There AirBNB era is here and you can now learn how to rent your house out to make some extra cash each month.
If this sounds like you and you have a house, extra room, condo unit, and other types of properties left unoccupied most of the year, a few days a year or even unoccupied completely, then listen up.
You can take advantage of this space, rent it out and actually earn cash on the side. Heck, you can even turn one space into a full-time, earning machine if you went with a rental agent.
Vacation houses have been around for centuries, but the popularity of Airbnb has paved the way for even ordinary homeowners to accommodate guests for a while.
And who says you can’t get a piece of the pie?
Interested? Read more for a comprehensive guide to renting out your house.
3 Options for Renting Out Your House
If you’re planning to rent your house out, you need to be armed with information about taxes, maintenance costs, as well as pros and cons for all the options available to you.
These details will help you decide if you’re ready to rent out your house to someone else either temporarily (via services like Airbnb) or under a long-term set-up (advertised on your own or managed by a third-party rental agent).
1. Long-term Rentals
There are various instances wherein long-term rentals may be best suited for you. These include:
- Getting a newly inherited property
- Having a second property, such as a summer house, that you only visit a couple times a year
- You’re the only one living in a big house
- You invested in a condo unit, but have no immediate reason for leaving your current home
Those who would benefit from long-term rentals are people with extra space or property aside from the one they currently reside.
The main benefit of renting out your house long-term is that the extra income is definitely significant and consistent.
There are, of course, downside to long-term rentals, including:
- Property destruction – the longer tenants stay in your property, the higher chances your property will get destroyed (intentionally or not). Some landlords specify that no young kids and pets are allowed, since they’ve been known to mess up paint jobs, carpet, and other house features more quickly than older kids and households without pets.
- Insurance – No matter how long you rent out your home, that space becomes an investment property. As a result, you’ll have to obtain insurance specified by the state where your property is in. Airbnb has some insurance offered to hosts renting out their properties, but it’s still better to check with your insurance provider because factors like length of lease can affect.
- Local regulations – Aside from insurance, check with city hall about local condo regulations, professional lease or landlord agreements, and so on. You have to be updated with these things since breaking rules equal to fines or loss of potential income.
- Collecting rent can be difficult – If you’re not hiring a rental agency (more on this later), it means you’ll have to collect rent by yourself, which can be a challenging task.
Traditional real estate websites, such as rent.com, realtor.com, homes.com, zillow.com, zumper.com (and so on) will let you list your homes as long-term rentals. Some of these sites come with a fee for two or more properties, while others rely on advertising for revenue so landlords can list for free.
2. Short-term Rentals
Short-term rentals would be better for homeowners who have an extra room, extra floor, a garage, or other spaces they could rent out temporarily.
The main benefit of going this route is that you can even be residing in the property for rent and only make it available during certain periods. For example, if you go on a yearly trip overseas, you can list your condo on Airbnb only during those days, weeks or months.
The downside to renting out your house on a short-term basis include:
- Tax Responsibilities – In the eyes of the IRS, “short-term rentals” shouldn’t go beyond 14 days in a year. If it does, you’ll need to file it properly. FYI, Airbnb automatically sends tax forms documenting all income to the IRS, so if you skip your tax responsibilities, don’t be surprised if you’ll still get a letter from the federal agency.
- Less income – Unfortunately, making your place available to guests for only a limited time also means you’d receive less income. If you’re only looking for extra cash, then this could be the solution for you, but if you need this rental space to help with expenses monthly, short-term rentals may not help that much.
- More clean-ups – Because the turnaround for vacation-rental properties like this is high, you’d have to keep the place clean for the next guest. This is especially true if you’re planning to rent out your place every weekend. (The good news to this though is that although there’s maintaining expenses to consider, there are services like Guesty to handle cleaning for you.
A Word about Renting Your Home Furnished vs. Unfurnished
Whether you plan to rent your house short-term or long-term, you’d have to clean up your place and do a bit of sprucing up. This also means you have to remove your valuables, such as heirloom flower vase, jewelry case, collector’s items, and so on.
Note that if you’re renting your house for only a few days, weeks or months, expect that tenants would prefer furnished homes. Depending on your circumstance and property, this could add costs for interior design.
People looking for homes to rent for a year or more usually look for unfurnished homes since it would make sense they’d bring in their furniture and other stuff for long-term residency.
3. Renting out Your Garage, Yard and other Outdoor Spaces
For those who don’t have space inside their homes or an extra property for rent, but live in a tourist destination city, you may earn some cash renting our your garage, yard or other outdoor spaces.
