5 Myths About Vacation Rental Properties

Written by Posted On Thursday, 07 March 2019 13:35

The average annual revenue for an Airbnb host is a whopping $20,000—and many hosts have other jobs as well. Contrary to popular belief, you don’t need a separate property to make money off of your space. According to Airbnb, 87% of its host list their primary residence.


Whether you plan to rent your primary residence or want to invest in another property, the cost benefits are clear. However, it’s important to understand the way vacation rentals properties work, as many rumors have circulated the Internet and not everyone is clear about what being a “host” entails. Here are five myths you should know about vacation rental properties:


Guests Will Destroy Your Home

Naturally, many homeowners feel wary about renting out their property for the first time. One of the biggest concerns is that the guests won’t take care of the space. However, situations where paying guests destroy a property are few and far in between. In fact, the majority of instances go by fairly smoothly. Usually, the worst that happens is the home is left a little dirtier than you’d like, which takes a longer time to clean. However, a completely trashed home with damaged goods is rare. If you want to be extra cautious, consider investing in custom storage and shipping containers to store some of your more valuable and/or larger items. This could be an especially smart idea if you rent long-term.


Furthermore, in addition to your own homeowner’s or renter’s insurance policy (which you should have regardless), platforms like Airbnb offer their own guarantees. And they verify backgrounds for each Airbnb guest, ensuring that everyone who uses the platform to rent property will behave responsibly and be held accountable.


In addition to the aforementioned policies, you should also consider vacation rental insurance. Vacation rental insurance protects your home because it views it as a business. For instance, in the event of a natural disaster, it provides an income because your source of revenue has been depleted. Additionally, many traditional insurance policies have clauses that void the contract if a bad situation occurs while someone else is renting your property.


Anyone Can List on Vacation Rental Platforms

When you live an apartment or condo, it might feel like the space is yours to do what you want with it, but the truth is, there are many stipulations that come with renting on a vacation rental platform like Airbnb. If you have a landlord, it’s crucial that you request permission. Far too often, this happens without the consent of the landlord.


As previously mentioned, in most cases, guests will take care of the property just fine, but you and your landlord could be caught in a major jam if you have a bad apple guest. Short term rentals are also illegal in many city municipalities. And perhaps the most important one is that the landlord has their own homeowners insurance, which will deny claims made if they find out an apartment being rented is treated as a business.


You Don’t Need to Report Your Income

If you use your vacation rental space, chances are you’ll have to report that income. There are various tax guidelines based on your specific situation. As a general rule of thumb, if you rent your property for more than just 14 days of the year, you’ll have to report it. One thing many renters aren’t aware of is that Airbnb sends tax forms that document your earnings to the Internal Revenue System, and you could get a letter from the agency requesting you to pay on undocumented income.


It’s Free to List Your Property

Both top rental platforms—Airbnb and VRBO—charge fees for listing properties. Airbnb charges 3% for each reservation, while VRBO charges $349 annually, or 10% on each booking transaction if you don’t use it fairly often. As you decide on your pricing, keep these fees in mind and account for them. You’ll also want to account for the time it’ll take to clean a property after your guests have left, especially if you have for a cleaning service. With Airbnb, you can add an optional cleaning fee to the cost of the reservation, which most hosts take advantage of.


It Creates a Passive Income

If you talk to anyone who rents out their property, you’ll quickly learn that, while it can be a great hustle for side cash—and in many cases, can even earn you more money than being a traditional landlord—it’s certainly not a passive income. As a host, you have to be working constantly to be the best host you can be. This means communicating with guests before, during, and after their arrival; prepping the space; curating a great vacation rental experience for each visitor, regardless of the duration of their stay.


This can make it difficult for you to go on vacations of your own (unless you pause your income stream, have an alternate arrangement for a key exchange, or have set up a self check in system). Either way, you will always have to be on top of your requests and bookings, and you’ll certainly meet many people. It’s important to understand that you’ll have to put a certain amount of work into the booking process.

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