Forget booking hotel rooms for your vacation. These days, consumers are turning to house rental sites to find a place to stay.
Eleven percent of U.S. adults have used a home-sharing site. That's according to the Pew Research Center's American Trends Panel survey of 4,787 respondents. The median age of home-sharing users is 42, with Americans ages 35 to 44 being nearly twice as likely as those 18 to 24 to have used home-sharing services.
This type of service is part of a larger "sharing economy," where users share or trade on a peer-to-peer level. Most often, the rentals of goods and services are exchanged online.
In this case, that's matching people who want a place to stay with homeowners who want to rent out extra space including an apartment, a home or even something larger like a ranch or an island.
Home-sharing sites like Airbnb, HomeAway and VRBO (Vacation Rentals By Owner), whose parent company is HomeAway, help pair consumers with homeowners, facilitating property rentals.
Pew Research Center likens home-sharing services to the "internet-enabled version of the boarding houses and bed and breakfasts of an earlier era."
Renting a furnished home or staying in someone's urban apartment can be a deal for vacationers looking for an affordable stay, compared to traditional lodging. But it's also an opportunity for homeowners to make extra cash renting their property.
Is it possible to pay off a mortgage with rental income?
"Absolutely," says Andrew McConnell, the co-founder and CEO of rented.com, the first online marketplace that helps second homeowners find, compare and choose the best professional property managers.
"It's easier than ever for homeowners to profit from their second homes through vacation rentals and the sharing economy."
McConnell says his site has helped homeowners make a guaranteed yearly rental income of $37,000 on $200,000 homes. "In these cases, and many others, homeowners have gone far beyond simply paying off their mortgage to making real returns off the investment," he says.
In the HomeAway Vacation Rental Report: Owner Edition, which surveyed 462 HomeAway customers who own vacation rentals, over half of the owners say their rental income covers at least three-quarters of their mortgage payment.
In another HomeAway survey of customer satisfaction, second-home owners reported renting their properties to travelers 18 weeks a year with an average weekly rental rate of $1,500, earning over $27,000 in annual rental income.
Homeowners looking to turn their home into a rental property can easily set up a rental listing on a variety of property rental sites. You manage the listings, including calendar and reservations.
Owners spend money listing and marketing their property rentals. HomeAway says the average owner spends $961 a year including listing and property manager fees, as well as local advertising, resulting in a 3.5 percent cost of that $27,000 income.
Check with local authorities about rental legalities. For example, homeowner associations may or may not allow rentals, local ordinances may balk as well, or the town, city or county where you live may want you to pay taxes on the rental.
With home-sharing, the main legal concerns have been consumer rights and whether renters should pay taxes on their services.
"While owners should always be wary of local regulations and HOA restrictions, both of which can be subject to change, legal short-term rentals are a great way to collect steady, passive income," says McConnell.
In New York, the state's attorney general reported that up to 72 percent of the 35,354 Airbnb listings reviewed were illegal, for infractions such as zoning violations and lost revenue from untaxed transactions. Another survey suggests Airbnb rental properties in Los Angeles could net $41 million if taxes were collected.
Some cities like San Francisco have legalized home-sharing rentals, provided renters register with the city to pay taxes. But recent reports show not all renters are registering with the city, which raises the question of who is policing the sharing economy.
Pew Research Center's survey found over half of all respondents believe home-sharing services should be legal and that owners shouldn't have to pay any local hotel or lodging taxes. And more than 30 percent say owners should be able to legally rent their properties but should pay taxes on the services.