What does it take to rent your house to vacationers?
In the past few years, the popularity of renting out individual single-family residences on a short-term basis (less than 30 days) has become very popular in areas that tourists historically visit. Red River and Taos have been at it for quite a while with great success. In Red River, for example, most of the rental income is derived from short-term rentals of single-family homes, as opposed to hotels and condominiums.
Where is a good place to have a rental house?
As of this writing, the towns of Red River and Taos each have well over 300 short-term rental properties, so growth in these areas may be limited. The Questa and Cerro area have only a handful, though, so additional quality short-term rentals are viable.
So how does this really happen?
You must first have a property that someone would actually want to rent. The short-term rental market is competitive: quality and location are the two most important factors. If you already own the home, there isn’t much you can do about location, however, quality can always be improved. If you have an older home with box TVs, shag carpet, and other remnants of the past century, your occupancy rate and rental amounts will be minimal at best. Properties with flat screen TVs, good internet access, and other modern amenities and decor fare much better.
Rent it yourself or hire someone to do it for you?
Under New Mexico law, you are permitted to rent out your own property if you abide by the local ordinances. You are not allowed to rent property for others unless you possess a New Mexico real estate brokerage license or have contracted with a New Mexico brokerage for qualifying broker services. In Taos County, you do not need a permit unless you are within the town of Taos.
If you rent out your own property, there are a multitude of websites that can assist you in finding renters. These websites all have different fees, ranging from a percentage of the rent to a flat fee, or both. Collection of funds, check-in, check-out, cleaning, laundry, and maintenance of the property will also fall into your own to-do list, so have a good plan in place before you begin.
The other option is to hire a rental management company if one is available in your area. They will take on all or part of that list of responsibilities, leaving you to simply cash your checks at the end of the month.
What about taxes?
Taos County, along with most other municipalities within the county, impose a lodgers tax on rental amounts. This is a pass-through tax and is normally charged to the renter and then passed on to the governing body for use in tourism promotion. As of this writing, the Village of Questa does not have a lodgers tax but from what I understand they may in the future. Gross receipts tax is also due on rental income. Again, this is a pass-through tax charged to the renter.
How much can you make?
Average nightly rates in the Questa area currently range from about $100 to $200. Nightly rates in Red River average between $200 and $600.
Renting your home on a short-term basis may be just the right venture to provide you with additional income, but be prepared to treat it as a business and everything that this entails. If you think this may be more than you want to deal with, you may want to consider renting it long-term, which will exempt you from lodgers and gross receipts taxes.
For more info, contact Rob Swan, Qualifying Broker at Swan Realty: (575) 613-4243.