Before you take the leap here’s a few things to consider.
- How much demand is there in your area? You can figure this out by surveying other properties on VRBO. How many reviews do your competitors have? One or two? Or do they have 10, 20 or 50 or more?
- What are your start up costs? Do you just have to buy 2 sets of white sheets for each bed and 2 sets of white towels for the maximum allowable number of guests, or do you have to buy a ton of other things like beds, furniture, kitchen items, etc?
- If you’re still interested then it’s time to really determine what is the going rate for your home. You will need to identify the exact address of your competitors. To do this you will likely need to use Google maps, then check the value of these homes on Zillow.com. Some homes will be over priced, some under priced, but most will be just about right. You will probably want to go with the median price for your home. If you’re more desperate for income then charge less, or if you’re less thrilled with the idea of renting your home then charge more. It’s up to you.
- Once you get your house all ready to rent (that’s a whole ordeal for another blog post) then it’s time to think about determining your rental policies and getting a legal contract together. Policies include things like deciding how far in advance payments must be made and in what form (credit card payment via HomeAway, PayPal, personal check, etc) what your refund policy is, etc. Again you will probably want to see what others in the area are doing. Having an air tight legal contract is critical. That means you will have to shell out money for a lawyer to draft up one, which should be an inside-the-box job. Avoid lawyers who want to draft one from scratch or before you know it you’ll be billed for $1,000 or more.
- Another must is to change your homeowner’s insurance policy so that it covers your house while being rented. This will no doubt raise your rates. You may even lose the discount that you get while bundling your house and car insurance. Yet another thing to consider before taking the leap to renting your home on VRBO.
- Another consideration is income taxes. Uncle Sam is not friendly when it comes to start up costs to rent your home. Expenses can only be deducted on a prorated bases. For example if you rent for 1 month out of the year you can only deduct 1/12th of your expenses against your income.
For details on renting your home in Pacific Palisades read this article