If you own a rental property, you may have considered changing from a long-term to a short-term. Long-term rentals are traditionally year-to-year leases, where tenants bring their own furniture and stay put. Short-term rentals are the new future of hotels: guests from all over the world book a property online and stay for a day, weekend, or week as they visit a city.
Check for Local Regulations
Every municipality has codes, taxes, and regulations. Yours may vary from another municipality, so one of your first steps will be to research local regulations. For instance, in San Francisco, you’d pay 14% taxes on all rental income. If you’re interested in renting on Airbnb, you can check their website for the regulations of 50 major US cities.
Consider the Cost of Furnishing
Unless your apartments were fully-furnished, you’ll have to make a financial investment before you start renting them out as vacation rentals. Vacation rentals are fully-furnished, with dishes if there’s a kitchen, a bed and linens, a couch, and a TV. In other words, you’re transitioning into a hotel, and the necessary furnishing could add up severely in cost. You might want to begin with a single unit, see if it does well, and then consider furnishing the others.
Weigh the Pros and Cons
Renting a vacation property can really bring in the cash–but it can also bring in the police. Consider Paula Pant’s experience with Airbnb, which she describes as “42 guests, one police incident, and $19,000 in gross income.” To clarify, that’s $19,000 over the course of eight months, for a unit that would traditionally only fetch $8,000 or so in that time. Airbnb can really work out financially, but there can also be “gory details” that end with you calling the cops.
Consider Your Ability to Host
When you rented your unit(s) long term, you weren’t required to be a host. You showed up for complaints, 24-hour maintenance, and the viewings, and that was about it. If you host on VRBO or Airbnb, you’ll have to be more available. Some renters could show up and find a hidden key or use an access code, but many vacation rental hosts find that hospitality really does the trick in keeping guests thrilled. You may want to drop off a bottle of wine for newlyweds, bring movies over for the kids, or include other small details to keep your many guests happy. The question for you is, do you have time for that much hospitality?
Consider Keeping a Rental Application Form
With long-term rentals, you have tenants sign a rental application. With your short-term rental, you may want to keep up the practice. Guests tend to book months in advance, and that’s plenty of time to have them fill out a rental application form. Sites like Turbo Tenant help you screen guests and keep things simple. You can screen tenants for criminal history, score factors, and other things that could keep you from calling the cops (remember Paula?) while you rent your property short term.
