The Internet helped the growth of AirBnB and other short-term rentals explode. With temporary rentals, homeowners rent their homes for a night or a week. They can make an income and provide a comfortable residence for visitors.
Temporary rentals provide homeowners with many benefits, but HOAs have received the short end of the stick. With the right approach, though, HOAs and short-term rentals can work together.
Below are the pros and cons of having short-term rentals like AirBnB in your association.
The Pros of Short Term Rentals
Short-term rentals have advantages for HOAs as well as the community members themselves:
- Homeowners have higher income – Homeowners earn extra money renting a room or unit on a short-term basis. Higher income can mean two things: Homeowners may have an easier time paying their homeowner’s association dues and they may also pay their mortgage payments on time, avoiding foreclosure. This helps maintain property values while avoiding vacancies too.
- Homeowners have a better chance of unit maintenance and improvement – Maintaining unit attractiveness is crucial for the unit to be rented. Renters often leave reviews online. This determines how often others may rent the unit too. To keep a unit attractive, homeowners not only maintain but also improve the unit. This helps increase the home’s value, which helps surrounding units too.
- Gives the association a competitive edge – Allowing temporary rentals makes the association more attractive to potential buyers. Once word spreads through the community, the demand for purchasing units in the development may increase.
- Give the area cultural diversity – Welcoming visitors from outside the surrounding area helps increase the cultural diversity in the area. This may increase the attractiveness of the area, introducing new tastes and experiences, rather than letting the area become stagnant or boring.
The Cons of Short-Term Rentals
Knowing the downsides of short-term rentals will help associations create solutions while enjoying the success short-term rentals can provide:
- Higher risk of damage – More people using the properties can cause unit damage. It also puts surrounding properties at risk as visitors may not know or follow the association's rules and regulations. Visitors may damage the unit itself, common areas or even other people’s property. This could decrease the development’s value.
- Lack of community – New faces coming and going can mean a smaller sense of togetherness when people stay temporarily versus long-term. People don’t get a chance to know one another and support one another as they would do in a stable community.
- Insurance risks – The security of the development, its residents, and the units themselves are at risk. Claims increase with more unit wear and tear and visitors often have less regard for the home's condition. Overnight guests often use clubhouse amenities too, increasing the risk of insurance claims.
Ways to Offset the Risks
As you can see, short-term rentals have definite advantages. Fortunately, there are ways to implement the use of short-term rentals without risking the integrity of an association:
- Create a clear set of rules that every short-term guest must receive from the homeowner. Should the homeowner not provide the guest with the rules or the guest chooses not to follow the rules, the homeowner can incur fines on behalf of their guests.
- Set a daily fee to be paid by the homeowner to the association to help provide funds for excessive maintenance and repairs of common areas.
When done right, short-term rentals can benefit homeowners and HOAs. Embracing the ability to bring in more guests, money, and a sense of diversity can benefit everyone involved.