Should You Turn Your Home into a Short-Term Rental?

Services like Airbnb and Vrbo have provided a new revenue opportunity for many homeowners. A growing number of people are turning properties into short-term rental homes, counting on the income to pay the mortgage and other expenses. Whether you own a second home or plan to rent out a room in your primary residence, you may be able to make a little extra dough.

But converting your dwelling into a goldmine isn’t as easy as listing it online. The reality is that you’re taking a risk. Here are several questions to consider before renting out your home.

Are you ready to be a lessor?
If you do decide to rent out your home through an online service, you’ll need to be prepared for the vagaries of life as a lessor, from the 2 a.m. phone call about a stopped-up toilet to the mess that renters leave behind. Renting a room in the home you currently occupy? You’ll likely need to give up space you’re used to having for your own purposes.

Is your time worth it?
Listings on property rental websites can get competitive, especially if you live in a popular area. If you want to stand out, you’ll need to not only manage your listing, but offer quick responses to questions from interested renters. Your time is valuable; make sure you’re getting paid enough to make it worthwhile.

What happens if your home doesn’t rent right away?
If you plan to turn your home into a rental, you’ll need to have a contingency plan in place. What happens if your home doesn’t rent for weeks or even months? How will you pay the mortgage and other expenses? The answers to these questions should factor into your decision.

Do you need extra insurance?
Your existing homeowners’ insurance may not be enough to fully protect you from damage and liability, so you’ll want to contact your insurance agent for more information. This extra insurance coverage can be expensive, and it’s important to do your homework and build those costs into the rent you plan to charge.

You May Also Be Interested In

Buying vs. Renting a Home: Which is Right for Your Wallet and Lifestyle?


Small Business Series: Chapter Five, Powering Your Finances