short term vacation (night/weekend/weeks/months) vs long term lease

[Jim Hamrick]

I am thinking of renting out my current house. I will be living next door in another house (our new house) and can manage the rental full time.

I live in a seasonal vacation area with a military base nearby. There is a short term rental home down the street that always seems to be occupied and is currently booked for the next 3 months.

What are the pros and cons of short term vs long term renting?

[Account Closed]

Jim Hamrick I have been helping one of my business partners book a house in my area. It is just under 6,000 sq.ft., 6 bed, 6.5 bath. He bought the house the end of last year and we started renting it out earlier this year -- first guests stayed in February. We are renting the house for between $500-$525/nt or $2,500-$2,625/week plus tax, plus a separate $300 cleaning fee.

A few things to research and consider:

Look at your city's ordinances for short-term rentals. Some have strange hoops to jump through. For my area, we had to get permission from all other homeowners within 300' from the house. Luckily the partner that bought the house has lived in that area for years, so that was an easy one for him. There also had to be adequate off-street parking.

Find out what taxes you need to collect. For my area, there are transient room taxes that total 11.5% between the city and county. 6.25% sales tax, 1.0% city transient room tax, and 4.25% county transient room tax. Make sure you know your taxes, otherwise you might get a nasty surprise from the city and county.

Make sure you collect a security deposit AND get the guests to authorize you to charge their credit card for extra damages. Last week we finally got our first "disaster group." Normally it takes 8-10 hours for our cleaning crew to clean the house. After this group left, it took them over 20 hours. This was the first time I was not able to refund the group's security deposit. It wasn't a pleasant experience having to do that to them, but after sending them a few pictures of the damages and mess, they paid for the extra damages without much hassle. Normally we try to be very lenient with groups on damages. If it costs us an extra $50, but we can get them to stay again, we won't worry about charging them the extra amount. In this case it cost us an additional $355, plus there is no way we would allow this group to stay here again, so we went ahead and charged them.

That leads me to the rental agreement. I have a 6-page agreement and the guests must initial each page and sign the last page. It goes over the rental amount (breaks out the rental fee, cleaning fee, and room taxes), releases our liability for anything done on the property, PLUS it explicitly releases our liability for the pool/spa (always a worrisome situation with kids around pools). It also tells them what they are required to do upon check-out (returning items to their original places, pick up all trash, etc.). I was a little worried about people not being willing to sign it -- seriously, it is a LONG contract with a lot of "we're not responsible for anything" language in there -- but so far I've only had one person ask to make one small change to the contract. It was actually a good change, so I used it for all other contracts since then. All other guests have filled out their contact info, initialed each page, and signed the last page without any questions.

While it is more hands-on than a regular rental, the extra rental fees you collect should be worth it so long as you are in a good tourist area.