As New Orleans prepares for Super Bowl XLVII, Feb. 3, 2013, the Crescent City community is cashing in on an influx of football fans and visitors who are dining, shopping, partying and looking for shelter.
A shortage of temporary accommodations and higher temporary accommodations costs are common when a big event comes to town.
However, property owners looking to make a little moola on the side by renting out a primary residence, a room in their home or by sub-letting an apartment, open a Pandora's Box of risks that might not be worth the extra cash.
Before you rub your hands at the prospect of a short-term rental that could be enough to pay your mortgage or rent for a month or two, here are some factors to consider.
Effectively turning your home into a business property will likely require some adjustment to your insurance policy which may not otherwise provide benefits for claims arising from certain liabilities or losses.
Also, if a short-term tenant damages your property, steals belongings or is injured and you don't have the proper coverage, you'll have to foot the bill or, worse, face the possibility of a negligence lawsuit. Always contact your insurance agent before renting your home.
There could also be tax consequences to consider. Talk to your tax professional before making this move
Local occupancy ordinances may forbid too many people in a given structure and forbid certain uses, say setting up beds in garages, sheds or other facilities not legally designated for human habitation. Check your community rules.
Homeowner associations that permit long term rentals may forbid short-term tenants and enforce the prohibition with hefty fines and in some extreme situations, you could lose your home. Get permission from your homeowner association's board of directors or management company.
In some cases, sub-letting your apartment is forbidden by contract. Sublet and you could get evicted.
You are also exempt from federal fair housing laws if you rent a room in your home. And you are exempt from federal law if you rent to a minor, but that could open another can of worms over issues that concern minors.
However, don't overlook state and local level fair housing laws, which can differ.
You'll either have to hire a property manger or quickly learn the screening process, which could mean many pointed questions, a full application for short term rentals, a credit check, income check, proof of current residence check, past rental record check and more checks before you get that fat short term rental check.
Legal experts also say if you open your home to short-term rentals, you should do so with a legal contract that defines the terms of your accommodations.
An attorney can help you sort through your legal rights and responsibilities and make sure your rental agreement complies with local law.