If you live in an area with a fair amount of tourism or appeal to visitors for weekend travel, the idea of turning your home into a vacation rental for a little extra cash might be tempting. It can certainly go a long way toward paying off your mortgage on a second home or vacation home of your own – especially if your main home would otherwise sit empty for days or weeks at a time.
Here are some important considerations when turning your home into a vacation rental:
Assessing the opportunity
The first thing you want to do is check out the local market for the type of vacation rental you would be offering. You want to look at the availability of rental homes, key details about the rental homes and the prices people command for renting out their home to visitors. Don’t forget to check out hotel prices in the area, as well as other vacation home rentals.
You want your home to be an affordable and viable alternative to hotels for families, couples and small groups interested in your area. Checking out the prices of other options gives you the tools you need to create a rental price for your home that is competitive, but fair.
Dos and don’ts
- Hire a management service. They will deal with things like the vetting of guests, listing your home online and other details and legalities on your behalf for a small percentage of booking fees.
- Invest in a quality and reputable cleaning service. That will save you the hassle of cleaning after each guest, and can ensure that your rental property is always in showroom shape.
- Make sure that renting your home is permissible in your city and with your association (if your home is in a community that has a homeowner’s association).
- Invest in adequate liability insurance. Also, check with your insurance company to make sure that you are protected from damage done by guests.
- Advertise your home for rent. There are numerous free or highly-affordable advertising opportunities to showcase your vacation rental, including sites like craigslist, Airbnb and HomeAway™.
- Do not rent your home to someone that hasn’t been vetted. You don’t want your home to become the host of an underage drinking party, nor do you want people known for criminal activities operating out of your home either. That is where property management services reign supreme by doing the vetting for you.
- Do not rent your home without the right kinds of insurance coverages. That protects you and your guests should something terrible occur during their stay.
- Do not forget to create a list of ground rules for tenants to follow. Also, remember to stock your home with a few necessities they are free to use (e.g., bath linens, sheets, cleaning products, garbage bags, basic kitchen supplies and other items to keep your place tidy).
The dollar signs of vacation rentals are certainly appealing. Don’t let them interfere with a few essential practicalities before you dive right in. These tips will help.
Thinking about buying a second or vacation home?
Old National can help. Find an Old National mortgage expert near you and start your application online.
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