Online home-sharing, such as Airbnb, VRBO and HomeAway, has become increasingly popular for both hosts renting out their home and guests. According to a recent study by Roofstock, a real estate investment marketplace, about 10.6 million people in the U.S. earn money from more than 17 million rental properties. And according to Statista, there will be 64.7 million home-sharing users in 2022 and more than 68 million in 2023.

While it can be very appealing for the property owner to secure extra income, there are risks associated with renting out your home to strangers. Knowing these risks and liabilities before jumping in can save you a lot of headaches and future expenses.


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Below is a list of four things to consider before renting out your home:

Follow City, County and State Regulations – When considering home sharing, it’s important to understand your city, county and state laws. For example, in Phoenix, renters are required to be registered with the City of Phoenix, and all residential rental units – including vacation and short-term rentals – must be registered with Maricopa County. It’s also important to consider your contracts with leases, condo boards, mortgage lenders, HOAs, etc. There may be limitations you need to be aware of.

Levi Claridge is a Member at The Cavanagh Law Firm and represents clients in commercial litigation, transportation, insurance defense, and products liability.

Be Aware of Tax Implications – As a renter, you’ll have to pay taxes on your earnings, but you can also deduct some expenses related to your rental. It’s also important to understand the various taxes applicable when renting your home. Phoenix assesses a sales tax on property rentals and a transient lodging tax for guest stays less than 30 days. Consulting a tax expert is always a good idea.

Check Your Insurance – Before renting out your house, you must ensure you have appropriate insurance coverage. Most homeowners assume they have protection under their homeowners’ policy, but this may not be the case. Websites like Airbnb offer some property protection for hosts against property damage by a guest but do not include liability insurance. You may need to invest in an umbrella insurance policy that will cover loss due to injury, loss of belongings or damage to your home. If you rent your home with Airbnb, HomeAway, VRBO or the like, you will need Landlord Protection Insurance or Vacation Rental Insurance.

Know what you are getting into – Renting your home short-term can be a big responsibility. In addition to the above-mentioned risks, a renter should also consider additional expenses that will incur, such as stocking the home with all the necessities like towels, kitchen essentials, toilet paper, etc. It’s also likely you will see higher-than-normal utility bills. Additionally, Airbnb, for example, charges hosts 3% per reservation. And, of course, don’t have anything in the home that you’d be heartbroken of if it was damaged.

If you’re thinking of renting your home out as a side hustle, don’t forget to do your research. There’s much more to it than just deciding and listing it on websites like Airbnb. Consult with an attorney on the legal implications and do your homework when it comes to the demand in your area, pricing, laws, taxes and insurance. Happy renting!

Author: Levi Claridge is a Member at The Cavanagh Law Firm and represents clients in commercial litigation, transportation, insurance defense, and products liability.