Tips for renting your investment property to family members

When you own a vacation rental, it’s natural to want to share your home with close family and friends—even make it available for family vacations, events, and reunions.

However, renting out your vacation home to personal guests—especially at a discounted rate or no rate at all—can be a gray area. What if they want to stay during 4th of July weekend? Or during peak season when you could otherwise generate more income? It can be uncomfortable telling your cousin to pay full price or your friend that they can’t use your home at all.

Here are 6 ways to navigate those tricky requests and still protect your home, your calendar, and your personal relationships.

1. Use a vacation rental agreement

Though it may be tempting to skip this step when dealing with friends and family—don’t.

All guests—even your siblings and closest friends—have the same responsibilities when they stay in your vacation home. It’s up to you to express what those responsibilities and expectations are. Like any other vacation home they’d rent, they have to be willing to sign a vacation rental agreement.

This short-term rental agreement should outline:

• Your maximum occupancy
• Any house rules
• Payment terms and extra fees, such as cleaning fees
• How to address maintenance issues during their stay
• Check-out instructions
• Any safety precautions specific to your property, like around pools, hot tubs, or outdoor decks

In case of any disputes or discrepancies, an agreement can possibly serve as a layer of protection for both you and your friends or family members.

Work with an attorney to compose all of your rental terms in the correct legal language. They can help you follow the proper city, county, and state laws around short-term rentals.

2. Invest in liability insurance

Insurance is essential for your vacation rental property, period. Even if your friends are responsible and you have airtight safety precautions in place, accidents can (and will) happen. Think broken lamps, spills on couches, and cracked TV screens.

At Vacasa, we urge homeowners to have adequate liability coverage for their vacation homes.

3. Use your high and low seasons as a guide

Also known as peak and off-peak seasons in the travel industry—these periods when your destination attracts its most (and fewest) visitors can guide your response to personal requests. Every destination is different. Ski towns fill up with skiers and snowboarders in the winter, while coastal areas attract a large number of vacationers come summer. Some destinations aren’t so cut and dry. The blustery Oregon coast can still fill up in the winter, thanks to travelers wanting to storm watch.

If friends or family want to book during your peak season, you can politely inform them you are saving those dates for full-paying guests. Then suggest alternate dates during a slower period.

4. Remind family that your vacation home is a business

If your aim is to make money from your vacation property, it’s important to let friends and family know this. They may not be aware that your mountain cabin is anything more than a personal getaway spot. Running your vacation rental as a business means you’re operating on a different level. Now, details matter—like marketing to get maximum exposure, maintaining your home, and increasing your rental income. Personal guests mean more wear and tear, plus taking up vacancies on your calendar that could otherwise go to paying guests. A simple reminder to your friends and family can help to ease the blow when you deny any of their reservation requests.

5. Understand how personal guests affect your taxes

Taxes can take out a chunk of your vacation rental earnings. Your tax deductions and how much you owe at tax time depends on the amount of time you spend at your vacation home for personal purposes. But, here’s the kicker—your friends’ and family’s stays count toward that personal time.

According to the IRS, here’s whose stays count towards personal use:

• You
• Family members and friends
• Anyone who pays less than the fair market rate

Whether you want your vacation home classified as a residence or a business, work with a tax professional to make sure you’re following all the rules.

6. Communicate with your vacation rental property manager

However you decide to handle requests from friends and families, let your property manager know. For instance, you may want to reserve specific dates during your low season for personal guests. Or, discuss what will happen if any of your personal guests damage something on the property. Keeping your property manager in the loop about how you’ll tackle personal requests allows them to continue helping you get the most out of your vacation rental.

At Vacasa, we allow homeowners to hold dates on their calendars—for themselves, friends or family, or for maintenance work—ahead of time, whenever they’d like (as long as you honor existing bookings).

Your vacation home is a special place—one that you want to share with family and friends. However, when you’re treating your vacation rental as a business, renting your home out to personal guests takes a few intentional steps. These tips will help you plan ahead so you can handle personal requests easily, without ruining relationships or your bottom line.