Four steps to make money on short-term rentals – and the crucial 30 day rule you need to know to not lose your rights

Using your extra space as a short-term rental can be a great way to make some money on the side.

Whether you want to offer a guest room or an entire property, there are four crucial steps to follow for success.

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The popularity of short-term rentals has skyrocketed in recent years, with over four million hosts around the world on Airbnb.

According to a new survey from Realtor.com and CensusWide, 39 percent of American homeowners have either considered or would consider renting out part of their primary residence.

The US Sun spoke with Realtor.com senior news editor Clare Trapasso to discover the four steps to short-term rental success.

And there’s a handy new tool to help you estimate how much money you could make.

STEP 1 – RESEARCH

The first hurdle to making money could be regulations or restrictions that prohibit using your home as a short-term rental.

Some cities, including New York City, have begun cracking down on sites like Airbnb, Vrbo and Casa.

If you have the opportunity to rent out your property, you should decide whether you want to rent out the entire house, set up a guest apartment or simply rent out a room.

“You should also research what the rental prices are for similar properties, what the typical vacancy rates are for these properties, and how much competition there will be from other hosts,” advises Trapasso.

To make things easier, Realtor.com recently introduced a short-term rental income estimator.

This handy tool provides potential yield estimates whether you’re listing a room or your entire home.

You can access the tool at realtor.com/myhome.

The calculator’s estimated earnings are based on Airbnb data from similar listings in the same zip code.

STEP 2 – PREPARE YOUR HOME

While the way you want to furnish and decorate your rental property is up to you, there are certain things guests expect.

According to Trapasso, hosts need to consider the following as a bare minimum: “A clean bedroom with fresh linens, a working stove and refrigerator in the kitchen, a comfortable couch and TV, and working air conditioning in the summer and plenty of heat in the winter.”

To prepare the home, you’ll need to create how-to books and other literature for guests so they know how to care for your home and enjoy their stay.

You must also have short-term rental insurance.

“If a guest gets hurt and sues, that can protect the owners,” Trapasso said.

Airbnb offers hosts an option called Aircover, which includes $1 million in liability insurance.

STEP 3 – ADVERTISING

“The more a host invests in their property, the more likely they are to benefit from it,” says Trapasso.

When creating your listing, professional photos are a wise investment.

They make a room look much more appealing than poorly taken cell phone pictures.

You need to write an engaging description of your listing, explaining to guests what makes your home unique and why it’s in a good location.

To create a compelling description, you may need to hire a copywriter.

Some of the most successful hosts also use social media to promote their properties.

STEP 4 – BE A GOOD HOST

“Hosts should be as transparent, communicative and responsive to guests as possible,” says Trapasso.

Guests who experience unpleasant surprises tend to leave poor reviews.

Trapasso recommends informing guests in advance of anything that might cause them problems.

These can also be small things such as complicated parking instructions or tricky devices.

Guests also don’t want to be asked to do chores or clean before they leave.

“If you ask them to do that, you might get a bad review—and the guest will stay at a hotel the next time they’re in town,” Trapasso says.

DIY OR MANAGEMENT?

So what about management companies?

These professionals can take away the stress that comes with having strangers visit your home.

But they can also reduce your profits.

“Whether you hire a professional management company really depends on the property,” Trapasso says.

“If it’s a separate home and you don’t live nearby, it can be a smart decision.

“These companies typically maintain and repair the properties and can arrange cleaners,” she said.

“Your fees can vary widely, ranging from 10 to 50 percent of profits,” Trapasso added.

The disadvantages of short-term rentals

Your nightmares about guests trashing your home can come true, and that’s one of the biggest risks of short-term rentals.

“Guests may damage the furniture and property and it may take a while for the platform or insurer to issue a refund.”

Another problem can be guests overstaying their booking and refusing to move out.

THE 30 DAY RULE

In particular, it is important to know the 30 day rule.

Because if you allow guests to stay longer than 30 days, you may lose some of your rights as the property owner.

Trapasso explains: “Some guests may stay longer than booked and it may be difficult to persuade them to leave.”

“In many cities, guests who stay 30 days or longer may be considered regular renters, and hosts may have to take them to eviction court to vacate the property,” she added.

SHORT OR LONG?

All in all – should you rent short-term or long-term?

“The decision of whether to operate a short-term rental or a 12-month rental really depends on the owner of the property,” says Trapasso.

“Long-term renters generally offer a higher guaranteed income, but typically pay much less than owners can earn on a short-term rental,” she adds.

However, long-term tenants are typically much harder to evict if they stop paying rent.

“Each has its advantages and disadvantages.”

If you’re looking for a new vacation home, there are four important questions you should ask before purchasing.

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