As Washington, D.C., readies for the Jan. 20, 2009, inauguration of President-elect Barack Obama, legions of supporters from across the United States—and beyond—are making arrangements to witness the historic day firsthand. But with only a reported 90,000 hotel rooms in the metropolitan area and as many as 4 million people expected to turn out, a growing number of Washington-area residents are looking to make a quick profit by renting their homes to inaugural visitors.
Brent Collier, who cofounded InauguralHomes.com, a website that connects Washington-area homeowners with would-be renters, says he's received calls from people as far away as Europe wondering how they can line up inauguration housing. "It really was mind-boggling," he says.
Other large-scale public events as well—such as the 2002 Winter Olympics in Salt Lake City—have seen homeowners turn into landlords. And while it can certainly make for a nice payday, renting your home to complete strangers presents a number of distinct risks; from property damage to outright fraud. To help consumers avoid these potential pitfalls, U.S. News spoke with a handful of experts and compiled a list of tips that those renting out their homes for public events should consider.
Note Well. Washington, D.C., has recently announced plans to ease enforcement of regulations requiring residents to obtain a basic business license and a certificate of occupancy to rent out their homes, allowing interested homeowners to do so more easily. For future events, it's important to check with the local government to see if you need to comply with similar laws. In addition, many condominium associations do not permit short-term rentals, says Andrew Palmieri, a partner at the law firm Vorys, Sater, Seymour and Pease. So, make sure you are not in violation of association rules before proceeding.
1. Go Solo or Team Up? The first step in the process is deciding whether you want to market the property yourself or bring in some outside resources. Those flying solo should consider putting their property on a free online classified site, like Craigslist. Homeowners preferring a little guidance can look into websites like InauguralHomes.com or call a real estate broker.
2. Price It Out. As with any other real estate decision, location is a key driver of the pricing of inauguration rentals. Collier says the highest rate he's seen is $25,000 a night for a mansion in Washington's prestigious Embassy Row. The lowest rate, meanwhile, is $200 a night for a room in a suburban D.C. house. Your best bet is to get on Craigslist and see what properties of similar size and location are going for. Don't forget: You can always negotiate with a prospective tenant.
3. No Refunds. Homeowners should require that renters commit to a four-night minimum, says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington. In addition, all payments should be nonrefundable, she says.
4. Background Sleuth. If you've found someone who seems like a good tenant, go ahead and do a little background research. Plug the person's name into Google, and see what comes up. For those interested in getting a little more aggressive, Bryon Bereano, an associate specializing in landlord-tenant issues at the law firm Knight, Manzi, Nussbaum & LaPlaca, recommends finding an online service that will run a criminal background check on the prospective tenant. Such a service might require a fee, but "depending on what you've got in your house and the potential damage, it's maybe worth the $25 just to run it," Bereano says. (You can recoup this cash by charging a processing fee with the rental application.)
5. Put It in Writing. Once you've settled on a tenant, write up a lease agreement and get it signed. "The way that [homeowners] can protect themselves as landlords is to have some type of written memorandum that sets out the basic essentials of arrival, departure, condition of property [and] the amount of money that people are supposed to pay," Palmieri says. You don't need a lawyer to create such an agreement; homeowners can do it themselves. (The Washington, D.C., government has even posted a sample lease agreement on its website.)
6. Payment Up front. Because you'll be renting to people from out of town, it will be tough to track them down after the event. So, make sure to receive full payment upfront. If your tenants are paying by check, you need to allow enough time for the check to clear your account before their arrival.
7. Security Deposit. Get a security deposit from the tenant to cover potential damage costs. This can be done through a separate check or by obtaining a credit card number from the tenant. Of the two options, Bereano recommends securing a credit card number because "you can also get [additional] information from the credit card in case it's someone who is coming in just to take advantage of the situation and empty your house."
8. Remove Valuables. Remove everything of value from your house before your tenants arrive. If certain items are too heavy to carry out, lock them safely inside the home. Remember, no matter how well you have screened your tenants, you don't know everything about them. Better safe than sorry.
9. Document the Condition. In the event that your tenants leave your home in poor condition, you'll want to have good documentation of the property's condition before they arrived. "Videotape the outside of the house, videotape every room, videotape every closet," Palmieri says. "Also the appliances, the artwork, everything that's [in the house]." Such documentation will help you prove that your home was in good shape before the tenant arrived, should a conflict arise.