Going away this summer? One of the best (and easiest) ways to earn passive income while you’re gone is to rent out your home for the summer. Renting out your house seasonally can be lucrative, but first you have to do your research and learn how to best advertise, price and prepare. Here’s how.
1. Big Brother (or at least the neighbors) could be watching
Research all local and state regulations regarding short-term leasing. More towns are cracking down on homeowners renting to vacationers, so make sure you check if there are any limits on how long and how often you can rent.
2. More renting means more taxes
Check with your accountant before signing a rental agreement. Unlike hotels, vacation rentals aren’t zoned as commercial properties and aren’t subject to some specific taxes. But if you rent your home for more than 14 days, you are legally considered a landlord and must report your income on your taxes, according to the IRS.
3. Location & advertising
You’ll have to decide how much time and money you are going to invest in advertising. If you’re renting in a hot tourist destination at the peak of the season, a simple Craigslist ad (which is free) might be enough.
Or try posting on Airbnb, VRBO/HomeAway or another third party marketplace site. Be sure to first research their variable service fees before listing your home.
Renting via Airbnb? This checklist is all you need to become a host.
4. Analyze other rentals to determine pricing
Even if you’re aren’t using third party sites to rent your place, analyze their posts, along with newspaper and news website ads, to help determine your rent price. If the place has amenities, including a washer, dryer, dishwasher, pool, outdoor shower, extra bedrooms or full baths, free Wifi, parking, cable or close proximity to a beach, consider upping your price.
If your place rents out quickly and you see other listings going for more, you be pricing too low. If you have trouble renting, your rent may be too high.
5. Learn about your potential tenants
You can operate solely online, but getting on the phone with potential tenants can tell you a lot about them in advance, said Carl Nocera, who has been successfully renting out houses at the Jersey Shore since 1986.
“I always talk to people on the phone before renting to them,” he said. “You can learn a lot more about someone from talking to them on the phone instead of texting.”
VRBO does not allow landlords and renters to talk to each other until after the rental agreement is signed, which, along with the cost, is one of the reasons he tries to avoid using the site.
Communicating effectively through every step of the rental process and making people feel at home are the best ways to attract responsible tenants and keep them coming back, Nocera said.
(Here are more side hustles that cost nothing to start.)
6. Include clear cancellation & security deposit policies
Whether you are renting out the property on your own or using an online rental marketplace, make sure the cancellation and refund policies are clearly spelled out and agreed to in the contract. That goes for you or your tenant.
If you’re using a third party booker, research their company on the Better Business Bureau’s website to see if there are any complaints from owners or renters.
7. Declutter, repair & clean
Your tenants will want your place to be at least as clean as their own home. If you are renting out your primary residence, clear as much clutter as possible.
Put any important records, mail or anything of monetary or sentimental value in a secure location outside the home. Seal up any gaps around the tubs. Eliminate mold and do any needed household repairs, especially to windows, doors and locks. Empty the closets and vacuum inside. Most vacationers will want space in there. (Here are items every host should have in their kitchen.)
The more time you put into creating a pristine setting, the more at home your guests will feel. Happy guests are a lot more likely to write happy reviews and come back.
8. List any specific demands in the rental agreement
If you want your renters to clean beyond just straightening up, put it in the contract.
If renters only straighten up but you still withhold part of their security deposit, you may land a bad review.
Note: Before you decide to rent out your property, make sure to read over your homeowners insurance contract. Here’s a primer on insurance for rental properties.
Image: Evelyn Page
Ready to shop for life insurance?