Best Way to Protect Your Short Term Rental

One of the biggest concerns we have as short term rental owners is protecting our properties. There's lots of ways to do that, lots of ways we've talked about on this show before. I want to wrap all those up for you and offer one other suggestion for some supplemental property protection you maybe haven't heard of and one that I'm considering with my whole portfolio. Stay tuned. Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick, actionable items to acquire, manage and scale your portfolio. I'm your host, Tim Hubbard.

Welcome back to the Short Term Rental Riches podcast. Perhaps after where should I buy a short term rental? Or how can you make a short term rental a passive investment? Perhaps after those two questions, which I get more than any other and which we have answers for on this show already. The third one might be I don't want a guest ruining my property. How do I protect my property? And so I want to wrap up some of the easy ways we can do that and provide another one for you this week. The first step is making sure that we have the right policies in place for our listing. And Airbnb calls these our house rules. So that is the first place we want to make sure we have the right house rules for our property. That is effectively our rental policy. Now, if we're on other websites outside of Airbnb, we want a rental policy as well. We talked last week about being on booking.com, which we just went back on, and they have their own set of policies as well. So you want to make sure that for every OTA where you have your property listed, that your policies or your rental agreements are set up properly first to protect your property from any potential guest damage. So that is step number one. The second step after we get a reservation is having some protection site at our actual property. We can do that a few different ways. The most common ones are the ones that I highly recommend are having a security camera for every entry door to your property and having a smart lock that allows you to change codes remotely so that no one's accessing your property. That shouldn't be. Tune into our previous podcast to check out those topics a little more in depth. If you want to just search for them, you can go to Striches and you can search for any individual topic there. The third place where we have property protection is with the online travel agencies. And now not all of them provide property protection, but Airbnb, the most common one, does, and they actually provide A lot of property protection. So they will cover your property up to $3 million in property damage and $1 million in liability insurance. Of course you have to file a resolution and that takes time. You need to get, submit proof and do all of those things. But it is nice, it is reassuring to know that if someone.

