AirBnB the right way in primary home

[Peter B Ana]

We want to rent out a basement apartment in our primary home on AirBnb (or long term rental with standard lease). Would love sage advice on what/how to do this right.

ASSETS
650k equity in home, stock/bond investments in retirement and taxable accounts
No trusts, No LLCs, 2 Kindergarten age kids

ZONING
Town laws suggests that less than 1 week is not allowed. So I can stick to renting it out for 7 days or more. I've never done this before so don't know if this will be financially viable.

BASEMENT
The basement has an independent entry and exit, in addition to indoor stairs that lead to the rest of the house.

INSURANCE
Recently switched Homeowners insurance to Travelers because their coverage covers short term rental explicitly (Travelers was the only company with this clause)
Umbrella – Moving to a new company (Markel insurance, not Travelers)

QUESTIONS ON HOW TO DO THIS CORRECTLY

1. Is there any liability risk that puts the equity in my house at risk (~$650k)?
Is there any liability risk that puts the rest of my investments at risk?

2. Is long term rental inherently safer than short term rentals?

3. Should I be using a LLC and/or a trust somehow to safeguard assets? I have never done either so any pointers on where to start would be very helpful.

4. Does having an umbrella insurance from a different company (Markel insurance) than the homeowners insurance (Travelers) matter? Can’t find a competitive rate for Travelers so are forced to go this route.

Thank you so much for any guidance!

[Carolyn Fuller]

@Peter B Ana

re This MTR market is a new idea and one that might work really well. We are a 12 minute bus ride to Harvard and 10 minutes to McLain hospital. Had never thought of this. Incredible!

Check out SabbaticalHomes and Harvard Off-Campus Housing. I have 2 fully furnished units that I rent via these 2 platforms plus MIT Off-Campus Housing because one of the units is near MIT. 

For the unit that is not on the first floor of my home, and hence, can not be rented on the STR market, I am strict about the begin and end dates of my leases such that I have absolutely no days that the rental is not leased. That generally means start dates of Sep 1, Jan 1 or Jun 1 with end dates of Dec 31, May 31 or Aug 31. I have to turn away tons of people who want slightly different dates but there are plenty of people who are willing to sign a 3, 4 or 5 month lease even if they are not occupying the rental for the full length of time.

With the other unit, I will sign any sort of crazy lease period because I know I can fill in with STRs. Keep in mind that January STRs in Boston rent for less money than LTRs. I use January STR days to ensure I keep my Superhost status and I don't worry about the fact that my monthly income is less than it would have been if I had found an MTR tenant who was willing to sign a lease beginning on Jan 1.

Again, I'm not so sure about the McLain Hospital proximity. Visiting nurses were a much tougher clientele for me. They often expected rents to be less than half what I charge. I'm not sure if McLain even has visiting nurses. 

Oh and one other thing, I found that spending time to create detailed videos of the listings REALLY, REALLY helps. People all over the world, including busy local people, are totally willing to sign leases and pay last month rent without ever seeing the place in person.