Difference between revisions of "Turn Your Home or Condo Into a Vacation Rental"
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==Steps== | ==Steps== | ||
===Planning to Rent=== | ===Planning to Rent=== | ||
| − | #Determine whether or not your property would make a suitable vacation rental. Before you invest a lot of time and money getting ready to rent, you should first ensure that your home is rentable. Is it in a desirable location? Is it near popular attractions in your town? Does the home have any amenities or unique features that would make it particularly desirable?<ref>http://www.mypersonalfinancejourney.com/2013/08/converting-home-to-vacation-rental-property.html</ref> | + | #Determine whether or not your property would make a suitable vacation rental. Before you invest a lot of time and money getting ready to rent, you should first ensure that your home is rentable. Is it in a desirable location? Is it near popular attractions in your town? Does the home have any amenities or unique features that would make it particularly desirable?<ref name="rf1">http://www.mypersonalfinancejourney.com/2013/08/converting-home-to-vacation-rental-property.html</ref> |
#*If there are other vacation rentals in your neighborhood, that is an excellent sign that your home is rentable. | #*If there are other vacation rentals in your neighborhood, that is an excellent sign that your home is rentable. | ||
#*Search an online site like Airbnb for highly-rated listings in your area. Are there many listings in your area? Does your home offer similar amenities? Are you willing to add or upgrade amenities to make the home a desirable rental? | #*Search an online site like Airbnb for highly-rated listings in your area. Are there many listings in your area? Does your home offer similar amenities? Are you willing to add or upgrade amenities to make the home a desirable rental? | ||
| − | #Make sure you can legally rent out your home or condo. There are numerous levels of laws and restrictions that might regulate rental homes in your area. Do your research now to avoid paying expensive fines in the future. <ref>http://time.com/money/2802450/vacation-rental-should-you-rent-out-your-home-to-guests/</ref> | + | #Make sure you can legally rent out your home or condo. There are numerous levels of laws and restrictions that might regulate rental homes in your area. Do your research now to avoid paying expensive fines in the future. <ref name="rf2">http://time.com/money/2802450/vacation-rental-should-you-rent-out-your-home-to-guests/</ref> |
#*City and county codes often restrict or regulate rentals. To learn the laws in your area, you can begin with a web search for "City of (Your Town) rental regulations," or by calling your city's main office or information number to begin tracking this information down. | #*City and county codes often restrict or regulate rentals. To learn the laws in your area, you can begin with a web search for "City of (Your Town) rental regulations," or by calling your city's main office or information number to begin tracking this information down. | ||
#*If you own the property, the terms of your mortgage may include restrictions on renting out the home, especially within the first year. Read your mortgage agreement carefully, or call your lending agent for clarification. | #*If you own the property, the terms of your mortgage may include restrictions on renting out the home, especially within the first year. Read your mortgage agreement carefully, or call your lending agent for clarification. | ||
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#*Many homeowners' associations include restrictions on renting and subletting. While many people see these organizations as toothless annoyances, an active HOA can have a lot of power to levy fines against you and your property so it pays to take them seriously. | #*Many homeowners' associations include restrictions on renting and subletting. While many people see these organizations as toothless annoyances, an active HOA can have a lot of power to levy fines against you and your property so it pays to take them seriously. | ||
#Decide if you want to rent seasonally, year-round, or as a short-term vacation swap. You may just want to rent your home out for a few weeks while you are on vacation, or turn it into a permanent rental property. Think carefully about what you want to do, so that you can prepare accordingly. | #Decide if you want to rent seasonally, year-round, or as a short-term vacation swap. You may just want to rent your home out for a few weeks while you are on vacation, or turn it into a permanent rental property. Think carefully about what you want to do, so that you can prepare accordingly. | ||
