Considering Using Your House As a Vacation Rental? Here's What You Should Know

By ROB SWAN, Contributing Writer, Qualifying Broker Swan Realty

The popularity of short term or vacation rentals as they are known, has grown tremendously in the past few years.providing additional accommodation options for visitors along with increased job opportunities for those servicing the industry. Many local homeowners have jumped on the short term rental bandwagon with varying degrees of success.

So is short term rental right for you?

There are a lot of things to consider when deciding whether or not a short term rental is the right decision. The biggest one is to make sure your home is zoned correctly. Some neighborhoods prohibit short term rentals as well as portions of some municipalities through their zoning ordinances, so be sure to check.

Another consideration is the servicing of the property, this includes, but it is not limited to advertising, marketing, cleaning, laundry and maintenance, all of which require time and money. There are professional management companies that can help you with all these needs or you can always go it alone if you have the time and resources.

Tax compliance is another important item to consider. You will of course be required to pay New Mexico Gross Receipts Tax and depending upon the location of the property you may also be liable for lodgers tax. These taxes are generally added on to the rental amount and are simply passed through the homeowner and on to the governing body.

Insurance, be sure to let your homeowners insurance company know what you are doing, you don’t want something to happen and not be covered. Many insurance providers have come out with specific policies to cover short term rentals.

Last but not least, is wear and tear on your home. Popular vacation homes get used a lot by a lot of people which generally equates to significant income but also will accelerate the wear on your home. You will replace and repair items more frequently than you normally would, this includes flooring, paint, appliances and fixtures just to name a few.

While the vacation rental business can be lucrative, it is not without its challenges, so if you are considering it, make sure to do your homework.