July 30, 2009
Howard Craft is one of four adult children who inherited a lakeside cabin from their parents. Every year, the kids gather for a dinner meeting to decide the dates that the individual families will use the popular getaway, assign clean-up chores, and discuss possible improvements to the aging structure.
For the first time since the parents stopped their summer residency at the lake place, none of the four children could schedule vacation time to take advantage of the family cabin. Two of the siblings had moved out of the area to take different jobs and could not justify the costs to return to the cabin for vacation. Another, Howard, had accepted a teaching job in New Zealand for a semester. And the fourth sibling felt pinched by the economy and decided to postpone any vacation time away from work.
"We didn't know how to best go about renting the place," says the New Zealand-bound Howard. "We weren't real eager about paying a property management company and there really wasn't one company specializing in
the area.
"It turned out that when we got the word out that our cabin might be available, most of the available time was requested by people we had known for years at the lake. They had family visiting from out of town or had friends they wanted to host but did not have enough room for them. It actually turned out great because we were able to rent to people we knew — people who would take care and look out for us."
This situation is not uncommon. Most second-home-owners are surprised by the number of friends and neighbors who would rent given the chance. They also are surprised with how easily potential renters can be found on the Internet. But one nagging thought continues to haunt them: What if we get a bad set of renters and they trash our beloved getaway haven?
According to Christine Karpinski, author of How to Rent Vacation Properties by Owner, the key to worry-free renting is to have a system in place that allows you to properly screen your guests long before they settle in for their stay.
"Much like employers interview job applicants and worried parents scrutinize new babysitters, you must properly vet your potential renters," Karpinski maintains. "However, very rarely have I run in to a problem with one of my renters. If you use common sense and ask the right questions, most of the time vacation rentals work out just fine."
Karpinski suggests talking with — not just e-mailing — each renter on the phone before taking their booking. By asking the right questions, you'll be able to discern quite a bit about your guests. Here are a few questions that you should always ask potential renters:
"It's amazing how much information about a person you can glean from a short phone conversation," says Karpinski. "Not only will the answers to these questions provide you with valuable information about your potential renter's plans, but they will also get her talking. I know from my own experience that these questions can ease people into a conversation with you.
"And that's how you find out what you really need to know. You might discover you really like her and will gladly rent to her, or she might reveal something that sets off a red flag. These conversations should be a set-in-stone part of your
rental process."
If you're wondering about tax reporting, the four Craft families receiving a cash reimbursement are required to report the income to the Internal Revenue Service. Owners can derive tax-free income from renting a home or getaway, provided it is rented out for 15 days or fewer and don't claim any of the tax deductions typically allowed on rental property such as for depreciation or maintenance. Once the 15-day threshold is reached, a different set of taxes laws comes in to play.
"Personally, I'm just glad somebody is going to be using it," Howard beams. "It's too great a place to have it just sit there vacant all summer."