| − | #*Some locations have very different regulations on short-term and long-term rental properties. These vary widely from place to place, so learn about the laws in your area before you commit to a rental plan.<ref>http://www.nytimes.com/2014/10/16/business/airbnb-listings-mostly-illegal-state-contends.html?_r=0</ref> | + | #*Some locations have very different regulations on short-term and long-term rental properties. These vary widely from place to place, so learn about the laws in your area before you commit to a rental plan.<ref name="rf3">http://www.nytimes.com/2014/10/16/business/airbnb-listings-mostly-illegal-state-contends.html?_r=0</ref> |
| − | #*New York City, for example, prohibits short-term rentals of less than 30 days, making the use of sites like AirBnB in these areas illegal in many cases.<ref> http://ny.curbed.com/archives/2013/03/25/an_introduction_to_new_yorks_short_term_rental_laws.php</ref> | + | #*New York City, for example, prohibits short-term rentals of less than 30 days, making the use of sites like AirBnB in these areas illegal in many cases.<ref name="rf4"> http://ny.curbed.com/archives/2013/03/25/an_introduction_to_new_yorks_short_term_rental_laws.php</ref> |
#Decide if you want to rent your whole home, or only a room or two. If you are thinking about renting out only a portion of your home, think carefully about what that will entail to determine if you are up for the challenge. Some key questions to ask yourself might include: | #Decide if you want to rent your whole home, or only a room or two. If you are thinking about renting out only a portion of your home, think carefully about what that will entail to determine if you are up for the challenge. Some key questions to ask yourself might include: | ||
#*Do you engage well with strangers? Can you make people feel welcome and at home? | #*Do you engage well with strangers? Can you make people feel welcome and at home? | ||
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#*If you are thinking about renting the entire home: are you prepared for the eventuality that your home and landscaping will suffer from substantial wear and tear and possible damage? | #*If you are thinking about renting the entire home: are you prepared for the eventuality that your home and landscaping will suffer from substantial wear and tear and possible damage? | ||
===Getting your Home Ready to Rent=== | ===Getting your Home Ready to Rent=== | ||
| − | #Keep careful records. Rental income is taxable, but many of the expenses you will incur as you prepare your rental are tax deductible. Keep detailed records of the money and time you spend getting your home ready to rent so that you can maximize your deductions at tax time.<ref>https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Rental-Property-Deductions-You-Can-Take-at-Tax-Time/INF26315.html</ref> | + | #Keep careful records. Rental income is taxable, but many of the expenses you will incur as you prepare your rental are tax deductible. Keep detailed records of the money and time you spend getting your home ready to rent so that you can maximize your deductions at tax time.<ref name="rf5">https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Rental-Property-Deductions-You-Can-Take-at-Tax-Time/INF26315.html</ref> |
#*It might be helpful to purchase one of the many software programs available that are specifically designed to help manage rental properties. | #*It might be helpful to purchase one of the many software programs available that are specifically designed to help manage rental properties. | ||
| − | #Apply for a rental permit. Permits are not necessary in all areas, especially for short-term rentals, but many cities are responding to the growth of new rental trends by creating new forms of regulation. If a permit is required in your area, give yourself plenty of time to get through the application process before your first guests arrive.<ref>http://www.portlandoregon.gov/bds/65603</ref> | + | #Apply for a rental permit. Permits are not necessary in all areas, especially for short-term rentals, but many cities are responding to the growth of new rental trends by creating new forms of regulation. If a permit is required in your area, give yourself plenty of time to get through the application process before your first guests arrive.<ref name="rf6">http://www.portlandoregon.gov/bds/65603</ref> |
#*The kind of permits you will need and the process for getting them varies ''widely'' from location to location. Once you have determined the kind of rental you want to offer, contact your city or county government for specific instructions for getting the permits you need. | #*The kind of permits you will need and the process for getting them varies ''widely'' from location to location. Once you have determined the kind of rental you want to offer, contact your city or county government for specific instructions for getting the permits you need. | ||
