Sites like Airbnb have made it so much easier for everyday people to make some extra cash from their homes. More vacationers are turning to this trend right here in Detroit.
Before you create your rental ad yet, you need to know the risks.
There are four million listings on website worldwide but some Home Owners Associations (HOA) have strict regulations and if you violate the zoning laws in your community you could be fined.
Detroit has over 300 rentals right now, and new attractions like concerts and games at Little Caesars Arena will bring more visitors.
Kevin Hirzel is an attorney in Livonia who specializes in property owners' law. He says some cities have restrictions about how long you can rent.
“I actually did a study in the last year and the city of Detroit was rated as one of the most, friendly cities for Airbnb,” Hirzel explains.
For example, if you were thinking about renting out your cottage up north, the Traverse City Zoning Department allows short term renting in their commercial districts but only 30 day minimum stays in all residential zones.
You’ll receive a warning the first time and then a $400 civil infraction if you do it again.
“The owner of the unit is ultimately going to be responsible for what happens in it, so the association would go after the unit and then they could possibly fine them, seek an injunction against them, preventing them from doing that,” Hirzel warns.
If you are going to use Airbnb or otherwise rent, you need to disclose that to your insurance company because if there's damage caused in a situation where there is a tenant, they may not cover it.
Kevin says you need to have adequate liability coverage as well as property protection.
“The best way to do it, if you are going to engage in a rental, is to put the rental and get it out of your own personal name, put it into a LLC or a corporation so you have personal liability protection there. Also, make sure you check in with your city to see if there is any taxes or license requirements, that may apply,” according to Hirzel.
Some legislation is in the works right now in Lansing that would stop cities from completely banning short term leases.
It would allow you to rent out your property for any length you wish, even if it’s just a night. We’ll keep an eye on this one so you ‘Don’t Waste your Money.’