How To Protect Yourself When Renting Out Your Summer HomeHow to Protect Yourself When Renting Out Your Vacation Home
If you own a vacation home, you may have considered renting it out when you’re not using it. The extra income would be nice, and the home would be occupied more often (deterring potential break-ins), but you’re worried about security and liability issues. If you want to enjoy the benefits of renting out your vacation home, there are ways to reduce the risks associated with doing so. Here are some steps you can take to minimize the potential risks of renting out your vacation home.
Screen the Applicants: One of the best ways to protect yourself when renting out your vacation home is to screen the potential renters. While you’re likely not renting the home for more than a few weeks at a time, the fact remains that it is your home, and you will still be living there for a portion of the year. For this reason, you should do as much as you can to avoid people who are likely to cause problems.
The first step in screening your applicants is to have them fill out a Rental Application. Reviewing the information on the rental application form should help you narrow down your list of prospects. Call the person’s previous landlords, and run a credit check on them. Pass on the people who don’t get good references from their previous landlords, or who have a poor credit rating.
Once you’ve got the list narrowed down, call the applicants that you feel would be good renters, and arrange for a time that you can meet them for an interview. You should conduct your interviews in person, whenever possible, as you’ll get a more accurate impression of a person from a face-to-face interview. You may get applications from people who don’t live in the same area as you do, however, so telephone interviews may have to suffice.
Have Them Sign a Rental Agreement: After you’ve screened the applicants, and found renters that you feel comfortable letting into your vacation home, have them sign a Rental/Lease Agreement. Having a written contract will make it easier to enforce payment, as well as any other terms of the agreement, should there be a dispute between you and your tenant. Should you be forced to go to court over a dispute with a tenant, your case will be significantly stronger if you have a written agreement to back you up. Even if you’re only renting the house out for a weekend, get the tenant(s) to sign a rental agreement.
Get Additional Liability Insurance: Liability is one of the biggest risks you face when renting out your vacation home. If a tenant is injured while on your property, as a result of your negligence, you will be held responsible for that injury. Increasing your liability insurance coverage will help to protect you in the event that something like this occurs. In fact, most insurance companies will require you to take out additional liability insurance if you’re going to be renting out your property.
Luckily, it might cost less than you think to get the additional coverage you need. The majority of vacation homes are unoccupied for most of the year. Because vacant homes are more likely to be targeted for crimes like theft and vandalism, insurance companies prefer properties that are frequently occupied.
Even though you’ll be renting out the home, your insurance company will likely be pleased that the property will now be occupied more often. As a result, your regular premiums may go down, so the added liability coverage won’t sting as much as you may have worried. Keep in mind that every insurance company will treat this situation differently, so you should talk to your insurance agent to figure out the best policy before you start looking for renters.
Remove Personal Items from the Property: Before you start allowing renters into your home, you should “de-personalize” the property as much as possible. Remove any personal items and family photos from the property (or make sure that they’re stored in a secure location). Not only will this prevent your belongings from being damaged or stolen, it will make the renters feel more comfortable in your home. While some people rent homes, instead of hotel rooms, because they enjoy the “personal touch,” most people don’t want to see pictures of your child’s graduation ceremony on the bedside table.
Hire a Property Manager: Unless your vacation home is a cottage at the lake, just outside of town, there is a fair chance that you don’t live nearby. If this is the case, you may want to hire a property manager. Someone will need to change the bedding, clean the house, mow the lawn, and generally maintain the property. If you don’t live close to the vacation home, you can’t do these things yourself. Even if you do live nearby, hiring a property manager may still be worthwhile. After a long day at work, are you really going to want to drive out to the vacation home and clean up after the renters?
Renting out your vacation home has a number of benefits. In addition to providing a supplementary income, it also decreases the chances of your vacation home being broken into or vandalized. There are also some security and liability issues that go along with renting out your second home. However, by following a few simple steps, you can reduce the risks, and enjoy the benefits of renting out your vacation home.