We’re all looking for extra cash these days. It’s tempting to take advantage of the explosion of interest in short-term rentals to stretch your travel budget and earn a little something for a few luxuries. All you have to do is sign up with Airbnb or another home listing site, list your home for short-term rent, and wait for the money to flow in, right? If only it were that easy. Before you take the leap, put your plan on pause and answer these three key questions: 1. Are you actually allowed to rent out your home? 2. Will you feel okay about strangers living in your personal space? and 3. Will the return you can get be worth the time and trouble?
1. Are you allowed to do it?
Before you do anything else, save yourself time, aggravation, and, possibly, money by learning whether you are subject to any laws, ordinances, rules, or regulations that govern short-term rentals.
Local Laws and Ordinances
In the pre-Airbnb era (amazingly, not even a decade ago, in 2008), few local governments paid much attention to short-term rentals. Not today. The proliferation of short-term rentals in some areas is impacting the availability of affordable long-term housing, and it’s a good bet that like San Francisco and New York, your city or county, has at least considered regulating or even prohibiting them. In June, a host in Santa Monica was hit with a substantial fine for violating the city’s new laws. Find out what applies to you.
Homeowners’ Associations and Coop Boards
Don’t belong to an HOA or a Coop? Skip this section. If you do, read your documents carefully. Many HOAs and Coops limit the ability of homeowners to rent their places, and some prohibit short-term rentals – or rentals of any kind – altogether.
Are you a tenant yourself? Read your lease. You may very well be prohibited from subletting, at least without the owner’s permission. Even if there’s no such language in the lease, it’s a good idea to check with your landlord. Otherwise, you might have to look for another place to live.
2. Will you feel okay about doing it?
My husband and I feel OK about having strangers stay in our home, as long as we have screened them very carefully and feel confident that they will take good care of everything. But I have friends who look horrified when I talk about our many short-term tenants. “How can you let strangers sleep in your bed?” said one, grimace. “What if they go through your stuff?” another told me, shaking his head at the thought.
I understand. To be comfortable doing short-term rentals, you have to feel comfortable when you visualized other people will be living in your personal space: sleeping in your bed, using your shower, or lounging on your sofa. If that thought really bothers you, look for another way to earn the extra cash you need.
3. Will the return be worth the trouble?
I’ll be frank. It’s a lot of work to rent out your home. You’d think it would get easier after the first few times, and it does. But we’ve had to find and prepare for two sets of short-term tenants this year, the first in the spring when we went to Europe, and the second in the fall before we left for New York (where we are now). It took time, attention, and energy to update our listings, field inquiries, screen tenants, work out the details, get the house ready, make sure our tenants could get in, arrange for someone to oversee things while we were away, and more.
The questions to ask yourself are: “Can I free up enough time to do everything, and do it right? ” “Can I charge enough to make a difference in my budget?” Be realistic: If the answer to either question is “probably not,” it may not be reasonable or practical to move forward.
Have you been thinking about listing your home for short-term rental? Are you on the fence? What makes you hesitate?