Lakeside retreats, mountain cabins and beachfront abodes are a dream for many families, and their appeal is obvious: You have a place to escape and unwind, whenever you want it, in a destination you love to visit.
A vacation home can, however, be more than just a place you go on weekends; a second home can also serve as a source of steady income. With the ready availability of home-sharing services and smart-home accessories, it’s simpler than ever to market your home to prospective vacationers and easily manage everything from check-in to payment collection.
But before you take the plunge and rent out your vacation house, consider two essential factors. First and most important, is it legal? Some cities and counties prohibit vacation rentals, so you’ll need to check with your local clerk’s office about whether renting is legal in your area. You should also double-check the terms of your mortgage; your bank may prevent you from renting your home. If you belong to a homeowners association, you’ll also need to confirm that it allows rentals of condos or houses.
Second, can you actually turn a profit? Put together a spreadsheet that outlines the revenue from the rental versus your outlay in costs and fees. Include in your calculations maintenance, utilities, taxes, insurance, repairs, guest amenities, cleaning and whatever commission you’ll be paying if you use a managing agent or home-sharing service.
Once you know that renting is legally and financially viable, follow these steps to prepare for and manage the rental.
Setting Up Your Rental Home
❏ Safety and Insurance: Ensure that the home is equipped with smoke detectors, carbon monoxide detectors and fire extinguishers. Make certain you have an insurance policy that will cover you in the event of property damage or an accident. If insurance is included in the policy of the rental service you’re using, be sure to fully understand the company’s terms and limits.
❏ Lease: Be crystal clear with your guests about the terms of the rental. If you’re using a rental service, these terms will likely be laid out by the company. If you’re writing the lease yourself, search for boilerplate leases online and modify them as needed. Include key elements such as the dates of the stay, the payment you expect and a liability clause. It may be wise to hire a lawyer to review your lease.
❏ Marketing: Have professional-quality photos of the space taken, and pair them with a clear (and honest) description of your home’s amenities, location and other compelling selling points. The more amenities you can offer, the more appealing your property will be. Then look into home-sharing options, such as Airbnb, HomeAway or a turnkey property management company—all of which have different requirements and fee structures.
❏ Get It Ready: Lock up or remove your personal and valuable items. And be sure that whatever was promised in the description is on hand—whether it’s towels, hair dryers, TVs, Wi-Fi or free coffee.
❏ Cleaning: Will you be doing it yourself? Or hiring a local service? Be sure to factor the cost of the service and supplies into your expenditures.
Managing Renters
❏ Screen Your Guests: Glean as much information as you can about your potential guests: Ask for references, check their social media accounts if possible, and talk to them on the phone to get a better sense of their personality. If you sense any red flags, politely let them know that the place is no longer available.
❏ Letting Guests In: Will you be greeting guests when they arrive? Setting up a lockbox? Installing a smart lock? Be sure the check-in process is clearly communicated; send it to your guests in writing and in advance.
❏ Instructions: Write up a detailed list of instructions for using such things as the Wi-Fi, TV, AC, doors and windows, as well as what to do with trash, linens, etc. Leave this in a prominent place and let guests know beforehand that you’d like them to review it when they arrive. Some owners also include suggestions for nearby restaurants or a selection of take-out menus.
❏ Keep Records: You’ll have to report your rental income to the IRS, so track it carefully, along with your expenses (which may be tax-deductible). Software that specifically helps manage rental properties may help out with your record-keeping.
If you are using your homeshare as added money to help you pay down the mortgage on your vacation home, make sure that you know what percentage of the profits you’ll be saving for the payments. Include that percentage in your tracking spreadsheet and periodically check in to make sure the rental is still worth it.
Rich Beattie is a former executive digital editor of Travel + Leisure, and has written for outlets such as The New York Times, Popular Science, New York Magazine and Ski.
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