5 vacation-rental need-to-knows

New twists on security deposits, tax collection

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Sep. 1, 2010

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New twists on security deposits, tax collection

Mary Umberger
Inman News

Whether it's the state of the economy or because you just don't get around to using the place a lot, you may find yourself thinking for the first time about renting out your vacation home.

Join the club, said Christine Karpinski, who owns several vacation rentals and is the author of "How to Rent Vacation Properties by Owner." She is also a spokesman for HomeAway.com, a vacation rentals website.

"I'm hearing from lots of consumers who already own and are looking to start renting," she said. Although she said as a homeowner she's had to resolve occasional hurdles with the properties, she's big on the financial benefits and has found that with thorough preparation, the process usually runs surprisingly smoothly.

Five things to know about getting ready to rent out your vacation home:

1. Find out if there are any legal prohibitions or restrictions on short-term rentals.

You'll definitely have to check with your city government, said Karpinski. Some towns may limit the number of weeks per year you can have short-term renters, and some of them may charge special taxes. Some towns limit the number of unrelated adults who might occupy a dwelling, she said. The same questions need to be asked of your condo or co-op board or homeowners association, she said.

"A lot of markets will require you to have a business license and collect sales tax, a tourism tax, a bed tax, etc.," she said.

2. Get the place ready.

"You'll have to depersonalize it a bit," Karpinski said. "You're going to have to take the toothbrushes out of the bathroom, sort out your closets, get the drawers cleaned out, remove family pictures, and clear out the refrigerator. Anything you leave will be considered fair game for renters to use."

HomeAway.com and other rental sites provide checklists of furnishings and implements needed for renters' use.

"Basically, you want to double what you 'sleep,' " she said. "If your place sleeps six, you want 12 forks, 12 knives, etc."

Plan on a certain amount of wear and tear. Karpinski said she usually replaces towels annually -- "Get good, fluffy ones. Renters expect good quality." The sofa might need to be swapped out every 2 1/2 years, she said.

3. Some financial considerations:

Decide on the rental amount by checking for comparable rentals on the Web or by calling local property managers. Typically, managers who provide rental services will charge the owner a percentage of the rent; Karpinski said that she regards most owners as being able to handle the chores themselves.

The size of rental deposit can be a sticky issue, Karpinski said.

"A lot of people seem to be getting away from taking security deposits because they're a hassle" to collect and return, she said. "I'd advise, for new people who are renting: take $200, or 10 percent of the rental cost."

A housekeeper who will come in between rentals is a must, she said. "That's the most difficult part of starting to rent," she said, because the homeowner needs to find someone who's reliable and can report on the condition on the place between renters.

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