Vacation property owners who rent their homes out on sites like Airbnb and VRBO take on a certain level of risk -- namely, that their properties will sustain damage when renting to guests. This risk is particularly elevated when guests opt to rent a home for a one-night stay to throw a blowout party.
That happened over the summer in New Jersey, when police had to bust up a house party at an Airbnb rental with over 700 guests crammed into it. Not only do gatherings like this pose the potential for property damage, but there's the not-so-minor matter of the coronavirus pandemic to consider as well. Large gatherings increase the risk of the dangerous virus spreading, and many states have capacity limits in place in an attempt to avoid having the outbreak worsen.
But one city is going out of its way to help ensure rental properties aren't used for party purposes. Chicago has officially banned single-night rentals for properties listed on Airbnb and similar sites. While this new restriction is temporary, it could be adopted by other cities in an effort to keep the pandemic at bay.
Should your vacation home have a minimum stay?
Though Airbnb has a policy banning parties, it's not always so easy to enforce. One way you can prevent parties at your rental, however, is to impose a minimum stay. After all, if someone wants to rent your home just to host a shindig and you impose a five-night minimum stay, that guest is unlikely to want to pay for those extra four nights. As such, imposing a minimum could help you avoid your rental being invaded by partygoers who cause damage beyond what your security deposit covers.
But could imposing a minimum stay hurt you? If you're renting a home in a city, quite possibly. Guests often want a crash pad for a night or two in a major metro area, and by insisting on a longer minimum stay, you might lose out on business -- and income. In fact, aside from the month of August, one-night listings on Airbnb earn an average 17% more revenue throughout the year than those with longer minimums, reports AirDNA.
Therefore, if you're trying to decide whether it pays to impose a minimum stay for your vacation home, think about your property's location and the clientele you're most likely to cater to. If you own a beach house that sees rental traffic primarily during the summer, for example, it could actually work to your benefit to impose a seven-night minimum stay with a standard check-in/check-out day (say, Saturday). This could help avoid rental gaps and maximize your limited season. But if you own a property in a big city likely to see demand anytime, a shorter minimum could be a smart move.
The bottom line
Ultimately, though, pay attention to the laws your city sets. If more vacation home guests are found to be renting properties on a short-term basis for party-throwing purposes, we could see more cities impose guidelines similar to Chicago's. That certainly is a reasonable call at a time when the country is deep in the throes of a major health crisis and officials are desperate to keep local infection rates down.