#*Be aware that in some locations, getting a rental permit can be a fairly extensive process that requires an inspection by the city, a notification letter to go out to your neighbors, and the payment of a permitting fee. | #*Be aware that in some locations, getting a rental permit can be a fairly extensive process that requires an inspection by the city, a notification letter to go out to your neighbors, and the payment of a permitting fee. | ||
#*Remember that permitting and inspection fees, like all other expenses you incur while preparing your rental property, are tax deductible so be sure to keep careful records. | #*Remember that permitting and inspection fees, like all other expenses you incur while preparing your rental property, are tax deductible so be sure to keep careful records. | ||
| − | #Acquire landlord insurance. Call your insurance agent and ask if your current homeowner's policy will cover the kind of rental situation you are planning. Many policies will cover the occasional short-term rental, but for more long-term arrangements, you will need special coverage.<ref>http://www.bankrate.com/finance/insurance/renting-out-a-home-get-right-insurance-1.aspx</ref> | + | #Acquire landlord insurance. Call your insurance agent and ask if your current homeowner's policy will cover the kind of rental situation you are planning. Many policies will cover the occasional short-term rental, but for more long-term arrangements, you will need special coverage.<ref name="rf7">http://www.bankrate.com/finance/insurance/renting-out-a-home-get-right-insurance-1.aspx</ref> |
| − | #Prepare your home to rent, inside and out. Make sure that all appliances work, that furniture is comfortable and in good repair, and that everything is clean and neat. Ensure that safety equipment like smoke detectors, carbon monoxide detectors, and fire extinguishers are in good working order and are clearly accessible. Remove all precious personal belongings to a secure location, such as a storage unit or primary home. Do the same with all toiletries and anything else you wouldn't want a stranger snooping through. Put clean linens on all of the beds, and make sure that bathrooms are stocked with clean towels, soap dispensers a full, etc.<ref>http://realsavvyrealestate.com/home-ownership-advice/savvy-income-sources-vacation-rental/</ref> | + | #Prepare your home to rent, inside and out. Make sure that all appliances work, that furniture is comfortable and in good repair, and that everything is clean and neat. Ensure that safety equipment like smoke detectors, carbon monoxide detectors, and fire extinguishers are in good working order and are clearly accessible. Remove all precious personal belongings to a secure location, such as a storage unit or primary home. Do the same with all toiletries and anything else you wouldn't want a stranger snooping through. Put clean linens on all of the beds, and make sure that bathrooms are stocked with clean towels, soap dispensers a full, etc.<ref name="rf8">http://realsavvyrealestate.com/home-ownership-advice/savvy-income-sources-vacation-rental/</ref> |
| − | #*The requirements for safety equipment in rental properties vary widely by region. Smoke detectors are the bare minimum in most places. You will be informed of further requirements through the permitting process.<ref> http://journal.firsttuesday.us/clearing-up-smoke-alarm-laws-for-residential-properties/36486/</ref> | + | #*The requirements for safety equipment in rental properties vary widely by region. Smoke detectors are the bare minimum in most places. You will be informed of further requirements through the permitting process.<ref name="rf9"> http://journal.firsttuesday.us/clearing-up-smoke-alarm-laws-for-residential-properties/36486/</ref> |
#*Unless you are going for a very high-end rental, do not furnish your rental with extremely expensive furniture, linens, towels, etc. These items are likely to get damaged or disappear. Look for items of decent quality that are not too expensive. | #*Unless you are going for a very high-end rental, do not furnish your rental with extremely expensive furniture, linens, towels, etc. These items are likely to get damaged or disappear. Look for items of decent quality that are not too expensive. | ||
| − | #Hire a reputable cleaning service. Some property managers are able to minimize costs by performing rental clean-outs on their own, but this can be a very time-consuming and difficult process, so it might be better worth your time to hire a professional service. If you do, be sure to do some research first and hire a reputable company that is licensed and insured.<ref>https://www.rentalutions.com/blog/secrets-of-writing-rental-listings/</ref> | + | #Hire a reputable cleaning service. Some property managers are able to minimize costs by performing rental clean-outs on their own, but this can be a very time-consuming and difficult process, so it might be better worth your time to hire a professional service. If you do, be sure to do some research first and hire a reputable company that is licensed and insured.<ref name="rf10">https://www.rentalutions.com/blog/secrets-of-writing-rental-listings/</ref> |
