If you are considering renting out your home to guests via a platform like VRBO, HomeAway, or Airbnb, stop right now and take a beat!
There are several important concerns that it’s wise to consider before you commit to renting out your private residence to strangers. Naturally, we’re not saying that earning a passive income from properties you already own is a bad idea. But it does come with several responsibilities and risks that you may not have thought of.
Below, we aim to cover these responsibilities and risks so that you have a fuller idea of what renting out your private residence will entail.
First Considerations: Neighbors, Home Associations, Expenses, and Privacy
Having adequate insurance coverage will be the main concern for most people who rent out their home. However, before we go any further discussing insurance coverage, there are several other considerations you’ll want to take your time thinking about too.
- Neighbors: Will your neighbors be alright with the fact that you’ll be inviting strangers into their neighborhood. While you and your family likely keep noise to a minimum and maintain a routine schedule, it’s possible that those you rent to won’t be so respectful to your neighbors. Late nights, loud music, and other obnoxious behavior are essentially beyond your control if you’ll be renting your home while you’re out of town.
- Condos and Home Associations: Bylaws from condo and home associations may actually prevent you from renting your home via a hosting platform. It’s smart to double check before you move forward.
- Expenses: You’ll be responsible for providing at least the minimum amenities for your guests. This usually includes bedding, towels, kitchen utensils, and appliances, etc. Of course, if you don’t want to use your own personal belongings for fear they could be damaged or ruined, you’ll need to purchase other items.
- Privacy: Most homeowners who rent out their private residence only rent out one portion of their home and lock off the rest. Still, there’s no guarantee that renters won’t venture into these parts of your home, and you won’t be there to know in most cases, putting your privacy at risk.
Naturally, insurance considerations are the main thing you’ll want to think about when renting out your private residence.
You should know that while sites like Airbnb do have insurance, it is only liability insurance. This means that it covers you if a third party claim for damage to property or bodily injury is made against you. This is definitely important insurance coverage to have, but you need more.
Unfortunately, insurance from Airbnb does not cover you if someone damages your property. It’s possible to purchase additional coverage from Airbnb to cover your building structure, but this comes with an added expense that’s going to take away from your profits.
Add to this the fact that you’ll likely need to purchase coverage for your belongings inside your home (because homeowners insurance will not cover this in a rental situation) and, in some cases, business or landlord insurance — and you’ve got to ask yourself: Is this really worth it?
Moving Forward: Speak With Your Insurance Agent
The most important thing to do if you are seriously considering renting your home on Airbnb, HomeAway, VRBO, or any other short-term hosting platform is speaking with your insurance agency.
All insurance policies and companies are different. Only a knowledgeable and experienced insurance agent will be able to tell you for sure if you can safely rent out your home without serious risks to your property and finances — or if you need additional coverage. At Feivor Insurance, we would be happy to sit down with you at your convenience to discuss these options with you.