Short-term Rentals Are All The RageAdded by Hawley Troxell in Articles & Blogs on January 16, 2016
We hear from clients excited to place their homes into the short-term rental market, and we hear from home owner associations ranting about the problems associated with short-term rentals.
A myriad of regulations need to be considered before placing a home into the residential rental market, be it short-term or long-term. Home owner associations may have recourse depending on the terms of the covenants, conditions and restrictions governing the subdivision. Regardless, one of the most important decisions is whether or not the rental will be managed by the homeowner or by a property management company.
Effective property management is key to the rental’s financial success, or lack thereof. It’s also key to whether the property will draw the ire of the home owner association. There are many factors to consider. They may differ in importance depending on the property, but let’s consider a few of the most common decisions.
Promoting the property on a variety of websites will lead to more rental use and higher revenue. If you employ a property manager, does that manager advertise available rentals only on its website or does it also advertise on VRBO, AirBnB, Homeaway and similar sites? How effective is the advertising? Are there multiple pictures of the home that make it look inviting and promote the best aspects of the home, or is the listing not much more than the fill-in-the-blank Craigslist advertisement?
What is the customer service level? When you call the property manager, does someone pick up the phone? Can you contact the same person consistently and is that person familiar with your home? If you are struggling to reach a live person, your tenants are likely to have the same problem. I recently cancelled my property management relationship with an Oregon-based company that focuses on short-term rental management for this very reason. I spent hours trying to correct their accounting errors and rarely spoke to the same person twice. The accounting problems are still not resolved. I’ve since listed my property with a local well-established real estate company with far greater success and service.
Will the property manager collect and remit all taxes and fees associated with short term rental use? Rentals of less than 30 days are subject to a tax collected by the Greater Boise Auditorium District. The District’s boundaries are wide-reaching, encompassing more than just downtown Boise. The failure to pay to the tax can result in penalties and interest and may ultimately lead to a lien on your property. Even if your property is outside the boundaries of the Greater Boise Auditorium District, there may be other taxes and fees applicable to your property. Understanding what taxes and fees apply and how to properly and timely remits those costs are important considerations.
Finally, can your property be used as a short-term rental? Do not rely on your property manager to make this assessment. Local laws differ from city to city and change over time. Some cities and towns, especially resort communities, may actively promote short-term rental use as an economic driver, while bedroom communities are more likely to restrict short-term rental use. As the prevalence of short-term rental use grows, we are expecting more cities and towns to implement regulations concerning short-term rentals. And, we know more and more homeowner associations are addressing short-term rental use. If properly drafted, the covenants, conditions and restrictions governing the subdivision can restrict and out-right prohibit short term rental use.
Whatever your decision, whether to go it alone or hire a property manager, there are many issues to address before entering your home into the short-term rental market. Undoubtedly the market is growing, if only based on the number of calls we receive both for and against short-term rentals. So making your short-term rental a financial success will depend greatly on your ability to stand out in a crowded market.
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