With the rise of home-sharing services like Airbnb, HomeAway and others, you might think that renting your home — or just a room in it — is an easy way to earn extra income. But it may not be as simple as that. There are several things to consider before you seek out short-term renters online.
Is it legal?
Start by finding out if local laws (and even your homeowners association) allow you to rent out your home. Some communities simply don’t allow it or only permit long-term leases. Others require certain permits or licenses before they do. Many areas, like Chicago, are currently in the midst of creating new laws.
Will insurance protect you?
Conventional homeowners insurance may not cover you when something goes wrong with a paying guest. You may need to add more coverage or buy an entirely different policy, like landlord or business insurance, to ensure you have safeguards in place.
What are the fees and costs?
Home-sharing sites usually charge a service fee on each booking, but there are other costs to consider. For instance, some communities require you to pay a hotel tax. And if you rent out your place for more than 14 days a year, the IRS will expect a cut too.
Are there services to help?
A whole cottage industry of companies has cropped up to support landlords with bookings, cleanings, key services and other tasks associated with short-term rentals. While they can take most of the work out of the process, keep in mind that they’ll take a bite out of your profits too.
If you’ve decided to give it a go, don’t forget that little touches — like a bowl of fruit or a handwritten note — are the hallmarks of a good host and can make repeat patrons out of your guests.