1. Speak With Your Insurance Company.
Airbnb offers trip protection to their users however they don't protect the property owner. It's important to make sure that you contact your insurance provider prior to renting your unit to make sure that you can be covered for your rental property. Many homeowner insurance policies have exclusions for short-term rentals and most policies have a "business pursuit's exclusion" where liability will fall on the homeowner.
“The insurance industry has not caught up with the latest trends in technology and real estate,” James Steele of S&T Insurance Agency explains. “Nine out 10 times policies have strict exclusions for short-term rentals.”
2. Research the Guests Prior to Booking.
Although Airbnb has been utilized by travelers for the better part of a decade, many people who are booking on Airbnb are still new to the process. Many users have had doubts about the service in the past but are now open to giving it a try after hearing positive feedback from friends, family or coworkers.
It's important to let the prospective renter know what they can expect and explain in detail what requirements they'll have to meet and what your expectations are of them as users. By letting the user know what they're getting, you'll get a more positive response from the user and provide them with a more positive experience while staying in your rental unit.
3. Check to make sure the building allows for short-term rentals.
Do your research before purchasing a property with the intention to use it as an Airbnb rental. Many associations and condos will not allow for short term rentals. Many associations have bylaws and regulations that require a minimum term lease be signed prior to moving in. These bylaws and regulations could mean that the building will not allow for a short-term lease that the majority of Airbnb users would need.
4. Look into the municipalities taxation on short-term rentals.
Everyone who has jumped on the Airbnb bandwagon has found that depending on where the property is located, they're being charged additional taxes on their rental earnings.
Short-term rental income IS taxable income and many states or local municipalities apply additional taxes to short-term rentals. For example, many municipalities are charging both sales tax and occupancy taxes to income earned on short-term rentals so it's extremely important to know what taxes apply to your short-term rental based on your local taxation rates.
5. Know your Municipality Rental Laws.
Each municipality has their own set of laws for renting property within their boundaries. Not all municipalities allow for short-term rentals so it's important that your realtor research the laws and restrictions in the municipality in which your are looking to invest.