5 Costly Mistakes Ranch Owners Make When Renting Their Properties
Owning a ranch has its perks. It’s hard work, but owning your own private, sprawling acres is a nice trade-off. Many Texas ranch owners are also discovering that renting their properties can be lucrative.
While rentals have the potential to generate significant income, many ranch owners are making costly mistakes that are impacting their bottom lines and putting them at risk for potential lawsuits.
Here are five costly mistakes ranch owners often make when renting out their properties.
1. Not Considering Safety
Safety may not be the first thing that comes to mind when renting your ranch. Your primary concern may be your property’s appearance. While that’s also important, neglecting safety could hurt you in the long-run.
More than 5,000 preventable injuries occur every hour in the U.S., so safety is more important than you think.
Whether you’re renting to visitors or just letting friends and extended family stay at your ranch, you have to make sure that you’ve taken reasonable steps to make your property safe.
If your guests plan to use an ATV on the property – and you’re allowing them to do this – then you need to make sure they know how to operate an ATV safely and properly. It should be made clear that the terrain may be rough and unsafe. You may want to consider having guests sign a waiver and ensuring that they understand the risks.
If children will be staying at the property, it needs to be understood that parents will keep a close eye on them to keep them safe.
Safety is an important consideration when renting your ranch. You can’t prevent every accident, but taking reasonable steps to make any structures and exterior spaces safe will go a long way in helping prevent injury claims or lawsuits.
2. Not Vetting Event Vendors
If you plan on making your ranch available for events, such as weddings and birthday parties, it’s important to vet any event vendors that may be on your property. This includes:
- Tend and equipment rental companies
Guests need to ensure that all vendors are properly insured just in case something happens during the event. If someone is injured or a piece of equipment malfunctions, there needs to be insurance to cover the damages.
Additionally, you should ensure that you have appropriate insurance coverage.
3. Not Checking Hunting Licenses
Many people stay at Texas ranches for the purpose of hunting. If you have guests booking stays for this reason, make sure that you verify that they have a valid license.
In Texas, hunting or fishing without a license comes with a $500 criminal fine. There’s also civil restitution for any fish or game that is taken while hunting without a license.
If guests are caught hunting with a license, it just means more headaches for you as the ranch owner and potential legal consequences.
4. Not Requiring a Damage Deposit
One of the biggest mistakes rental property owners make is failing to require a damage deposit. Their primary concern is getting guests through the door, and requiring an additional deposit can make that more difficult.
But without a damage deposit, you have no recourse if your guests damage your ranch. And, yes, guests will cause damage. Minor damage adds up over time. Major damage can completely wipe out any profits you made from rentals.
5. Not Creating a Rental Contract
Whether you decide to rent through a platform like Airbnb or privately, it’s a good idea to have some kind of rental contract in place with your guests.
Rental contracts can outline the house rules clearly and concisely, so guests understand what they can and cannot do, and the penalties for violating the rules. The main purpose of the contract is to ensure that everyone is on the same page when it comes to fees, house rules, check-in/out rules and any other issues that may be relevant to your property.
If you decide that you want to turn your ranch renting into a business, you might consider incorporating into an LLC to minimize liability and protect your assets. It’s easy to set up an LLC in Texas, and it’s worth the cost and effort for the peace of mind it provides.