Is Renting Out Your Vacation Home a Good Choice?

With the increasing popularity of vacation rental sites like Airbnb and VRBO, the prospect of renting out your vacation home to others seems easier than ever before. If you don’t plan on using your vacation home for part of the year, the potential to earn some rental income can be alluring. Ultimately, the decision on whether to rent out or not rent out your vacation home is one only you can make. Here are some things to consider. 

Find Out if Short-Term Rentals Are Allowed in Your Area 

Before you go any further, you need to check if your short-term rental will comply with local regulations. Check the city website for where your home is located to see if there are any short-term rental rules or ordinances. Confirm with local officials to be sure your home is in a zone where short-term rentals are permitted. If your home is located in a neighborhood with a HOA, check with them as well.

When Do You Plan on Using Your Vacation Home? 

Consider how often you want to use your vacation home. Is it located in an area with a peak season? If you see yourself only using the home occasionally and are okay giving up some time during the peak season, renting it out may be the way to go. On the other hand, if you want the flexibility to be able to use the property whenever you like, renting may not be the best option. To advertise the property for rent, you will have to commit to what days you will not want to use the property.

Know You May Have to Deal with Problems 

While some renters may leave your vacation home nice and tidy, others may leave the property in a less than ideal state- or worse, damaged. If you are planning on renting out your vacation home, consider the extra wear and tear and areas that could see damage. Added to this, someone who rents your vacation home and becomes injured could decide to sue you. Because of this, it is very important to let your insurance agent know about your plans to rent out your vacation home, especially if you have never done so in the past. 

Insurance for Renting Your Vacation Home

Even if you are only renting your vacation home for a short period of time, you will want to be sure you are protected both from damage done to your property as well as from any lawsuits filed against you. If you are relying on your existing homeowner’s policy to cover you, that may not be wise. Coverage can vary greatly from carrier to carrier, and some policies don’t allow for short-term rentals. Even if you are only renting out one room for a limited time span, you may find yourself with a claim that is denied.  An insurance review with your local office can help you decide if you need different or additional coverage, such as a Dwelling Policy in place.

Moving and Storing Personal Items 

If you do decide to rent your property, be sure to remove or safely lock away any valuable or personal items. This can be a deciding factor on whether or not you decide to rent out the property. If removing your clothes and other items isn’t a hassle for you, you may decide to rent. On the other hand, if you want your vacation home set up and ready for your arrival at any time, maybe it is best not to rent.

Weighing the Pros and Cons of Renting 

Every property is unique. Some financial considerations to take into account before you rent your vacation home are property management fees, taxes, home insurance costs, property repairs, and marketing costs. Depending on where your property is located, deciding to rent may be a lucrative choice for you, or it may end up costing you more time and headaches.

Suggestions for Renters 

If you do decide to rent your vacation home, here are a few suggestions.

• Be sure you have reviewed all local regulations and made the necessary accommodations.
• Take care to screen potential renters.
• Be sure to keep up with home maintenance in order to prevent injury to any of your renters.
• Supply safety equipment such as smoke and carbon monoxide detectors, fire extinguishers and first aid kits.
• Lock up valuables or remove them from the home.
• Be sure to have your mail delivered elsewhere or utilize a PO Box for delivery of mail.
• Discuss your plans to rent the property with your insurance agent early on in the process, ideally before you even advertise your property on any rental sites (and certainly before you accept any bookings).
• Create a Manual for Use of your home that includes things like instructions for use of heat, media and security to prevent damage and misuse, as well as phone numbers for local police, fire, hospitals and security.

   

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  This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.