Why You May Want To Think Twice About Renting Out Your Home
Renting out one's house for short periods of time is becoming a popular choice for those who spend weeks or months away on business or vacation. Websites, such as Airbnb, which specialize in bringing together renters and landlords, are popping up all over the Internet. It can be a great way to make some extra money while you aren't using your place, but there are some risks. New York City instituted a law effective May 1, 2011 that bans short-term rentals for under 30-day tenancies in order to halt this practice and clean up what city government views as illegal hotels. If you are considering renting out your house while you're away, begin by ensuring that it is a legal practice in your locale, then be aware of these five other potential issues.
In most long-term rental arrangements, landlords can check out potential tenants in several ways. They can run credit checks, speak with the tenants' employers and former landlords, and ask for personal references. In a short-term rental situation, landlords often don't have the time or the opportunity to do their due diligence, especially when online rental services are used. As an example, a woman who rented out her home for a week through Airbnb, reported that the tenants completely destroyed her home and cut holes in walls to gain access to locked rooms, in order to steal family jewelry, passports and other identification - all the while sending the landlord text messages saying they loved the apartment. Without a full background check, you have no idea who you are inviting into your home.
If you turn your home into a rental property, even for short periods of time, you will almost certainly need a new insurance policy that covers renters. Your personal policy covers owner-occupied properties. Once you are no longer on the premises, the risk to the insurance company rises. The new policy will likely cost more than your current one, so figure the difference into your profit projections. Tenants will need their own policy to cover their possessions that they bring into the home; this is commonly called contents insurance.
Every state and municipality has its own zoning ordinances that cover the allowed uses for houses and apartments in its area. Some will allow for rentals and others won't, so check before you rent. If your neighbors decide that they are not fond of the late-night partying your tenants do while you're gone, you may end up coming home to a hefty violation ticket.
Renting out your house for short periods of time likely means that you will leave most of your own belongings there. If you store your financial and other personal records at your house, they are susceptible to theft by criminals posing as short-term renters. Thieves can leisurely browse through your records and extract more than enough information to impersonate you and ruin your credit. If you're going to rent, keep all of your sensitive information locked up and away from prying eyes.
Landlord Tenant Laws
While you may consider your short-term rental arrangement to simply be a way to make a little money, in some jurisdictions, you could fall afoul of rental laws. Landlord/tenant laws protect the rights of both parties, and may make it difficult to end the tenancy when you come home, regardless of the contract details. Research laws in your area before renting out your home to avoid legal hassles.
The Bottom Line
Short-term renting is not for everyone. There are significant risks to opening up your home to strangers and these may outweigh the inflow of cash. Consider both the pros and cons before jumping in.