Short-term vacation rentals have been becoming more and more popular. Many vacationers opt to skip out on the traditional hotel and rent a home with more space and better amenities. Landlords are also choosing to use their investment property as a vacation rental instead of a long-term rental. The amount they can charge in rent can often be double or triple what they could with a traditional long-term rental.
As with any good investment, however, there comes some risk. Many vacation rental owners have shared stories of nightmare renters who have cost them thousands of dollars in damages and legal fees. As much as we prefer to talk about the positive aspects of owning investment properties, we felt it is just as valuable for prospective owners to know about the negative possibilities a property owner could face. If owning a vacation rental is something you are considering, you will want to prepare yourself for even the worst-case scenario. Learn from the experience of others; keep reading for insight into what could possibly go wrong when owning a vacation rental.
Loud, Obnoxious Parties
Vacation rentals are notorious for loud parties. Many vacation rental owners have reported parties hosting more than 100 people being thrown in their vacation rentals! These parties can come with noise complaints which could cause you, the homeowner, to get ticketed by the city. The partiers can cause damage to your property, cost you thousands of dollars in repairs, and you’ll likely have to cancel reservations for other guests while the repairs are made. Absolute worst case, and this has happened, is criminal activity stemming from these parties. There have been a few stories lately of fights breaking out at short-term vacation rentals resulting in death.
So, what is an owner to do? You can try your best to screen people before they arrive at your rental. You can also impose a minimum stay of two or three days to cut back on people who only rent the house intending to throw a party.
Thanks mainly to the loud, wild parties we discussed above, many neighbors have become fed up with vacation rentals. The neighbors have gone to local HOAs or municipalities to complain and get more regulation on short-term rentals. This has led to some HOAs mandating that a lease be no shorter than 30 days, and some have decided that vacation rentals are not allowed at all.
If you own a home within an area that has decided to place restrictions on how long a tenant must stay, you may be out of luck. Most vacationers do not want a 30-day lease, so this new rule would make you have to rethink your investment strategy. You may need to pivot back to housing long-term renters, which will likely cause you to make less money. You will also lose out on the money you spent to furnish the house since not many long-term renters are interested in a home that comes furnished.
Pay attention to your HOA board’s upcoming meetings. If they want to change the rules to restrict vacation rentals, you will need to voice your opposition.
Guests Who Overstay Their Welcome
While most vacation rental guests are great, others may like the place so much they do not want to leave. Seriously. Squatters can be a nightmare for a vacation rental owner. Airbnb has a policy that will charge the guest 1.5 times the regular nightly rate if they stay beyond their check-out date. But, if that doesn’t deter them, what can you do?
Many vacation rental owners will have their guests sign a lease agreement so that they can take legal action more quickly should they need to. If you must call the police to remove a guest, you will have evidence that they are overstaying their welcome and it should make the eviction process faster.
Often you will find the guests who stay at your vacation rental will be courteous and respectful of your property. In the cases where you have trouble, though, the situation can be horrible and cost you a lot of money. The best course of action is to try to avoid the guests from causing any trouble to begin with by not allowing overnight stays, having them fill out lease agreements, and keeping up to date on HOA and city regulations relating to short-term rentals.