Short-term rentals can be a boon

BY JAY BRIJPAUL

Short-term rentals, such as Airbnb can be lucrative, fetching an average of about $150.00 daily. It is a boon for many. Millions of hosts and travelers around the world are benefitting from short-term rentals; the hosts enjoy the extra income and the guests welcome affordable accommodations. I rented a suite in London, England for a week and the service was excellent. The 2-bedroom flat was beautifully furnished, and the price was below that of the local hotels. There are horror stories in which the renter’s home is left trashed after a visit from rowdy guests. Airbnb Host Guarantee program will cover the cost to a maximum of one million dollars, but the homeowner is not fully exempted. Be sure to check with the mortgage and insurance before venturing into short-term rentals.

If up to the challenge, then, prepare the rental accommodation. A place that is well presented and nicely furnished will get great reviews. It is best to register with a reputable company such as Airbnb, rather than to advertise independently. Good photography and a virtual tour are imperative. At first, there is no review of the rental property, therefore the price should be set at below market value. Positive reviews are golden.

A short-term rental applies only to the principal residence where the owner-operator can rent a portion of the home, to a maximum of 3 bedrooms, for less than 28 consecutive days and must not exceed 180 days in a calendar year. To qualify, the operator must have a license granted by the city and pay Municipal Accommodation Tax (MAT). The licensing authorities must have satisfactory evidence that the property is the owner’s principal residence.

As an owner-operator, there are strict guidelines to follow. Guests must be able to contact the owner at any time during their stay and they must be advised on the proper use of a 9-1-1 call. All guests must be given a layout of the dwelling equipped with the nearest exits in case of an emergency. Operators must keep a record of every short-term rental for a period of three years. The record must include the length of the stay, cost, and whether the rental was for an entire unit or for a single room. Failure to comply may result in fines of up to $100,000.

Condos are great avenues for short-term rentals as well. In this setting, guests have access to several amenities such as the concierge services, pool, gym, and parking during their stay. Most condos have rules disallowing short-term rentals and it is smart to review the condo declaration before proceeding. Violating the rules of the condominium can result in stiff financial penalties against the owner. If a renter plans to rent their apartment on a short-term basis, be sure to check the lease. Most leases have restrictions against short-term rental and sublets. Violating the lease can be cause for eviction and if there are damages done, the owner is personally liable.

The income from short-term rentals is taxable. By offering your home as a short-term rental, the owner is considered self-employed. The rental income can be offset by related expenses such as repairs, supplies, and cleaning services as well as an equivalent portion of their mortgage interest payment, property tax, and insurance.

Short-term rental can be lucrative but requires a lot of attention. A service provider must work to keep their customers happy. One bad review can ruin the reputation of the property. The owner must be accessible and have a circuit of maintenance personnel.

Joanne, a stay at home mom considered it a boon because she can take care of the family’s needs and maintain a steady stream of income. The 3-bedroom basement apartment brings in an income of $3,500 monthly, whereas a long-term rental, market rent is only $1,400.

Short-term rentals are financially rewarding but they do come with potential problems. The owner of the property will be living in close quarters with strangers and are essentially at their beck and call. Go with reputable companies such as Airbnb and check their reviews. Along with the risks, the rewards are high. The best cherries are on the end of the weakest branches so be careful!