Next Avenue: How some retirees are making extra income with short-term rentals
This article is reprinted by permission from NextAvenue.org.
When my husband died in 2018 at age 57, I knew I was going to have to do something to make up for the savings he would have contributed to our IRA.
This year, when inflation skyrocketed, I not only needed additional income if I hoped to eventually retire, but I also needed additional money to maintain my standard of living.
I decided to transform a stand-alone cabin on my property in the Ozark Mountains from my writing studio into a short-term rental.
It turns out that I’m not alone in trying to turn property into income.
Living off the land
“Against the backdrop of a rising cost of living, people of all ages and backgrounds are turning to hosting,” says Liz DeBold Fusco, an Airbnb
executive. She added that her company noted an increase in the number of new hosts 50 and over in countries with higher inflation.
Along with competitors such as Flipkey, Vacasa
and VRBO, Airbnb is one of many short-term rental companies that offer platforms where travelers can find hosts with rooms to spare.
“More and more, adults over 60 would rather age in place in their current home or neighborhood, but as people live longer, stretching their savings even further into retirement can get difficult,” Fusco says. “Airbnb gives them the opportunity to earn extra income, which helps cover housing costs and the overall rising cost of living.”
Related: Dear Tax Guy: I just started renting my house out on Airbnb. What income-tax deductions can I claim on this property?
Make a business of it
Mari Ascherin, 58, lives on 5 acres of land near Custer, South Dakota, and has views of Custer State Park. After her husband, Mark, died unexpectedly in 2019, she went on a camping trip to visit friends who had listed some of their property as a short-term rental. Ascherin was living in the 850-square foot cabin on her property while finishing a larger home she and Mark began building.
Given her proximity to a popular state park, she decided to live in her camper during the summer and list the cabin as a short-term rental. She also took a class on small-business management, which included a section on marketing. While doing market research on short-term rentals in her area she realized that few rentals offered dog-friendly accommodations.
“I decided being dog-friendly would be my niche,” says Ascherin, who already had almost an acre of land fenced for her own dogs. The fenced area also includes heated kennels—a bonus during long, cold South Dakota winters.
“I had such a great response,” says Ascherin. “There were dozens of inquiries the first day I listed.”
The first two years were so successful with the cabin, she decided to live in the camper this past summer and also rent out the larger home, which was built to allow Ascherin to age in place.
The plan proved so profitable, Ascherin will reach her goal of retiring early at 59½.
See: Most Americans want to retire just 10 years early. Here are 5 steps to making that happen.
Location: Important, not imperative
Tim Rosolio, vice president of vacation rental partner success for Expedia Group
which owns VRBO, says location is important when deciding if you have a viable short-term rental property.
“If you’re in a lake community, the closer to the water the better,” he says. “Look for comparative properties for how many there are, pricing and the number of reviews in your area.”
While being in a vacation or resort destination, as Ascherin is, can certainly determine whether your short-term rental will be booked months in advance, as hers is, Fusco says Airbnb is seeing people stay in less-traveled destinations more frequently.
“People travel for so many different reasons beyond vacations,” Fusco says. “They might be looking for a place to stay near family, traveling for a graduation, or booking a stopover on a road trip.
“Ultimately,” she adds, “what so many travelers value is localized experience guided by a host who knows the space and area best, and that’s true no matter where you live.”
Also read: This couple traded their house for an RV and paid off $200,000 in debt — then the money started rolling in
Tips for people new to short-term rentals:
Know the laws. Some local authorities require hosts to receive a license, buy liability insurance, pay occupancy taxes or comply with zoning rules that may limit how hosts use their property. “Make sure you understand the regulatory laws where your home is located,” says Rosolio.
Understand the industry. Anticipate your guests’ expectations and try to meet or exceed them. “It’s very important to remember you’re in the hospitality business,” says Rosolio. “You have to deliver a great experience if you expect to get great reviews.”
Choose a platform that best fits. There are dozens you can investigate. For example, Airbnb has rentals in over 100,000 towns and cities around the world and doesn’t cater specifically to a type of traveler. VRBO typically rents larger homes for family and multigenerational vacations, Rosolio says. However, they also have smaller homes as well.
Communicate effectively and swiftly. Create a detailed, honest listing, complete with house rules. A popular rule limits the number of guests on the property; another stipulates that parties are not allowed. “Showcase what makes your space appealing, whether it’s luxurious, quirky or simple and affordable,” says Fusco, who adds hosts should respond to inquiries fast, at least within 24 hours.
Keep it clean. Nothing will normally get your space a negative review faster than if it isn’t spotless. “Whether you are doing the cleaning or hiring someone to do it, clean and audit it to perfection,” suggests Rosolio.
Splurge on linens. Anything a guest touches should be of high quality, Rosolio says. This includes towels and linens. Valerie Van de Zilver, president of Val’s Vacation Homes in Tustin, California, even provides extra sheets in sealed bags for her guests. “That way the guests know they are clean and sanitary,” says Van de Zilver.
Sweat the small stuff. “It’s often the little things that end up being the most memorable parts of a guest’s stay,” says Fusco. “Consider greeting your guests with a warm welcome, or if you can’t be there in person, leave them a handwritten note with some helpful tips about the home or a few of your favorite hidden gems that they should check out in the local area.” Ascherin believes it’s the small touches that have helped earn her “Super Host” status.
Protect yourself. Note the protections the rental platform offers, but Patrick MacQueen, an attorney with MacQueen & Gottlieb in Phoenix, Arizona, says to educate yourself and obtain the proper rental and liability insurance. He also recommends creating an agreement separate from the hosting platform’s that releases you from liability. Also have your guests sign off or acknowledge the property rules in an email. Van de Zilver, who manages 38 short-term rentals, says owners also have cameras outside their properties so they can monitor who is on the premises. “Remember, you can’t put cameras inside,” she adds.
Video or take photos. As soon as you or your housekeepers finish, have them videotape the property or take photos to show it was clean and free of damage prior to a new guest’s check in. Do the same immediately after guests leave.
Read next: 6 ways retirees can bring in extra income
I listed my property just before Labor Day; since it is on a lake in a summer resort area, I knew my bookings would be slow until next summer. I hope 2023 brings people to my property and helps secure my financial future.
Kerri Fivecoat-Campbell is a full-time freelance writer and author living in the Ozark Mountains. She is the founder and administrator for the public Facebook page, Years of Light: Living Large in Widowhood and a private Facebook group, Finding Myself After Losing My Spouse, dedicated to helping widows/widowers move forward.
This article is reprinted by permission from NextAvenue.org, ©2023 Twin Cities Public Television, Inc. All rights reserved.
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8 Rules to Rent Out Your House While You’re Away