Reviewed by Connor Griffiths
You’re dreaming about your summer vacation – a month touring the country – and realize that your own home will be empty for that length of time. Or you own a cottage that you won’t be using for the entire summer and hate to see it unused. If so, why not consider renting it out to others?
Renting your home, condo or vacation property is tempting, because the income can help defray the cost of your own vacation. However, there are costs associated with becoming a landlord and it also requires preparation and work. Before you take the plunge, educate yourself about the ins and outs of vacation rentals.
Before you advertise your home or condo for rent, be sure that it is allowed under the rules of your municipality. If you live in a condo or an apartment, check into the rules about subletting
Before you decide to advertise your home on one or more of the popular online websites, compare the benefits and requirements for each of them. How much third party insurance do they provide? What percentage of the profit do they take? Know the marketplace before you commit.
There is nothing to prevent you from advertising your property on more than one website, so consider a few of the following options:
Be sure your insurance covers rentals. Many policies exclude it. Although using a listing organization such as Airbnb, whose host insurance covers some accidental property damage, it doesn’t usually include liability insurance, which is necessary if someone is injured on your property. It’s always a good idea to double-check with your insurance provider to ensure you have proper coverage.
If you’re renting out your home to others, one of the most important things to ask is whether they have home insurance or tenant insurance. Ask for the policy number and who their insurance provider is, in case something happens, you might be able to recover against them as well.
Before you welcome renters, be sure your home or condo has no safety issues. Check your smoke detectors to ensure that they are working, and make sure stairs and railings are in good repair.
ready for an online quote? Policies start at $12/month if you rent your home and $40/month if you own your home. To see how much you can save with Square One, get a personalized online quote now.
If your rental property isn’t nearby or if you’ll be renting your primary residence, you’ll need to make arrangements to have it cleaned between guests.
If there are grounds around the property, you’ll also need to line up someone to keep lawns mowed or driveways shovelled. Arrange that in advance and factor that into your calculations of costs and benefits of renting.
Determine a fair price for renting your property. Do some research into the rates being charged by area hotels and properties listed online. You’ll want to make sure you’re in synch with the market. Location is important. Are you near popular attractions or is it a bit of a hike to reach them? If they are close by, you may be able to charge a bit more. If you find your occupancy rate is close to 100 per cent over time, your price is probably too low.
Your property is precious to you, and you don’t want to rent it to just anyone. Ask for references, search their names online or read the reviews their previous hosts have given of them. When they sign the rental contract, ask for a deposit, and ensure that they know the conditions for getting the full deposit refunded.
Many online sites ask their guests to rate their experiences. If you want a positive rating, treat your guests well. Prepare a binder for them to read, similar to those you find in hotel rooms. Include the house rules, emergency numbers, information about and directions to local attractions, restaurant options and transit information.
Leaving a bottle of wine for your guests or some snacks are inexpensive ways to make an impression. Also, make sure that there are enough supplies on hand for their stay: towels, toilet paper, soap and dishwashing liquid are among the items that should be available.You can see more tips here at rental tips for Airbnb.
Renting your property can be a great way to earn some extra income to fund your own travels, but it requires work, so weigh the pros and cons carefully first. Some condominium corporations and management companies don’t allow it or only allow it under certain circumstances – beware of violating the terms of your agreement.
Taxes are also a consideration. BDO Canada explains, “Revenues earned from renting your cottage will be taxable. However, you can claim applicable expenses to offset this income.
Expenses can include a reasonable portion of the operating expenses for the cottage, as well as costs directly associated with renting the property (such as cleaning, advertising, commissions or fees paid to rental agents, and property management fees).” So, don’t leap before you look – do your homework.
You can rent out a mortgaged home, provided that your mortgage agreement allows it. It is often the case that, when you sign a mortgage contract, you’re agreeing that the home will be owner occupied. If you wish to have tenants, you’ll need to speak with your mortgage provider first.
Renting out your home through Airbnb, VRBO, or similar sites is considered renting for all intents and purposes. The CRA, for example, considers any income earned by renting out your home to be rental income, regardless of if it’s one night or 365 nights.
Generally, rental income is not considered self-employment income. However, for tax purposes, it may be considered self-employment income if you include additional services to your tenants beyond the basic facilities or utilities—as though you are operating a rental business rather than simply renting out a property.
Want to learn more? Visit our resource centres for hundreds of helpful articles created specifically for homeowners, condo owners, landlords, and tenants. Then, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
Get a personalized online home insurance quote in just 5 minutes and see how much money you can save by switching to Square One.
Even when you take precautions, accidents can happen. Home insurance is one way to protect your family against financial losses from accidents. And, home insurance can start from as little as $12/month.