The intersection of technology and the global travel market is creating opportunities for both traveler and homeowner. Many homeowners have heard about the surging popularity of home rental sites including Airbnb, VRBO and HomeAway.
Sites such as these make it easier for homeowners to enter the home rental business. But listing the home is only the first step, and there are other things to consider.
If you have clients thinking about renting out their homes this summer, here are a few areas you can advise them to consider that will help ensure a successful venture:
1. Who’s in charge of renting: a property manager or the homeowner?
The first step is to determine whether to go it alone or to hire a property manager. Renting the property solo can be a great option, but it requires personal involvement. Your client will need to interact with the guests, keep track of scheduling, collect funds and follow up on any issues.
However, a property manager will handle all those details for you but will charge a commission, usually in the 20-35 percent range.
It’s incredibly important to make sure to hire an excellent property manager. If your client does decide to use a property manager, tell them to make sure the manager knows what is expected out of the rental process and estimated rental income.
I often hear testimonials from customers who are not getting many bookings from their manager. If your manager isn’t effective, consider hiring a new manager or renting the property through an online platform. In the end, don’t be afraid to make a change or try something new.
2. Advertise and price correctly
One of the most important areas to consider when renting a home is the best way to advertise the rental to reach interested travelers. Usually the large, established vacation rental sites, such as Airbnb and HomeAway, are an efficient and safe way to get started.
Most sites have pay-per-booking pricing models, where fees are charged only when you secure a booking. It’s a low-risk and easy way to get started without committing to annual listing fees.
Help your clients price their property correctly, so they don’t price out of the market. At a minimum, tell them to compare their property size and location to what other properties are charging for nightly rates in the area.
If it’s a two-bedroom condo across the street from the beach, most likely they can’t expect as much as the four-bedroom beachfront home. With a little research by reviewing similar listings on other websites, it’s not too hard to get a feel for the market.
Some homeowners will be lucky enough to be in areas where there are special events that create significant demand — such as the U.S. Open in the Seattle area or the pope’s visit to Philadelphia. For these events, it’s not uncommon to rent an average home in the area for $10,000 to $20,000 for the week.
3. Save the headache and get compliant before renting
It’s important for rental owners to realize that in renting out their home they are running a small business. Running a business means there are regulations and tax issues to be addressed.
States and cities require short-term rentals to pay a lodging tax, so it’s important for homeowners to understand this tax — or use a service to handle this.
By renting their home, even for a few weeks, they are basically operating a small hotel. It is important to be registered, and they need to remit the correct amount of taxes to keep themselves compliant.
Taxes and licenses can be confusing for rental owners, so they might want to consider getting help with this requirement.
4. Build a reliable turnover staff
If they’re planning to rent out the home on an ongoing basis and are thinking of doing the in-between work themselves, this might get old fast.
With reliable, professional turnover staff — cleaning crew, landscapers and pool cleaners — this work can be done quickly and efficiently.
Although there is a cost involved with professional maintenance, it saves time and stress — and cleaning crews might do a much better job. In the long run, your clients and their renters will likely appreciate the professional work.
The checkout cleaning crew is an especially critical operational part in the entire process. In peak rental seasons, many owners have guests checking out in the morning and a different group checking in during the afternoon.
A reliable cleaning service helps keep the process running smoothly. If service fails at this level, it is an enormous headache. Fortunately for me, this has only happened once in the 15 years I have been renting my Colorado property.
When managed properly, renting a home can be an excellent way to earn some extra cash this summer. But tell clients to think of it as a business and use many of the tools and services the large rental websites provide to make it easier.
If your clients try renting their homes this summer, I think they’ll find it’s not as hard as it looks. Wish them luck from me.
Finance expert for the rapidly growing short-term lodging marketplace, Rob Stephens co-founded HotSpot Tax in 2002 out of his own necessity to understand and manage compliance with his rental property.
Inman Connect San Francisco is right around the corner — register now and save $200!