Do you have a spare room that you never use (or is full of junk!)? Live in a bustling area near a university? Leave a holiday home vacant for most of the year? Plans for extended travel?

If you can answer ‘yes’ to any of those questions, then you may be able to turn a profit off of your assets.

Many people these days are turning to services such as Airbnb to generate income by renting out spare rooms and even entire homes.

Should you get in on this recent income trend? If so, what do you need to know?

Renting out unused space is great way to supplement your income. You might use the funds to pay off your mortgage faster, afford a new property or take your family on a holiday. Whatever the purpose, renting out is a very flexible way to get more out of what you have.

When you rent out to strangers, you get the chance to meet some very interesting individuals from a variety of backgrounds. Who knows what adventures your new connections could lead to?

Depending on how often you rent out a space and at what rate, you may see a return of several thousand dollars per annum. How could you not consider renting out an unused room, apartment or home?

Earning a few extra dollars may sound as simple as putting up a property listing on Airbnb. But there’s actually a lot more to it than that.

Here are a few things you’ll need to keep in mind.

– You must be legally able to rent or sub-let if you are already living in a rental property.

– You will owe tax. You must report your earnings when you file.

– Renting on a home you later sell will likely incur capital gains tax.

– You might need extra insurance. Most peer-to-peer rental services offer some kind of insurance but you shouldn’t rely on that alone.

– There will be both start-up costs to prepare the rental and continuing costs to maintain it.

– You must make the time to maintain and market your rental space. It can be like taking on a part-time job.

There are quite a few factors to consider before you go ahead and dive into offering a bed-and-breakfast-like rental space. It’s good to get some financial advice before you do so.

After ensuring it’s legally okay, you’ll want to look into sprucing up your rental space. This includes not just a thorough cleaning, but installing cable, wifi, appliances, new bedding and possibly furniture, security systems or locks and even a laminated file of house rules.

Once your property is guest-ready, it’s time to advertise. You may want to branch out and market your property on more than one website to increase the odds of someone choosing your space. Don’t underestimate the importance of high quality, professional photos.

How much you charge will have a lot to do with your location, what attractions and conveniences are nearby and what amenities you can offer.

Keep a careful collection of all receipts and records pertaining to your property’s income and upkeep costs. These will come in handy when it comes time to report your income for tax purposes.

For more smart money tips as well as finance and mortgage services, contact the expert team at Funding Options.

– Dom Cassisi, Managing Director