A vacation rental is both a fun place to stay and an investment opportunity. And a part of that responsibility is ensuring that you run your business smoothly. When you own a vacation rental, you want to have good cash flow, avoid tax penalties, stay organized, have a great presentation, minimize risk and ensure your customers are satisfied.
That is why I put together these 9 must-have tips to run your vacation rental like a business.
LLC or not to LLC
That is the real question when you start a vacation rental. This is a personal and legal decision. In my experience, I do not worry about having an LLC with only one home. With one home, it is unlikely you will have enough cash flow to recover the costs of the LLC fees. Regardless of whether you choose sole proprietorship or LLC, it is important that you have at least a $1 million liability insurance on your property.
Make sure that your property is safe and clean to prevent injury. Once you have two or more properties, I suggest you split them into LLCs for every two or three homes based upon value and risk. This protects your assets and your investment.
Regardless, speak with your attorney or tax adviser about the best business set up for you. I can only speak to my experience — I cannot provide you with legal advice.