental would provide?
Steps
- Check your homeowner's insurance policy. Most don't cover damages done by a renter, so you'll have to purchase an additional policy to cover not only your home and any contents you leave, but also liability issues in the event the renter is injured on the property.
- Make sure your local zoning regulations and homeowners association permit residential property rental. If not, you may need to obtain a variance to rent your home.
- Decide what furniture you'll leave and what will go into storage. Short term rentals, typically 4 months or less, are usually rented furnished. You'll want to make the renters feel at home, while protecting heirloom furniture and other treasured possessions. Storing them offsite is safer than simply warning tenants about fragile chairs or delicate fabrics. Consider purchasing inexpensive basic furnishings to use in place of irreplaceable family favorites.
- Remove valuables from your home. As much as you would like to trust your renters, things can disappear while owners are far away. Take family collectibles, special toys, electronics, cameras, and silver out of the house. Simply putting it out of the way in the attic or a closet is not sufficient protection for your valuables.
- Make sure appliances and mechanicals are in good working order. It's easier for you to make needed repairs or replace them before you go than to try to arrange it from another state, or worse yet, come home to find that the tenant has tried make repairs on their own!
- Hire a local property manager to handle all repairs and emergencies, or create a list of trusted service people to leave with the tenant. The former has the advantage of saving you from a tenant who calls in an expensive service person for minor repairs, while the latter means you only pay or services actually used.
- Have a cleaning service come in to thoroughly clean the house before the rental starts, then make it a contingency in the rental agreement that the tenants hire the same service to clean before they leave. This prevents disagreements when it come to security deposits.
- Get a security deposit. Even for a short term rental, you need protection against tenant damages or rent defaults.
- Run a background check on your renters and meet them in person, if possible, before the lease is signed. Basic background checks online cost anywhere from $7.95 to $150, but are well worth the money for the peace of mind they provide.
- Arrange to pay all your basic bills in advance or online. Having mail forwarded is slow and often unreliable, and could result in late payments and penalties.
- Make sure your pets have a place to go. Take them with you or board them while you are gone. Even if a neighbor offers to feed and water a pet, remember there will be strangers in your house and that could lead to bites and scratches.
- If you'll be renting to people from another city or region, leave a local reference packet with names of area businesses, a map, local emergency information, and names of neighbors. A renter who feels a part of the neighborhood is more likely to care for your home.
- Keep all expense and income records for your Federal income taxes...the revenue you receive is taxable, but you can deduct the mortgage, property taxes and relevant expenses if you keep good records.
Tips
- Create special deals and niches for groups during times that are hard to rent out. (Rent five nights and get 6th night free).
- Include taxes and cleanings fees as part of the expenses for the renter.
Warnings
- Be aware of oversea frauds that want to rent out your cabin. Do not refund people if they send you too much money. Make sure you get the correct amount before cashing the check. Some over sea people try to swindle you by sending you an amount over what is due and are expecting you to cash it then send them the rest of the money. This is fraud and the check will bounce. Be aware.
- Some communities do not allow you to rent out vacation rentals. Make sure you check in with your local community before trying.
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