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Renting Out Your Home: Issues and Tips


The sharing economy has never been bigger. Instead of getting a loan from a bank, people are turning to crowdfunding. Instead of hailing a taxi, they’re turning to companies like Uber and Zipcar. Instead of staying at a hotel, they’re staying at a stranger’s home.

On one end of the transaction, it’s cheaper than dealing with a more traditional business. For the people renting out their belongings, it’s a quick way to make some cash. There are downsides, though, especially when it comes to renting out something as important as your house.

The Rise of Airbnb

Although renting out one’s property is nothing new, the way it’s commonly done has changed in recent years. One of the main reasons for this has been the rise of Airbnb. Founded in 2008. Airbnb is an online marketplace that lets people (hosts) list their homes as available for rent. Other people (guests) can then book a stay. It’s essentially a peer-to-peer alternative to hotels. The company started in San Francisco and now facilitates short-term rentals all over the world.

How It Differs from Traditional Renting

Renting your property through a company like Airbnb differs from more traditional options in several key ways. First, when you rent or sublet your home, you’re usually doing so on a long-term, ongoing basis. Airbnb rentals often last only a night or two. Local laws sometimes have additional restrictions on such short-term leases.

Additionally, when you book through Airbnb, you’re using the company’s terms—although you are allowed to add your own contract, as long as you disclose this before booking.

What You Need to Consider

It’s important to keep in mind that, unlike traditional leasing and subletting, the peer-to-peer business model is fairly new and untested. Thus, unforeseen problems can arise.

Before you begin renting your home out, you need to make sure you’re following local laws. In Hawaii, this includes registering with the Department of Taxation and paying taxes on rentals. You also need to look at other restrictions on the way you use your property, including zoning laws, homeowners association agreements and, if you rent the property in question, your lease.

Other legal and regulatory issues may arise, as well. For example, one man filed a lawsuit claiming that a host was discriminating against guests based on race. Another man was accused of secretly recording his guests in a Las Vegas property, according to Honolulu Star Advertiser. Although security cameras are common in and around homes, using them in rental properties becomes more problematic.

Insurance is another tricky issue. A lot can go wrong during a short-term stay. A guest could fall down the stairs and injure himself. He could flood the bathroom or destroy the host’s belongings. A fire could start. Airbnb now provides Host Protection Insurance, but this protection is quite new and is not available everywhere. Your average homeowners insurance policy is not intended for commercial use, and you should not expect it to cover cases related to short-term rentals. Instead, hosts need to obtain commercial coverage.

The bottom line: Before you rent your house, talk to your FICOH independent agent. Understand how your insurance applies, and if any additional coverage is needed. It’s always better to be safe, then sorry!