If you regularly go away on vacation, renting out your home on Airbnb, HomeAway, VRNB or some other short-term rental site makes sense – at least financially.
However, you’ll have to put in some work to rake in a profit – and there are risks.
At least 370 homes and condos in Ahwatukee are listed on various short-term rental sites with prices as low as $65 a day to more than $230 per day. ZIP code 85044 has the greatest number of short-term rentals with 132, followed close by 85048 with 128, according to AirDNA.co, an analytics site. ZIP code 85045 has only 12, according to the site.
Overall, however, the number of short-term rentals has skyrocketed over the past five years, according to AirDNA.
Between 2014 and this year, the number of short-term rentals in Phoenix at large grew from 867 to 4,224. As of last March, Scottsdale was home to 5,369 vacation rentals, and Sedona had 2,095 short-term rental properties.
At the same time, the allure of extra income can be strong. Airbnb says homeowners can earn upwards of $1,400 a month.
To help owners decide whether and how to rent out your place, Realtor.com recently listed some important questions to consider first.
Are there other restrictions on short-term rentals where I live?
Knowing what the regulations are in your area is crucial.
For example, Airbnb.com notes homeowners should study the Phoenix zoning ordinance “to see if your listing is consistent with any zoning requirements or use definitions.”
It said important terms to examine include “bed and breakfast establishment,” “boarding house,” “commercial use,” “dwelling,” “dwelling unit,” “guesthouse,” “guestroom,” “hotel,” “residential purposes,” “residential use,” “rooming unit” and “transient purposes.”
The ordinance also regulates converting some dwelling units to a different use.
Phoenix also has rules and regulations specifying construction, design, and maintenance standards for buildings, including regulations on habitability, health, and safety.
“Certain regulations applicable to residential and non-residential uses may be relevant to your listing,” Airbnb advises, urging homeowners to look at building codes or contact the Phoenix Planning & Development Department for more information.
Phoenix requires owners and operators of hotels and certain property rentals to apply for a license.
And both Phoenix and Arizona impose a sales tax on real property rentals while the city also has an additional transient lodging tax.
Guests qualifying as a “permanent resident,” or guest stays of 30 days or more, are exempt from the transient lodging tax. Airbnb collects and remits these taxes in Phoenix.
Under a law that took effect in August, short-term rental hosts must include a lodging tax license number in all advertisements.
The law requires short-term rental operators to hold a current transaction privilege tax license before offering up a vacation rental to guests. Hosts who break these rules face fines of $250 for a first offense and $1,000 for a second.
The law also prohibits short-term rentals from hosting special events normally requiring a permit, such as large parties.
And it allows municipalities to require short-term rental owners to provide contact information for someone who can respond to complaints of rowdy behavior in a timely manner.
The state Department of Revenue is also authorized to impose fines ranging from $500 to $1,500 on short-term rental hosts who receive citations from a city or county for violating vacation-rental use laws.
The bill amends legislation that went into effect in 2017 prohibiting cities, towns, and counties from restricting short-term rentals. Advocates lobbying for the bill complained proliferating short-term rentals were becoming nuisances with loud parties and other unneighborly behavior.
In Arizona, short-term rental operators are required to collect state transaction privilege tax, county excise tax and local transient occupancy from their guests and remit it to tax authorities.
Does my HOA allow short-term rentals?
Like cities, homeowners associations, condo associations and co-ops can take a different approach to regulate short-term rentals. Some have no rules at all, while others ban subleasing altogether.
Contact your HOA to see if subleasing is permitted, and find out if there are any restrictions you have to follow. Some HOAs require short-term renters to submit an application to the board for approval before they can occupy the property.
How much effort am I willing to put in?
Depending on where you live, you may face heavy competition from other short-term rentals.
If your house is located in a hot neighborhood, you might have to go to extra lengths to make your listing shine.
Most Airbnb hosts provide guests with basic toiletries and free Wi-Fi. Offering extra provisions can make your listing stand out.
For example, many Airbnb “superhosts” set out fresh flowers, stock their fridge with local foods and wine and beer or even offer guests “experiences” like surfing, spa treatments, adventure sports, or cooking classes for an additional fee.
Also, keep in mind it takes time to clean up your place before guests arrive and after they leave. Alternatively, you could hire a cleaning service, which would cut into your profits.
Am I planning to refinance my mortgage?
Though renting out your house on Airbnb can be a great way to help pay your mortgage or even help you qualify for a mortgage, it could hurt your ability to refinance. If your mortgage lender decides you make enough money from your home for it to qualify as a commercial or investment property, it may charge you a higher interest rate or deny your refinance application altogether.
Earning a supplemental income might be more advantageous than refinancing your mortgage to a lower interest rate, depending on how much you’re making and what rate you’d qualify for.
Realtor.com advises owners to consult a financial adviser before renting out your house.
What’s the best home-sharing service for me?
Airbnb may be your first thought when it comes to listing your short-term rental, and for good reason: It offers more than 6 million places to stay in nearly 100,000 cities and 191 countries.
But it’s not the only home-sharing player in town. Choosing one of these alternatives may be a better option for you, depending on your needs.
Airbnb lists only about half the total of available short-term rentals in Ahwatukee.
Onefinestay offers luxury home accommodations (think private villas and penthouse apartments) in destinations such as London, Paris, New York, Los Angeles, and Rome.
Those looking to host gay travelers can turn to Misterb&b. Meanwhile, home-sharing providers Outdoorsy and RVShare specialize in offering RV rentals in cities across the U.S.