What You Need to Know Before Renting Your Home on Airbnb

What You Need to Know Before Renting Your Home on Airbnb

by Lisa C. Johnson, Esq., November 2014

With winter weather here and the holidays just around the corner, those who are lucky enough to be traveling to a beach destination or a ski getaway will probably not keep the good times a secret. People love sharing vacation photos on social media.

Joanna Goddard, who writes the popular blog “A Cup of Jo” often writes about her vacation experiences. She and her family rented a house in Palm Springs on VRBO, which is part of HomeAway, and she shared the pictures on her blog. For many of her readers, her blog post was an introduction to the idea of using vacation rental websites for a vacation rental.

Vacation Rental by Owner

Condo rentals or home rentals can be a great alternative to staying in a hotel. A short-term rental can be cheaper than a hotel stay and offer a lot more space. HomeAway allows vacation rental owners and property managers to market their properties online to travelers seeking accommodations to rent. Primarily the properties available for rental are second homes and the company touts the rentals as being a great way for owners to generate rental income to use toward paying their mortgage.

Airbnb also allows rentals by owner. Their website says you can find “an apartment for a night, a castle for a week, or a villa for a month” for any price point in thousands of cities all over the world. On the website, hosts who decide to rent out their spaces, set up a profile, list the property and can decide whether to accept or decline a guest. The Host Guarantee generally provides protection for up to $1,000,000 in damages in case a guest causes damage.

Both hosts and travelers write Airbnb Reviews. According to a recent Forbes article by Seth Porges, a longtime Airbnb host, the reviews are the difference between Craigslist and Airbnb. Porges says, “The system creates incentives for hosts to go the extra mile, and for guests to follow the campsite rule and leave the room in as good a shape as they found it.”

Regardless of how smoothly rentals can proceed most of the time, sometimes things go wrong. An article on PropertyCasualty360 says that the service is too risky unless both host and guest are insured. “A mistake many Airbnb participants are making ins (sic) that they assume they have protection under their homeowners’ policy. But some renters are unprotected, and should consult their agent. Those who are not protected, experts claim, should seriously consider renters’ insurance, as an inexpensive, but invaluable coverage, especially for those hosting guests through Airbnb.”

Airbnb Horror Stories

Before deciding to rent out your home, beware and be aware of the short-term rental laws in your state and your local zoning laws.

A California woman named Cory Tschogl learned what can go wrong with Airbnb the hard way. Business Insider reported that Tschogl rented out her Palm Springs condo to a man named “Maksym” for more than a month. There were no reviews for him on the site at the time. A possible warning sign, she acknowledged. Although he made complaints about the condo and asked for a full refund, she was willing to give his money back. But he stayed in her condo and refused to leave, stating that he had rights. Which was true. After hiring an attorney, Tschogl found out that in California, a rental for 30 days gives a tenant rights based on a month-to-month lease. In order to get a tenant to leave, a landlord has to go through the eviction process.

In Quincy, Massachusetts, Richard Cope and Susan Velentgas rented out their home on Airbnb in order to earn some extra money and to meet new people. According to WCVB, the house rented for $150 a night, but unfortunately the city fined them twice in a few weeks for a total of $1,500.00. Neighbors complained by protesting outside their house and calling the police. Cope and Velentgas were told that their house is not in a business zone and that they cannot operate a transient lodge.

A Few Tips

If you rent an apartment or house and want to rent out a room or the entire unit on Airbnb, it’s best to first read your lease to see if any sublease provisions would apply. The owner of the property may not be inclined to let you rent out the space and you could be in violation of your rental agreement.

Also be wary of racial discrimination. A Harvard Business School study found that use of user profiles by Airbnb may result in discrimination based on the race of the host. “Nonblack hosts are able to charge approximately 12 percent more than black hosts, holding location, rental characteristics, and quality constant. Moreover, black hosts receive a larger price penalty for having a poor location relative to nonblack hosts.” Most states have antidiscrimination laws in place and a complaint of discrimination in housing could be a possibility.

While there are pitfalls to be wary of when doing short-term rentals for a vacation, from what many hosts and users seem to say, they love the experience and have a good time. If you use common sense and keep a few things in mind, you may soon be wowing all your Facebook friends and even some offline friends with your fabulous vacation rental photos. If you’re a host, you may be adding some extra money into your wallet.