#*Get personal recommendations from other property owners, or look for a service with excellent online recommendations. | #*Get personal recommendations from other property owners, or look for a service with excellent online recommendations. | ||
| − | #Hire a landscaping service. As with cleaning, some property owners take on landscaping chores themselves, but for a long term rental situation, you may be better off hiring a landscaping service to take care of routine lawn maintenance and care. Landscaping services, like cleaning services and other maintenance costs are all tax deductible, and a well-maintained is more likely to get good reviews and repeat renters. <ref>http://www.angieslist.com/articles/5-tips-hiring-best-landscaping-contractor.htm</ref> | + | #Hire a landscaping service. As with cleaning, some property owners take on landscaping chores themselves, but for a long term rental situation, you may be better off hiring a landscaping service to take care of routine lawn maintenance and care. Landscaping services, like cleaning services and other maintenance costs are all tax deductible, and a well-maintained is more likely to get good reviews and repeat renters. <ref name="rf11">http://www.angieslist.com/articles/5-tips-hiring-best-landscaping-contractor.htm</ref> |
#*Look for a landscaper that is licensed and bonded, with a good reputation. | #*Look for a landscaper that is licensed and bonded, with a good reputation. | ||
| − | #Create a system for providing a key or entry instructions to your guests. If you are local, you may choose to meet the renter at the property and let them in. Some property owners also install lock boxes on site, or keyless locks that require a code. Some renters even snail mail keys to their guests, but this is a risky and potentially messy protocol and should be avoided.<ref>https://community.homeaway.com/docs/DOC-1329</ref>. | + | #Create a system for providing a key or entry instructions to your guests. If you are local, you may choose to meet the renter at the property and let them in. Some property owners also install lock boxes on site, or keyless locks that require a code. Some renters even snail mail keys to their guests, but this is a risky and potentially messy protocol and should be avoided.<ref name="rf12">https://community.homeaway.com/docs/DOC-1329</ref>. |
#*Send your guests detailed information on how to gain entry to your property before they arrive. There is nothing more frustrating than arriving at a rental home, only to discover you have no idea how to enter the parking garage or don't know what floor your rental is one. | #*Send your guests detailed information on how to gain entry to your property before they arrive. There is nothing more frustrating than arriving at a rental home, only to discover you have no idea how to enter the parking garage or don't know what floor your rental is one. | ||
#*If your condo requires an entry code to get into the lobby or parking area, be sure to give that to guests before they arrive. | #*If your condo requires an entry code to get into the lobby or parking area, be sure to give that to guests before they arrive. | ||
| − | #Create a welcome book or informational packet to give to renters when they arrive. Include information about the home and your rental and checkout policies. Also give information on local attractions and dining options, and emergency contact information. Leaving a welcome gift like a fruit basket or bottle of wine is another great way to welcome guests and improve your online reviews.<ref>http://blog.evolvevacationrental.com/how-to-guide-compiling-a-welcome-book-for-your-vacation-rental-home</ref> | + | #Create a welcome book or informational packet to give to renters when they arrive. Include information about the home and your rental and checkout policies. Also give information on local attractions and dining options, and emergency contact information. Leaving a welcome gift like a fruit basket or bottle of wine is another great way to welcome guests and improve your online reviews.<ref name="rf13">http://blog.evolvevacationrental.com/how-to-guide-compiling-a-welcome-book-for-your-vacation-rental-home</ref> |
===Finding Renters=== | ===Finding Renters=== | ||
| − | #Take high quality photographs of your rental property. The vast majority of vacationers find their rentals online, and the quality of the photographs in the listing make a huge difference in what property they choose.<ref>https://www.rentalutions.com/blog/rent-your-home-fast-with-great-pictures/</ref> Make sure your photographs are properly lit, and accentuate the special amenities in your home. | + | #Take high quality photographs of your rental property. The vast majority of vacationers find their rentals online, and the quality of the photographs in the listing make a huge difference in what property they choose.<ref name="rf14">https://www.rentalutions.com/blog/rent-your-home-fast-with-great-pictures/</ref> Make sure your photographs are properly lit, and accentuate the special amenities in your home. |
