Practical Considerations

Today’s low, low mortgage interest rates might have you thinking , “Maybe I should buy a second home for short-term rental.” This post, which we first ran in 2017, can help you decide.

Wouldn’t it be nice to have a second home? A little casita in Santa Fe or a small apartment in Manhattan? A cottage on the lake? You’d have a place of your own in a favorite destination, and you could use it as a short-term rental when you weren’t using it.

That’s what we did when our grandkids were small and living in San Francisco (they’re teenagers now!). With the help of a small inheritance, we bought a small condo nearby. When we weren’t using our unit, we rented it to short-term guests. It was perfect.

This post originally ran in August 2018. The COVID-19 pandemic is a wakeup call to consider unexpected events when thinking about whether you can really make money using your home as a short-term rental.

At least 75 U.S. hosts on the Internet home-sharing service [Airbnb] are grossing more than $1 million in rental income a year. That’s $2,739 a day or $19,230 a week. Forbes.com, “The 75 People Who Make $1M A Year From Airbnb.”

$1 million a year?  That’s a lot of money! Makes you wonder, “Could I do that, too?”

Maybe….but don’t count on it. Those hosts either have very special homes that are rented out all year long, or they are “multi-property” hosts who rent out several homes at a time.

Chances are that few of us who use our homes as short-term rentals will hit the $1 million mark, or even come close.

Still, being a short-term rental host must pay off in some way; otherwise, why do so many people list their homes on Airbnb, VRBO, and other short-term rental sites?

The question is, would using your home as a short-term rental be worthwhile for you? Before you quit your day job, put the issue in perspective by considering these 5 questions.

 1. Are you ready to run a business?

That’s right.  Unless you have guests for only 14 or fewer days a year, using your home or second home as a short-term rental means you’ll be running a business.

We recently discussed short-term rental taxes with expert Rob Stephens, co-founder and general manager of Avalara MyLodgeTax.  Here’s what he told us.

Do all states and local governments charge tax on short-term rentals?

Nearly all locations in the U.S. collect lodging tax on short-term rentals.  There are a few exceptions, like Massachusetts, where single-family homes or very small operators are excluded from any lodging tax liability, but that is unusual. [Read more…] about An Expert Discusses Short-Term Rental Taxes

Thanks to Madison Blancaflor  and BankRate.com for this guest post.

The number of short-term rentals hosted by people 60 years and older has grown by nearly 1,100 percent over the past year. In fact, the United States tops Airbnb’s list of countries with the most hosts in that age group.

Retiring (and aging as a whole) is sometimes associated with loneliness and withdrawal from social activities, but statistics prove that is far from the truth. Retirees actually comprise more than 50% of senior hosts on Airbnb.

Guest Post by Dawn Royski of ShareTraveler.com

The point of a travel insurance policy to protect yourself in case you have to cancel a trip. These policies reimburse you for airline tickets, prepaid lodging, and other non-refundable purchases (depending on the specific coverage), and many also provide emergency medical evacuation.

The tricky question is whether the risk is high enough that it’s worth spending the money to buy travel insurance for a home exchange. [Read more…] about Should You Buy Travel Insurance for a Home Exchange?