If you've never rented vacation property before, know that you probably have many more price-conscious options available to you at your destination than ever before. But keep in mind that you have to shop very carefully.
Credit the so-called "sharing economy" for putting many more people in the lodging business. According to a 2015 study by consulting firm EY, in one year alone, the world's dominant online room-sharing company added more listings to its inventory than the largest global hotel companies added rooms during the same period.
What does that mean for you? More choices, certainly, and potentially larger savings. The newer online property-sharing services can be cheaper for property owners to use to market the rooms and dwellings they want to rent out, which can result in savings for the traveler as well.
Before you make a vacation lodging choice between hotel rooms or the range of rental property available to your destination, you've got homework to do.
Here are five tips to get started:
1. Closely evaluate options. The world's leading tourist destinations tend to have the broadest range of lodging options from luxury hotels to hostels. Vacation rentals are usually a cheaper option, and depending on which neighborhood you choose, are typically somewhere in the middle of that quality scale. There are plenty of quality online services that will help you book properties, but don't make a reservation without checking other resources as well. Search the name of your destination or property with the words "vacation rental scam" and see what turns up. Your search might generate everything from news stories detailing recent illegal vacation rental activity to local tourism bureau and city agencies offering guidance on safely renting property in the area. It's always important to verify addresses and locations of properties as well.
2. Check local short-term rental laws. While it's generally easier to do this domestically than abroad, make sure the kind of vacation rental you want to do is legal. Check news clips or contact a local tourism bureau or chamber of commerce to see whether the municipality where you're planning to stay has enacted any recent restrictions on your chosen rental. For example, in late 2015, San Francisco voters narrowly rejected a ballot measure that would have made certain kinds of short-term rentals illegal in their city. You wouldn't want your vacation spoiled by local authorities.
3. Verify the renter personally and with local experts and agencies. If your renter is reputable, he or she should be more than willing to have a detailed conversation about the property, costs, financial arrangements and onsite rules--including deadbolt locks you can control if you are renting rooms within their residence. Make time to call the local tourism bureau, chamber of commerce, or the local chapter of the Better Business Bureau for any details about the renter or the property. Ask the renter for referrals from previous renters, if possible, and consider the Federal Trade Commission's (FTC) Scam Watch travel page for extensive updated advice on renting out-of-town property.
4. Ask for all completed agreements and liability insurance documentation before paying. Before you reserve, ask to see all contract information with pricing and scheduling information filled in as well as proof of insurance on the rental property. You should understand all payment and property rules affecting your stay and what might happen if there is accidental damage to the property while you're there. Share these documents with your home or rental insurer for input before you sign. If a renter hesitates to share this information, you might want to consider other options. Also, review your personal health, property and liability coverage to make sure you're protected during the trip.
5. Weigh all spending risks of the rental transaction. If you're planning to rent vacation property, take the extra step of calling your credit card and travel insurance companies to determine whether they offer any particular protections in case something goes wrong with the rental. It's a good way to review the full range of protection available to you on a trip. And if a vacation landlord asks for advance cash payment--particularly wired money--be very cautious. Many travel scams begin with wired cash.
Bottom line: Finding the ideal location has changed with the increased popularity of property sharing. The role online services play in short-term room and property rental provides many more choices and opportunities for great vacations, but also for fraud. Thorough research will help protect you and your vacation budget.
Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.