Renting your home during the upcoming Super Bowl in Glendale could be a way to earn a few extra bucks. However, there are some precautions and advice you should take before doing that. AAA Arizona insurance expert John Candaso will go over those tips.
Ted Simons: A number of valley residents are looking to rent their homes to Super Bowl visitors in the next couple of months. But, it is quite a bit for part-time landlords to consider before handing over house keys to well healed football fans, aaa insurance expert John Candaso is here with more on that. Welcome to Arizona Horizon. What do folks -- Anyone who lives near a stadium, or anyone near anything that is happening-- easy money. What do they need to think about here?
John Candaso: I'm sure that lure is going to bring them in. In 2008, the last time the super bowl was here, Over 91,000 out of state people brought in over $218 million of revenue for lodging and entertainment. It was -- there was a lot of money involved.
Ted Simons: So what do folks need to know before becoming an instant landlord?
John Candaso: They need to know about the risks involved, first there is risks involving if this is the home you are living in, there is an insurance risk, and because you probably have an insurance policy now. You definitely need to go back to your agent and talk to the agent to make sure if you temporarily rent your home to someone like that, that it will be covered in the event of a loss. In a lot of cases it's not covered. It goes by insurance companies in the contracts.
Ted Simons: That's your insurance companies, should you get proof of their renters? Maybe home and auto insurance?
John Candaso: Exactly. I would treat it like a long-term renter so you want as much information prior to them coming in, so you want to do a background check like you would if you were renting your house for a long time, and you will want to get as much personal information like their insurance, in case something does happen, that their insurance, you have that information so you're prepared that way. And that you have a contract with them.
Ted Simons: Ok, if you don't have a contract, is the renter still responsible for all damage to that unit?
John Candaso: Not if you don't have a contract.
Ted Simons: So that's a big deal.
John Candaso: Right. Especially talking about damage to it, and their responsibilities, as well.
Ted Simons: So, insurance has to have damage protection insurance, and you have got to get a contract with that renter. How about criminal checks, background checks, credit checks?
John Candaso: Right, and I would check with a realtor, property manager because they have a lot of expertise in that area, but that's what you want to do before you think about renting that out. Have that procedure down, so when you have a potential tenant, you can actually do those background checks.
Ted Simons: Do you need permission to do those checks?
John Candaso: I would go and find out through your association. There is a lot of associations here in the Phoenix metropolitan area, so if your association does not allow it, you cannot do it, so you want to find that out from them first.
Ted Simons: If you don't have an association, though.
John Candaso: No problems.
Ted Simons: Really?
John Candaso: You can do that.
Ted Simons: So, and again, I guess people do forget you have got to maneuver around the hoa. They are not going to let them park on the lawn or do any other business. And they are probably not going to -- are some of these HOA's not allowing units to be rented?
John Candaso: I would tend to believe that yes that would be the case because they are protecting the living area of the people around them and all the common areas so they want to make sure that only certain things can happen there.
Ted Simons: We talked about insurance policies, and I was looking, what's the difference -- do you know the difference between and ho-3 and ho-5? Do you know what that's all about?
John Candaso: Those are policies that are made for the owner occupants, so like my house and your house, if you have your insurance and your home, and the difference between the ho3 and ho-5, ho-3 is what we call the named perils contract where they are specifically assisting with a fire or a theft or vandalism that can happen, and then the home is protected for the damage to it for a place for you to stay because it's being repaired, and an ho-5 is just a built-up policy that has more enhancements to it, so not only are the perils covered but the things not named in the contract, normally they will be covered in that homeowner's policy, so it's an enhanced contract for coverage.
Ted Simons: And probably a good idea to find out which one of those you have.
John Candaso: Right. And then, if you are renting your home, whether or not you can even have a temporary one. You might have to go to a commercial insurance policy?
Ted Simons: Do you know what homes mostly go for rent? Are they single family, condos, townhouses?
John Candaso: A little bit of everything. Just to give you figures, I was researching figures and back in 2011 when Dallas had their -- they looked specifically at homes, and they were averaging renting homes out for $2,000 a night but it's a myriad of things. Depending on the community, and where for an example, Phoenix in the metropolitan area, there is a lot of condominiums, and apartments, and I am sure that you can rented those out to as long as your association would allow that.
Ted Simons: And as long as you have got the insurance to do the background checks and the whole nine yards. What kind of prices can people expect?
John Candaso: That's, that average that we were talking about. Just doing some research on it, that if it's a regular tract home, you could probably get at least $2,000 or more a night.
Ted Simons: A night.
John Candaso: Yeah. That's the big lure, is that much money being made in that short term period of time.
Ted Simons: Are all parts of town involved here, if you are out in queen creek,just don't even bother?
John Candaso: That's going to be up to the tenant. That's going to be up to the person that wants to rent, if they see a value of being able to come into town, and do that, because that's what is available, I am sure that you could probably get it.
Ted Simons: Somebody can go out here and be a cowboy.
John Candaso: Right. Exactly.
Ted Simons: And as far as -- let's say I'm interested, ok. I have got that. I am interested. How do you post -- what's the best way to make -- do you just -- you can't go to Craigslist. What do you do?
John Candaso: You will probably see some advertising on Craigslist there, and people -- consumers doing it on their own. A lot of people, if you are inexperienced I would go to a property manager, a realtor manager because they do this on a regular basis for long term rentals. And their processes are in place. So, you can get a lot of education and help that way.
Ted Simons: So, there are better than other areas, you think, as far as posting for rent?
John Candaso: Oh, sure. Oh, sure. They will have their own listings. The realtor, property managers can have their own listing websites where they can, actually, hit tentative clients very easily.
Ted Simons: So again, as far as the differences between someone who rents their home and has done so for years, maybe for the summer, maybe for, you know, all the time. A short-term landlord, biggest difference?
John Candaso: Biggest difference, is in how to protect yourself as that short term landlord because as we mentioned earlier, the contracts that you are in that protects your home, if you are sued for a liability, or sued for damage to the home, are usually set up just for you as an owner occupant, not someone that would rent that home out. So you want to go back and make sure that you can do that through the regular policy, and if not you need to purchase an alternative.
Ted Simons: And once you are successful, make sure that you remove the valuables and change the locks when it's over, correct?
John Candaso: Exactly. If you think you are going to make money and put in that budget, rekey your home.
Ted Simons: All right, good information. Good to have you here, thanks for joining us.
John Candaso: Thank you, Ted.
Ted Simons: Tuesday on Arizona Horizon, a discussion on the best and most effective ways to help Veterans pay for a post-military education. And hear about attempts to support more data centers in the valley. That's on the next Arizona Horizon. That is it for now. I'm Ted Simons, and thank you very much for joining us. You have a great evening.
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John Candaso:Insurance Expert, AAA Arizona;