Want Your Remodel to Pay for Itself? How to Transform Part of Your Home into a Vacation Rental

Thanks to platforms such as Airbnb and Vrbo, more and more people are leasing all or part of their homes as short-term rentals. At Utah Home Remodel Experts, we’re definitely seeing more homeowners expressing interest in remodeling a portion of their homes to become rentals, and it’s easy to understand why. Homeowners who rent out some of their space as a vacation rental enjoy the chance to connect with travelers from around the world and, of course, the additional income such rentals provide.

Transforming a portion of your home into a short-term rental can be a rewarding venture, but if you want to ensure a positive experience for both you and your guests, there are a few things you should keep in mind. 

1. Understanding Local Regulations

Before making any modifications to your home, familiarize yourself with local laws and regulations regarding short-term rentals. Ensuring compliance will help you avoid potential fines or legal issues down the road. Aspects to research include:

• Zoning Laws: Determine if your property is in a zone that permits short-term rentals. In Utah and many other states, these laws vary by city and county, and the best place to start looking for answers is your City Planning Department.

• Necessary Permits: When talking with your City Planning Department, make sure to ask if your area requires specific permits or licenses to operate a short-term rental and if applicable, what you need to do to obtain one.

• Homeowners Association (HOA) Rules: In addition to city- or county-level regulations, if your property is part of an HOA, they may have their own restrictions or guidelines you must follow. Consult your CC&Rs or HOA board for information.

• Tax Obligations: Be aware of any local taxes applicable to rental income, such as transient occupancy taxes, and know your responsibilities regarding collecting and paying those taxes. Your state’s Tax Commision Department should be able to help you understand the requirements.  

2. Understanding Your Guests

In order to identify the most suitable area in your home to rent out, you must understand what guests are looking for in the spaces they rent, to ensure your space can provide that. Factors guests prioritize when renting a space are:

• Privacy: If a guest must walk through your personal space to get to their rented room(s), it often makes them feel uncomfortable, as if they are intruding. Spaces with separate entrances, such as basements or detached guesthouses, offer guests more privacy and enhance their experience. 
• Accessibility: Ensure the space is easily accessible and complies with safety standards, including adequate lighting and safe entryways. Incorporating elements of universal design will also help set your rental apart from others. 
• Amenities: Providing essential amenities like a private bathroom, comfortable bedding, and basic kitchen items such as a microwave, mini fridge, and coffee maker can significantly improve guest satisfaction. Other appreciated amenities often mentioned in reviews include extra linens, reliable Wi-fi, entertainment options (streaming services, books, board games, etc.), basic toiletries such as shampoo or hand-held razors, and a welcome basket with bottled water, snacks, and recommendations of things to do in the area. Those traveling with small children especially appreciate rentals that offer playpens, high chairs, and non-breakable plates, cups, and bowls.

3. Selecting the Ideal Space

Now that you know what your future guests are looking for, you need to select a space in your home that will be–or could become–both comfortable and appealing for guests. The following are common areas homeowners convert into short-term rentals.

• Basement or Lower Level: If your home has a basement or lower level, this is often an underutilized area that can be transformed into a private, self-contained rental space. You can add a bathroom, kitchenette, and separate entrance for privacy and convenience.

• Attic or Loft: Converting an attic or loft space into a cozy guest suite is a great way to utilize otherwise unused square footage. Ensure proper insulation and ventilation, and consider adding skylights for natural light.

• Garage: Many garages are only used for storage, but with some renovation, this space can be turned into a stylish and functional rental. Insulate the walls, add flooring, and install a bathroom to make the space ready for guests.

• Unused Spare Rooms: If you have extra bedrooms or office areas that aren’t used regularly, these can be easily converted into rental spaces with minimal renovation. Standing wardrobes or dressers can make up for a lack of closet, and if there’s no room for a full kitchenette, a microwave and coffee maker can rest atop a dresser while a mini fridge can double as a night stand. 

• Patio or Porch: Some patios can be enclosed and converted into chic rooms with great outdoor views, with the added bonus of easily providing a private entrance. Make sure to include proper ventilation and insulation. Window AC units or space heaters can be used to keep guests comfortable in all seasons. 

