Renting Your Home to Others
Do you plan to rent your home or even a spare bedroom on a house-sharing website like VRBO or Airbnb? According to research from Pew, well over 11 percent of American adults have used these services, and they continue to grow more popular. Some property owners use the extra income to catch up with bills, ensure one spouse can stay home with kids, or even to fund a full-time business. Viewed positively, these house-sharing companies will give you a chance to earn income from underutilized space you own.
Just remember that even if you only plan to rent out rooms once in awhile, you will begin conducting business during your very first booking. As with any other kind of small business, you will face some risks and need to do a good job of managing them right from the start.
How to Manage Home-Share Business Risks
These tips can help you protect your property and yourself against risks:
1. Understand the Limits of Vetting Guests
First, you have to decide how comfortable you feel about having a series of strangers live inside of your home. According to the Airbnb website, for instance, the company will search criminal records if they have enough information to perform checks. The company also warns its customers that background checks don’t always uncover every red flag in a person’s past and even a clean record can’t guarantee future behavior.
For this reason, the company urges patrons to get to know their guests via the website before confirming, to protect valuables and private information, and to rely upon the platform to process payments.
2. Learn Your Building and City Government Regulations
Besides deciding how comfortable you feel with welcoming strangers into your house, you also need to know how your building and city government view the issue.
- If you intend to rent out an extra room or even a sofa in your apartment, your property management may consider that a sublet. In some cases, they will want to know about it or may use it as grounds to terminate your lease. In some cases, a COA or even an HOA may also impose restrictions.
- Even though most cities allow house-sharing rentals, some have strict regulations that limit this activity. Some hosts have had to pay thousands of dollars in fines after multiple violations of these rules, and typically, cities won’t accept ignorance of the rules as a defense.
3. Understand Your Insurance Coverage
If you don’t know how your insurer will view your new rental business, you should contact them to find out. They might ask you to upgrade your policy to cover tenants. If you don’t work with your insurer in advance, you risk having claims denied. In fact, some Airbnb hosts reported having their home policies canceled after the insurer learned of their activities from a source other than the policy owner.
Most home insurers also offer landlord coverage, and some even have month-to-month policies that they designed for house-sharing rental owners. Some of the larger house-sharing websites provide limited property and liability insurance, but you should work with an insurance professional to understand what that kind of coverage will and won’t cover.
Who Can Help You Manage House-Sharing Risks?
Most small businesses rely on their insurance agent as their primary source of risk management advice and products. A homeowners insurance policy can help you understand your current policy, explain potential gaps in coverage, and help you find affordable premiums for the right solutions.