#*If you do not have a good camera, or are not skilled at this kind of photography, consider hiring a real estate photographer in your area. The cost is a lot lower than you might expect, and the results will be exactly what a would-be renter is looking for. | #*If you do not have a good camera, or are not skilled at this kind of photography, consider hiring a real estate photographer in your area. The cost is a lot lower than you might expect, and the results will be exactly what a would-be renter is looking for. | ||
| − | #Prepare a written description of your property and its amenities. Look at the kinds of websites you hope to list on, and read through several highly-rated listings to get an idea of what a successful listing includes. Your listing should ideally be concise, engaging, and clearly highlight the amenities you are offering. Be sure to make it clear how many rooms you have available, and how many people they can accommodate. <ref | + | #Prepare a written description of your property and its amenities. Look at the kinds of websites you hope to list on, and read through several highly-rated listings to get an idea of what a successful listing includes. Your listing should ideally be concise, engaging, and clearly highlight the amenities you are offering. Be sure to make it clear how many rooms you have available, and how many people they can accommodate. <ref name="rf10" /> |
#*Don't neglect to mention any important limitations your property might have, such as being handicap inaccessible, or having limited parking. | #*Don't neglect to mention any important limitations your property might have, such as being handicap inaccessible, or having limited parking. | ||
#Draft a strong rental agreement or contract that protects both you and the renter. Most home rental websites offer rental agreement templates that you can use a starting place. However, you should ''strongly'' consider hiring a lawyer to help you tailor the agreement to local regulations and conditions. At minimum, your rental agreement should stipulate the following: | #Draft a strong rental agreement or contract that protects both you and the renter. Most home rental websites offer rental agreement templates that you can use a starting place. However, you should ''strongly'' consider hiring a lawyer to help you tailor the agreement to local regulations and conditions. At minimum, your rental agreement should stipulate the following: | ||
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#*It should clearly state that the renter will be liable for damages to the property, and describe the recourse you may take (security deposit, fines, etc.) if violations occur. | #*It should clearly state that the renter will be liable for damages to the property, and describe the recourse you may take (security deposit, fines, etc.) if violations occur. | ||
#*It must also specify the kind and amount of notice that must be given by the landlord or tenant to make changes to the agreement or vacate the property. | #*It must also specify the kind and amount of notice that must be given by the landlord or tenant to make changes to the agreement or vacate the property. | ||
| − | #*It is possible to get free advice online for drafting these agreements, but consulting with a lawyer is by far the safest bet.<ref>http://rent-roll.softwareadvice.com/lease-amendments-to-make-airbnb-work-for-you-0613/</ref> | + | #*It is possible to get free advice online for drafting these agreements, but consulting with a lawyer is by far the safest bet.<ref name="rf15">http://rent-roll.softwareadvice.com/lease-amendments-to-make-airbnb-work-for-you-0613/</ref> |
| − | #List your property online. There are many ways to list your property online. For the occasional short term rental, you might consider using Craigslist or AirBnB. If you want to rent the property on a long term basis, you might look to sites like Homeaway and VRBO.com. Each site offers different services and clientele. Look at the options that are available, and choose the site that seems best suited to your situation.<ref>http://www.vacationrentalpartners.co/marketing-tips/top-10-best-vacation-rental-websites</ref> | + | #List your property online. There are many ways to list your property online. For the occasional short term rental, you might consider using Craigslist or AirBnB. If you want to rent the property on a long term basis, you might look to sites like Homeaway and VRBO.com. Each site offers different services and clientele. Look at the options that are available, and choose the site that seems best suited to your situation.<ref name="rf16">http://www.vacationrentalpartners.co/marketing-tips/top-10-best-vacation-rental-websites</ref> |
