Let’s say you’re a homeowner. An enterprising one. But it’s been a few years since you bought that four bedroom place in the ‘burbs, and the kids are launching fast. Enterprising person that you are, walking by junior’s empty room makes you twitchy. If you have tuition bills, you may even be developing a facial tic. Why let that room sit empty when it could be bringing in $50 a night?
Bring on the renters!
What to Consider First
But wait! There’s a lot to consider before you sign up to host with Airbnb, VRBO, or another peer-to-peer rental service. These companies are brokers, matching travelers to hosts who want to rent out everything from a living room couch, to a basement apartment, to vacation home in Maui. They will match you with renters, verify renters’ identities, give you minimal insurance against property damage, and process payments. They will also let you, the host, set your own prices and rules.
However, they do not offer legal advice. This is important because laws on renting out your place vary greatly by location, right down to your neighborhood HOA. Some cities require you to register for a permit or a business license. Some restrict how many days per year you can sublet. Some, including Denver, forbid you from renting anything but your primary residence. Not complying with local rules, even unknowingly, can result in fines or jail. And if you are a renter yourself, trying to host? Be sure to check with your landlord first.
What About Liability Coverage?
Further, peer-to-peer rental businesses do not offer liability coverage. If a renter slips and falls in your shower, or trips over a loose carpet… you get the idea. Standard homeowner’s insurance is designed for personal, not commercial, risks. If a renter is injured in your home, homeowner’s insurance may not to cover those damages. You need a business—or landlord—policy, for that.
And finally, you are responsible for making sure your home is as safe as possible, so no one gets injured in the first place. From fire extinguishers to hand rails to functional thermostats, Airbnb will not provide a safety inspector to assist you.
So, dear enterprising homeowner, renting out a room is not as simple as it sounds. It can be financially rewarding, but it also carries risks. As with any new venture, make sure you know the rules before you dive in.
Make sure you have an insurance-policy-shaped life preserver, too!
Article by Molly Fuscher