Short-terms rentals have become increasingly popular with real estate investors and those who want to purchase a retirement or vacation home for the future but are willing to rent it to vacationers during the intervening years. Whether you are considering a first-time short-term rental or have experience with short-term rental endeavors, important legal issues must be considered:
- Local Regulations: Are short-term rentals permitted by the local government? Do you need a special license to operate? Are there any proposed ordinances or regulations that may affect the property in the future? Is the property located in a development with a homeowners’ association that limits or prohibits short-term rentals?
- Business Entity: Forming a business entity to own the property and treating the short-term rental as a bona-fide business venture will help keep liability within the limited liability company or corporation. Also, insurance providing umbrella or additional coverage to further protect your assets if someone is injured on your property should be carefully considered.
- Pricing: Keep in mind that your pricing should include legal and accounting costs in addition to the costs of the property itself. Detailed records will help you with financial forecasts and analytics.
- Management: You may manage the property yourself or use an outside property management company to relieve you of time and stress. Consider what is best for you and your situation, such as where you are located with respect to the property and the time you have reasonably available. Contracts with professional management companies should be reviewed by your legal counsel.
- Listing the Property: Research fee structures and profile information that should be included in your listing, consider partnerships with local real estate agents, and study establishing your own rental website if you can capitalize on search algorithms. Pay careful attention to the terms and conditions of the sites on which you choose to list your property.
Reach out to the attorneys at Wright Beamer at 248.477.6300 for assistance with any legal questions about your short-term rental property.