• Yard Space: Don’t be afraid to think outside the box… or rather, outside your home. With only a couple hundred square feet of ground, you can add on to your existing home by building a mother-in-law suite or even a stand-alone tiny home structure that would afford guests the privacy they want while without you having to sacrifice any of your current living space.

4. Running the Numbers

Understanding the financial aspects of converting part of your home into a rental is crucial if you want to ensure a good return on your investment. When budgeting, keep the following in mind:

• Initial Investment: Calculate the costs of necessary renovations, furnishings, and permits.

• Maintenance Expenses: From replenishing toilet paper and coffee filters to increased utility usage and insurance rates, there will be additional costs to keep your rental running from month to month. Cleaning expenses are a large consideration as well, especially if you plan to hire professional cleaners between each guest. While it is common to add cleaning fees to the cost of the rental, too high a fee can be a deterrent for guests when selecting where to book their stay. You should also set aside a portion of your rental income to pay for repairing broken appliances, replacing stained linens, plumbing issues, etc. 

• Service Fees: Platforms such as Airbnb charge service fees to list your property on their site and handle the booking transactions between you and your guests. The fees vary from platform to platform but are often a percentage of the guest’s final booking cost.

• Pricing Strategy: Research local rental rates to set a competitive price that reflects the value you offer. Consider occupancy rates that may fluctuate with seasonal tourism in your area. Many short-term rental platforms have features such as “weekend pricing” that allow hosts to set higher prices during higher demand periods. If you are going to charge cleaning fees, make sure to factor those into your overall price as well, as guests look at not just the per-night fee but the total cost of their stay with all fees and taxes included.

5. Designing an Inviting Space

While cleanliness is obviously vital to making your space inviting, the general ambiance of your rental also makes a big difference in attracting guests and securing positive reviews. When striving for a welcoming space, focus on the following design elements:

• • Neutral or Calming Décor: Traveling is stressful for many people, and certain color palettes can be overwhelming or add to that stress. To appeal to a broad range of guests, use neutral or calming colors along with simple designs. 
  • Durable Furnishings: Invest in quality furniture that can withstand frequent use while maintaining aesthetic appeal.
  • Local Touches: Incorporate elements that reflect your area’s unique culture or natural beauty, such as local artwork or photography. Including written information about the art is a fun touch for those guests interested in learning about the history and culture of the area. 

• Remove Personalized Décor: Family portraits, trophies your children have won, throw pillows or wall plaques bearing your last name–items such as these are wonderful in your personal spaces but should not be in any areas you are renting out. Just as walking through your family’s private living room to get to their rented area can make a guest feel like they’re intruding, having items in their rented area that are personalized to you or your family serve as constant reminders that the guest isn’t truly in their own space.

6. Marketing Your Airbnb

Effectively promoting your rental is essential to attract guests. These strategies set the stage for your success:

• High-Quality Photos: Invest in professional photography to showcase your space in the best light. 

• Compelling Listing: Write a detailed and engaging description highlighting unique features and nearby attractions. Let guests know of every amenity you offer–portable cribs for babies, gym or pool access, hair dryers, all of it. You will also want to include information on parking as well as proximity to public transportation. The more a guest feels like they know what to expect, the more comfortable they will feel booking your property.

• Local Networking: Let your friends and neighbors know you have a rental available for whenever they have out-of-town visitors they’re unable to host themselves. Guests may feel more comfortable booking when they have a personal connection with someone who can vouch for the host and neighborhood. 

• Guest Reviews: Encourage satisfied guests to leave positive reviews to build credibility and attract future bookings. 

 

By thoughtfully preparing and maintaining your Airbnb rental, you can create a welcoming environment that delights guests and provides a rewarding experience–and income–for you as a host. 

At Utah Home Remodel Experts, we’ve helped people realize their dreams of short-term rental hosting, and we’d be happy to guide you through the renovation process to help you maximize your rental potential as well. Contact us today to begin your short-term rental transformation.