Tourists traveling by car into your city (that has strict rules about parking just anywhere) will pay per day/night to avoid sky-high penalties, jail time, or getting towed. This is your chance to offer your garage for a fee. You can even choose a niche, such as parking for RVs, for a more targeted audience.
If your garage has access to a functional bathroom, you can even deck out your garage into an extra room. It won’t be as fancy as villas and beachside properties, but if you offer fair pricing, there’s a good chance guests will bite.
Yeah, some people also need extra space for storing stuff. List your garage on websites like Stow It! and decide on your monthly rental fee.
Yard and other Outdoor Spaces
- Weddings and other events – Depending on how spacious your garden is and how many people or tents you can accommodate, you can earn quite a substantial amount if you rent out your backyard even once a month. The downside is that hosting events can have a ton of issues (from problems with catering, bathroom, and so on), so make sure you partner with an events coordinator before you list your yard for rent.
- Camp site – With Instagram folks showing off their “glamping” (glamorous camping) adventures left and right, there’s a sudden spike for dressed up camp sites. If your outdoor space has a good view of nature, try to build luxurious tents or camp sites for this crowd and wait for the guests to come.
5 Ways to Rent Your House Out
Here’s how to rent your house out temporarily.
Join one or all of the websites below, check out their rules, and list your property away.
Launched in 2008, this San Francisco-based company grew in numbers thanks to how properties are shared on social media and the rise of travel bloggers seeking off-the-beaten path and cheaper, yet Instagram-worthy vacation rentals.
Airbnb isn’t the oldest site like it, but with over 80 million monthly visitors, it surely leads the pack.
As the host, Airbnb lets you set the price per day and “required minimum stay,” which means you won’t have to worry about unappealing travel days (such as Sundays, or day-after a holiday).
HomeAway acquired VRBO (short for “Vacation Rental By Owner”) in 2006, but it has been in the vacation-rental industry space since 1995.
VRBO claims that members who list their properties receive an average 120 inquiries per property every year, with its top members earning up to $60k annually from their VRBO listing.
Hosts can choose from paid and free-to-list options. Paid members can further choose a subscription model ($499 per year) or pay-per-booking (pay around 5% for every property booked).
TripAdvisor is one of the most popular websites people go to when searching for reviews on hotels, beach resorts, and other rental properties from real travelers who have gone there. Which is why when the company launched FlipKey, a branch that lets property owners to list their space, it made perfect sense.
Similar to Airbnb, hosts pay FlipKey 3% on a pay-per-booking model. Unfortunately, guests suffer from the host’s low fee since they shoulder up to 18 percent more on top of the property’s fees. This is kind of a bummer if you’re a guest. But as a host, just imagine the 448 million people visiting TripAdvisor each year that will remain untapped if you skip FlipKey and list your vacation rentals elsewhere.
If you have a luxury accommodation to offer, join Tripping.com’s Luxury Retreats and give guests an unforgettable experience.
Properties here come from all over the world and range from beachfront homes to vineyards, mini mansions and the like.
Note that since vacation rentals here are above ordinary, the clients would expect personal concierge service, guest support, and other special services.
Plus, not everyone interested in renting out your house can list property here (Luxury Retreats claim only 5% of applications are approved).
Homeowners don’t need to pay a sign-up or membership fee, but if your property is accepted you get to follow a pay-for-performance model.
For homeowners with properties “on par with hotel chains,” VacayHero may be the website to go to.
It’s a bit different from others on this list, since the San Francisco company vets all vacation properties ahead of time. It’s a win-win for guests and hosts!
Runner-ups: Booking.com (free forever for your first 5 listings), HomeToGo.com (world’s largest search engine for vacation rentals), Homestay (for genuine local feel), Go With Oh (apartments for rent in Europe), and OneFineStay (above $1,000/night high-end properties), among others.
The Bottom Line
If you decided to rent out your property, you can do-it-yourself and list your property online on sites like Airbnb and its alternatives. The secret of a successful listing (aside from having an irresistible property) is effective marketing offline and online.
If you don’t have time for monitoring listings across different websites, juggling upcoming guests, answering inquiries, clearing possible tenants, and handling paperwork, you can hire a rental agent who will handle almost everything for your (often for a fee or percentage of the booking).
Probably the two best things about working with rental agents is that you’ll be rest assured that renting out your property follows local and state laws. And the agent or agency will collect rent on your behalf.