#*Some listing sites offer free initial listings and only charge a fee when a reservation is made, whereas some charge an annual subscription fee. Remember that listing fees are tax deductible. | #*Some listing sites offer free initial listings and only charge a fee when a reservation is made, whereas some charge an annual subscription fee. Remember that listing fees are tax deductible. | ||
| − | #*You may want to consider listing your rental on multiple sites. While this may cost more in terms of setup time and subscription fees, it will help publicize your property and ensure as few vacancies as possible.<ref>https://community.homeaway.com/docs/DOC-1460</ref> | + | #*You may want to consider listing your rental on multiple sites. While this may cost more in terms of setup time and subscription fees, it will help publicize your property and ensure as few vacancies as possible.<ref name="rf17">https://community.homeaway.com/docs/DOC-1460</ref> |
| − | #Consider using a rental agent or property management company. Property management companies take a lot of the stress out of renting by advertising and managing your vacation home for you. But they also take a significant chunk of the profit; as much as 20 and 50% of the rental income goes to the company as commission.<ref>https://community.homeaway.com/docs/DOC-1291</ref> | + | #Consider using a rental agent or property management company. Property management companies take a lot of the stress out of renting by advertising and managing your vacation home for you. But they also take a significant chunk of the profit; as much as 20 and 50% of the rental income goes to the company as commission.<ref name="rf18">https://community.homeaway.com/docs/DOC-1291</ref> |
#*Be sure to vet potential property managers thoroughly. | #*Be sure to vet potential property managers thoroughly. | ||
#*Get recommendations from friends or online, and ask a lot of questions before you decide on a management company. | #*Get recommendations from friends or online, and ask a lot of questions before you decide on a management company. | ||
#*Be aware that for a smaller commission, you can also hire a property manager to perform certain tasks for you, like advertising and booking, while leaving other tasks like maintenance and cleaning up to you. | #*Be aware that for a smaller commission, you can also hire a property manager to perform certain tasks for you, like advertising and booking, while leaving other tasks like maintenance and cleaning up to you. | ||
#*Some people know that they want to use a property manager from the outset, but others choose to take a shot at managing their property themselves at first to see how it goes. | #*Some people know that they want to use a property manager from the outset, but others choose to take a shot at managing their property themselves at first to see how it goes. | ||
| − | #Screen your guests carefully. Inviting strangers into your rental home can be a nerve-wracking, risky process. Create a protocol for screening new guests that will help alleviate some of your fears.<ref>https://community.homeaway.com/docs/DOC-1676</ref> | + | #Screen your guests carefully. Inviting strangers into your rental home can be a nerve-wracking, risky process. Create a protocol for screening new guests that will help alleviate some of your fears.<ref name="rf19">https://community.homeaway.com/docs/DOC-1676</ref> |
#*Speak to each potential renter on the phone before accepting the booking. Ask about the purpose of the trip, whether or not the person has stayed in a vacation rental before, and about how many adults and children will be staying. | #*Speak to each potential renter on the phone before accepting the booking. Ask about the purpose of the trip, whether or not the person has stayed in a vacation rental before, and about how many adults and children will be staying. | ||
| − | #*Ask for personal references from your renters, and check them out on social media before you decide.<ref>http://www.moneysense.ca/invest/how-to-turn-your-property-into-a-vacation-rental/</ref> | + | #*Ask for personal references from your renters, and check them out on social media before you decide.<ref name="rf20">http://www.moneysense.ca/invest/how-to-turn-your-property-into-a-vacation-rental/</ref> |
#*Online rental sites track reviews not just for properties, but for guests, which might be another incentive to list online. | #*Online rental sites track reviews not just for properties, but for guests, which might be another incentive to list online. | ||
#*Ask for a deposit. Requesting a deposit that is between 15% to 20% of the rental fee is another way to prescreen guests, and will help pay for damages if they do occur. | #*Ask for a deposit. Requesting a deposit that is between 15% to 20% of the rental fee is another way to prescreen guests, and will help pay for damages if they do occur. | ||
