Turn a Home Into an Income Stream
While executive recruiter Lori Greenberg and her husband were on vacation in Ecuador and the Hamptons, strangers were in their four-bedroom townhouse in upscale Park Slope, Brooklyn.
The couple had rented out the property, on a picturesque block, with the help of London-based onefinestay.com. The company listed the house online, acted as a concierge, showed the renters around when they arrived, and took care of any mishaps, Greenberg says.
Vacation-home owners have traditionally used property-management companies to rent out villas, especially in resort areas. With the rise of online marketplaces for home rentals, these owners are finding it easier to list their second homes, as well as to swap homes with others. For people who own a luxury residence, the services offer a way to fund vacations they would take anyway, or make back some portion of the cost of the home.
Financially, it’s absolutely worth it,” Greenberg says.
Onefinestay matches historic and luxurious homes in London, New York City, Paris, and Los Angeles with guests who pay to use them. It’s the same as the principle behind Airbnb, which connects homeowners with travelers looking for a place to stay, but at a higher price.
Launched in 2010, the company hires and supervises the cleaning service, swaps out the linens, and makes sure valuable keepsakes are locked away behind tamperproof seals and then put back in place. If something is broken—American renters have occasionally tried to heat a European-style electric coffee pot on a London stove, for instance—the company fixes it.
People who have rented out their houses with the help of onefinestay say that the company styled their homes before taking professional listing photos, which they were able to keep. Staffers take a video of the way the house looks once the owners leave, and everything—even clutter—is put back exactly the same way after the guests depart and the cleaning crew sweeps through.
Listing your property with a concierge website like onefinestay.com or a do-it-yourself site like Luxury.HomeAway.com is just one of three main ways to monetize your home’s idle time. So says Nick Copley, president of travel analysis firm SherpaReport in Newton, Massachusetts. You can also hire a property-management firm, which will handle everything from listings to renter relations to maintenance in return for 15 to 20 percent of the rent. Or you can submit your property to an exchange, such as 3rdHome or Trade to Travel, both of which allow high-end homeowners to contribute time at their own homes and in return stay at others’ homes elsewhere in the world.
It’s important to list your property on websites that specialize in luxury rentals, so it will be seen by the sort of people who are looking for what you have to offer. At onefinestay.com, an urban townhouse can rent for $3,000 per night, while properties on Luxury.HomeAway.com average $1,800 per night, with some topping out at $50,000. Homes for rent may have gourmet kitchens, cinemas, and wine cellars, as well as over-the-top features including a helicopter landing pad, access to a private yacht, and an equestrian center,” comments HomeAway’s Adam Annen.
In all cases, Copley says, it’s a good idea to have stellar photos taken, perhaps by a professional photographer. You’ll also need to inform your insurance company that you are renting out the house. Depending on the insurance you’ve got, it might mean additional premiums,” Copley notes. Some rental sites have arranged for special insurance policies; check when you submit your listing.
One pitfall of renting your home is not being able to keep tabs on how guests treat it. Try not to get too attached to your possessions, warns homeowner Kathy Brunjes: You have to recognize that everything is just a material thing, and sometimes things get broken or are not used the same way you would use them.”
Brunjes and her husband, Julien Beresford, who own a market-research firm, have rented out their riverfront Westport, Connecticut home in the summer for a dozen years, fetching a peak of $15,000 per month while they live on their sailboat. Renters, who find the house through HomeAway’s listing site VRBO.com, have included both vacationers and people relocating to Connecticut. Last year, the couple fulfilled a decade-long dream, sailing to the Bahamas and back over 15 months while a series of renters occupied the house. Brunjes and Beresford plan to do another stint on the seas, on a bigger boat and for a longer time, which will entail renting the house again.
If you rent your home through a website like HomeAway.com, you’re responsible for taking care of your renters’ needs. Brunjes has a roster of local service people who look after her pool, grounds, and house, but problems can arise.
When she and her husband were in the Bahamas, a telephone-company mix-up back in Connecticut resulted in disconnection of their landline phone service, which inadvertently shut down the home’s security system. The couple discovered the problem when the long-term renter who lives in a cottage on their property found the front door to the main house blown open by strong winds, and called the police. Another time, when a renter moved out, the power company also mistakenly turned off the house’s electricity.
No matter how much you plan, issues arise, and you have to deal with them,” Brunjes says.
Not Using Your Yacht? Rent That Out, Too
Chartering out your yacht can make as much sense as renting out your home.
Steve Norry just bought a 50-foot Jeanneau sailboat. But the computer-software salesman will use it only two to four weeks a year. He has put it up for charter, as he has done with boats he has owned for the last 15 years.
Norry gets about 60 percent of the $1,000 rental fee when the charter company he uses, Seaforth Boat Rental in San Diego, rents out his boat for a four-hour trip. Seaforth advertises the boat, finds renters, handles paperwork, makes sure the captains have proper qualifications, and performs minor cleaning and maintenance. Nory holds his boat in an LLC, which protects him from liability and makes clear to the IRS that renting it out is a business for him, he says.
Owners who place their yachts with a charter company often receive tax benefits, says Ian Van Tuyl of San Diego-based IVT Yacht Sales, the broker that sold Norry his latest sailboat. A few of Van Tuyl’s sales each year are to owners who charter out the yacht, often making back the costs of keeping it. On the minus side, he says, the vessel does get more wear and tear and more engine hours, which decreases its resale value.
Chana R. Schoenberger has been an editor at Forbes, an online editor for the Wall Street Journal, and a news editor for Bloomberg News.