A huge number of homeowners in America are renting rooms in their homes (or the entire home) to short-term tenants and even travelers. They are using one of the many online rental platforms that specialize in this business. The aim is to make some extra cash that is then used in making rental and mortgage payments for the properties. People living in expensive areas and neighborhoods find this to be an economical way to meet mortgage payment demands.
However, despite the rising growth of this business, many homeowners are ignorant of the many challenges and risks that come with short-term renting to strangers and travelers.
1. Homeowner’s Insurance Policies Do Not Extend to Short Term Rentals
Many insurance policies do not cover owners who rent their properties on a short term basis. This is because this coverage is often viewed as quite risky and uneconomical by the insurance company. In order to protect one’s assets, the homeowner should either get a complete business liability policy, upgrade their policy or add a rider that ensures that they are covered. They could also decide to only rent to tenants with insurance coverage.
2. Increased Risk
Tenants often increase the risk of damage to a property as opposed to family and friends more so if they rent short-term.
3. Inadequate Coverage from Online Rental Platforms
Online rental platforms only offer a guarantee of insurance and not actually a full coverage. It is only accessible after the home owner proves that they have exhausted all other avenues.
Richard Blair is the owner of Wealth Solutions Inc., an investment advisory firm that is registered and based in Austin, Texas. He founded the company to offer great investment advice to small business owners, families and individuals. Blair has reiterated that the reason why he chose to educate people on effective investment methods is because he comes from a family of teachers. He experienced firsthand how education can change a person’s life by allowing them to grow their knowledge and confidence.
Blair entered the world of financial services immediately after graduating from college. He founded Wealth Solutions Inc. in 1994, and has since offered excellent and unbiased financial advice with no conflict of interest. He has gained immeasurable experience and knowledge in retirement planning. He has held the coveted industry securities registration for nearly 22 years and has grown his fund into a $55 million worth RIA.