Didn'T treat your property well, well then you have a place to go with Airbnb. But outside of Airbnb, we want to make sure that we have a deposit because the other OTAs like Vrbo and booking.com do not have the sort of insurance like Airbnb. So make sure that you have a deposit in place there. A lot of times you might need to collect this through stripe payment processor. If you don't have a stripe account set up, head on over to stripe.com and check it out. You can set one up for free. It'll allow you to take payments and deposits on some of these other online travel agencies. So after we have our house rules and our policies in place, we have our cameras on site and our smart locks, we, we know which OTAs are providing which types of coverage, like Airbnb's air cover, for example. If we're using other OTAs, other travel agencies like Vrbo, let's make sure we're getting a deposit. The fifth step here is making sure that we have property insurance. Now if you have a loan on your property, you're required to have property insurance. So hopefully you have a policy that includes your short term rentals. If that is not explicitly written into your policy, I would double check with your insurance broker that it is covered. Because when push comes to shove, if someone accidentally lit your kitchen on fire and it's not written in your policy, well, you might not be able to get compensation. I know I might be freaking you out with all this damage talk and guest issues and stuff, but the reality is it's very, very infrequent that we actually have an issue. And I would say, knock on wood, I haven't ever had to file an insurance claim. I hope I didn't jinx myself. So if you have a loan on your property, insurance is required. You want to make sure that short term rentals are included in your policy. There is a company, several companies that offer this insurance now specifically for your short term rentals. One is proper insurer and you can check them out. I use them for several of my policies and they also come with liability insurance, which is another protection that we want to have in place. So your traditional single family home insurance, double Check that it has liability included, but if you don't have enough or it's not included, another protection number six I would say is having an umbrella policy. So an umbrella policy is for liability that can cover multiple properties. Of course, you want to check with your insurance broker that that umbrella policy is including all of the properties that you need included. You have to actually list them in the umbrella policy, but those can go beyond your basic insurance to help you in case someone slips at a property or if something comes up that you might need to file a claim for. Okay, so after we make sure we have our insurance in place, hopefully we can add an umbrella policy on. They can be very inexpensive too, by the way, if you don't already have one. So check with your existing insurance broker to see how much it might cost. Sometimes it's only a few extra hundred dollars a year. The next step is how are we holding this property? So this is another question that we get all the time is should I put my property in an llc? Well, we do have a podcast episode on this specific topic as well. Go back and check that one out. An LLC is not always necessary in my opinion. And sometimes a lender won't allow you to put your property in an llc. If your insurance policy covers up to a million dollars in liability and you have less than a million dollars in assets, well then separating those assets from your name in a limited liability company like an LLC isn't really as necessary. But make sure you talk with a and get their opinion as well. But that is my opinion. If you have less assets that you are covered for by your insurance policy, then you don't necessarily need to add an llc. The other thing to keep in mind is that every state has different LLC fees. California for example, last time I checked, $800 versus Tennessee's $300. Then you're also going to have some different tax filing requirements too. So make sure you check that out before you just jump in and try to put a property into an llc. But it can provide you a lot of additional protection. Okay, so that's a nutshell on some of the basics, some of the insurance and property protections that we've talked about before on this channel, but there's one more that I'm really considering trying out. I'm not affiliated with this company at all in any way, but the goal of this podcast is just to provide you guys the best information to help save you a headache to help make you more money. This company is called Safely and what they do is they will insure each one of your reservations so you pay safely and they cover you for each reservation. Now, the cost depends on the amount of properties you have with them. But the beautiful thing is they don't have any contracts or commitments. There's no upfront fees, there's no cancellation fees. So it's worth giving them a shot. Now, this doesn't make sense for every property. If you have more budget friendly properties that are, say, you know, 70 to $100 a night, which a lot of my properties are in that price range, depending on the season, adding another insurance policy or another cost to the owner, which is not a lot, but it's probably going to be, you know, five, $10 a night, that can really increase your rates or your costs on the property. So you got to think through that. Also, if you're only on Airbnb, think they have pretty decent coverage. So maybe this isn't as important for you. But we talked last week about Booking.com and how they're not actually going to collect your deposits if you're using their payment system. So this can be a really good option. Charge a little more on booking.com and include this insurance policy, which your guest doesn't necessarily need to know about, but you will know. And so let me go over some of the features real quick just to give you, in a nutshell, what they actually will do for you. First of all, they have a guest verification service or feature. So this isn't going to be as necessary for Airbnb because they're doing this already and they've kind of got your back with their insurance. But if you're on booking.com for example, you're on VRBO or you're taking your own bookings, which I highly recommend as well. Well, screening your guests becomes a little more important. So they've got some features to help facilitate that as well. Depending on the policy, you go with them. Again, this is per reservation, but they will cover up to a certain amount of damage. And to file a claim with them only takes about five minutes. So much faster they handle it for you. I know a lot of times when we file claims with Airbnb, for example, a resolution, maybe we submit a claim for $700 because they damaged a table or a couch. A lot of times they come back and they give us a percentage of that, even if we've submitted invoices and documents and stuff like that. So this could allow you to recoup a little more expense if someone did damage an item in your property. Most of these claims too. By the way, they claim that they will handle in one day a one day turnaround. So that makes it pretty easy. Again, this is something you could try out. There are no contracts. You need to negotiate the price directly with them, but it could provide a lot more insurance for you. They can also provide liability based on every reservation. So if your current insurance policy isn't covering the liability side of things and you don't have an umbrella policy, well, this can help cover you with some more liability as well. So one thing you might be thinking is, you know, if your average rate is 100 bucks a night, which a lot of my properties, again are smaller apartments and I'm sort of in that price range, if I add another $6 a night fee to cover my cost for this insurance policy, that's technically another 6%. Right? So that's something I've got to consider. And if I don't charge a higher amount, well, then that's coming directly out of my pocket. So you might want to look back and see how many resolutions you've actually filed. And maybe, you know, if you filed $1,000 worth of resolutions over the last three years and you only recouped $500 of that, and maybe you could have recouped the whole thousand dollars by using a company like safely, well, that's something to consider as well. I'm going to be playing around with this. I think this will work really well for OTAs other than Airbnb. I don't really think it's as necessary for Airbnb, but again, it depends on the size of your property. If you have a really nice luxury vacation rental, an additional $6 a night, $10 a night is not a big deal. And I would say go for it. If you're concerned maybe about the protection, the other thing they will allow you to do is choose the OTAs or the travel sites that you want to use their policy with. So you don't necessarily have to use it on VRBO and Airbnb. If you're got your. If you have your properties on both those sites right now, you might just choose to have it just on vrbo, for example, or homeaway or booking.com so take a look at it again. It's not something that I'm currently using, but it's something I'm exploring and can provide a little extra protection. So until next time, I hope you're having a wonderful week out there. I hope your properties are not being damaged again. Mine, after thousands and thousands of guests, very, very minimal damage. So I hope I didn't discourage you this week. Just want to present a couple other options for you. And until next time, I hope you have a wonderful week.

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