Vacation homes are used occasionally and can be great sources of income for property owners. Rather than letting it sit idle for months on end, renting it out does seem like a way to put it to good use. But renting out one’s home and inviting a revolving door of visitors comes with its unique set of challenges. Here are a few mistakes that those looking to rent out their vacation homes tend to make:
1. Neglecting legalities
The laws on short-term rent can vary based on location. Not considering these laws before putting the property up for rent can lead to legal issues and even hefty fines. Homeowners must have the necessary license valid in the respective state or county before putting the property up for rent.
2. Not pricing it right
This is a tricky one, especially if the vacation home is in a touristy area that attracts a lot of visitors. Overpricing to keep it exclusive can deter renters, while underpricing can attract the unsavory kind. So, the price should be competitive yet reasonable enough to appeal to renters.
3. Lack of property maintenance
There’s nothing worse for those who rent out their vacation homes than receiving bad reviews for the property. In a market that is this competitive, maintaining clean, livable surroundings with all the promised amenities in working order can help a great deal.
4. Not having an iron-clad rental agreement
Ensure that the rental agreement for the property does not have any ambiguous language. Consider consulting a real estate lawyer to draw up an agreement and check it with a fine-toothed comb. Further, hold renters liable for any damage to the property and add a security deposit clause to the agreement.
5. Not considering the neighbors
Some vacation homes may not be in a touristy area, but a quieter, mainly residential neighborhood. Before putting up a vacation home for rent, consider the neighbors’ comfort level with sharing their space with a constant ebb and flow of tourists and short-term renters.
6. Underestimating startup and operation costs
The cost of setting up a vacation home to be rented out, along with mortgage (if any) and maintenance expenses, should be considered. Advertising, marketing, rental insurance, listing the property on booking websites, home appliances, furniture and furnishing, home security, and, of course, utilities can add to the cost. So, one should earmark finances for all these expenses before deciding to rent out the property.