Can you generate passive income using your backyard, without selling your home?
That’s a lingering question in the mind of many American homeowners, especially in today’s rising inflation.
Like the answer is yes, you can rent your backyard out for events and make some cash.
Years ago, if you were staying in a new town due to vacation you booked a hotel room. Then came Airbnb and folks started putting rooms in their homes, decorated for tourists.
Now, not only can you rent the extra room in your home, but you can also rent out your lawn as a campsite, or let a group of friends hold a small event in your backyard.
Not every home has the capability to host events. If you want to turn your home into a venue, it needs to be in great condition, and have functioning utilities.
There are also a lot of legalities to consider before you throw your gate keys to a bunch of strangers.
Legal Considerations for Renting Your Backyard
You want to make sure that when you rent out your backyard things are done in a legal manner.
You need to be sure that you are doing things that don’t piss off your neighbors, the landowner, any local authorities, or your renters.
So here are some legal things to go over prior to renting your backyard.
Taxes
You don’t have to list on your tax report renting your home for parties.
In other words, if you rent your principal home for four days or less, on fewer than 15 days a year, it is tax-free per the regulations. You don’t have to report it on your tax report.
While 14 seems like a short time, it can provide a few days or weeks of money that could sustain in a plentiful manner.
If you are near the top of the tax bracket, that money can make a world of difference.
However, if you have rented the property for more than 14 days, you have to report it on your tax report as income.
While this may sound bad, here is the good news, you may include other costs as expenses.- make-overs of the home for example.
Generally regarded, a home makeover should never be an expense on your tax report.
Insurance
If you’ve got the proper insurance coverage, then it is a good idea to rent your house out to a third-party. Your insurance protects you from any accidents which could occur.
Many standard homeowners insurance policies will cover you for the risk of renting your home out.
That being said some insurers will require you and any vendors attending on the day to buy temporary coverage to protect you from accidents occurring on the day.
Having insurance means that your company ultimately pays for any claims made by the people attending the event.
Similar – it allows you to have a claim for any property damage.
Before agreeing to rent your backyard out for a function, check with your insurance company and the event coordinators on how to proceed if an accident occurs.
Local Laws
Local laws may have specific rules for large gathering in your home.
Most rules detail what loudness of noise is allowed, how many cars are allowed, how long the event may take, etc.
Your renters must understand the rules in order to prevent disputes with your local government and even neighbors.
Security Deposits
When it comes to letting strangers get access to your property, there is a lot of risk.
You should always require a security deposit in addition to the rental fee.
To you, the deposit is collateral against the cost of damages that might occur at the event.
If the event goes smoothly, you need to return the deposit to the renters.
The estimated value of your property and equipment should influence how much you will ask as the security deposit.
Contract
You and your renters have a contract. A contract is a legally enforceable agreement. If they breach your listed rules, they are accountable for those actions.
In addition to addressing the expected behavior during the event, your contract should state who is responsible for potential damage.
What Kinds of Parties/Events Can My Backyard Host?
Well, that’s gonna depend on your guests.
If they don’t plan to do anything illegal, you have a number of fun ideas for your backyard!
Backyard Campsite
If you have a large lot with views, interesting terrain, or anything else fun, you can also list your land as a private campsite.
There are a ton of websites that allow you to list your land for short-term leases to make money.
Fundraisers
Sometimes its good to give back to the community.
If you don’t have the money, you can always give part of your backyard to use for fundraisers for charitable causes.
Since you won’t charge the nonprofit, it means that a greater percentage of the donations received goes to support their humanitarian needs.
You can see if your local non-profit can use your space for their events by calling their office.
Or – you can host your own fundraisers and donate to the organization you choose!
Photoshoot locations
You can make a profit through photoshoots if your place has photogenic locations like a feature-packed new swimming, and or a rustic outdoor garden.
Amateur and pro photographers, indie movie producers and up-and-coming musicians are all going to pay you cash money to shoot videos and or photographs on your property/space.
Although shoot locations can be messy and full of movement and action, they also provide many possibilities.
If the first photos go viral, you must have multiple crews every month!
Weddings
If you have a large, calm lawn with nice green grass and a few pretty flowers, you can list it as a possible wedding venue.
While weddings often have all the glitz and glamour along with exciting celebrations, you may forget that they take their toll on you – people will walk on/ruin your grass, have loud noise, bathrooms full and probably nobody will park where they are supposed to.
A wedding organizer will help make it easier.
Again, when you are thinking about a wedding venue, please remember it is the beauty of your space, not always the size of your space that is going to be a wedding venue.
Other Things To Consider Before Renting Your Backyard
Here are additional factors to consider before allowing strangers to hold an event in your home.
House rules
You gotta tell ’em what the rules are for behavior while they’re at the party.
You need to designate what areas of the rental you’re allowing access to and what areas of your home are for your family only.
You also need to tell them if they’re allowed to use adult behavior such as smoking alcohol, drinking alcohol, or bring pets.
And you need to decide when the lights out will be.
If there are a lot of people attending the party, you’re going to need to provide bathroom access, parking, water, and amenities.
Things like hot tub access, outdoor decks, and amenities like backup generators increase the chances your home will be engaged for a party.
Safety and accessibility
No doubt, it’s important to think about the needs of people with disabilities.
Provide detailed information to let people know where the ramps and other accessibility features are.
If you have ramps, be sure to let the organizers know where they can find them.
Also, remember to speak of possible inconveniences, for example, lots of stairs
If your renters are having a family get together, please keep hazardous equipment and chemicals away from children.
Finally, you must have an equipped first aid kit and a list of emergency contact #s in your home.
Neighbors
Before renting out your backyard, it’s a good idea to speak to your neighbors.
Let them know your plans and listen to their concerns.
When your neighbor is informed, you can rely on them to keep an eye on your home while you’re gone.
How To Ready Your Home For A Backyard Party
Here’s how to prep your backyard such that every person will be craving to party in it.
Estimate the rent you’ll charge
How much will you charge to rent your backyard?
This is the most important question.
Usually, the number of amenities you have will determine the rate.
If you have a large yard and a lot of add-ons or features, you’ll get more money than the person with a cookie cutter yard.
And if you don’t have any cool stuff, consider renting it. Then you would have to add the extra cost to whatever you charge the renters.
For the Best Deals – Bill hourly and not daily. Standard fees for renting a backyard can range between $100 – $500. You can charge even more if your house has a view or is in a desirable locations.
What types of parties will you host?
Depending on the kind of event you have, everyone seems to have different criteria they need to check off.
A green, spacious lawn is perfect for a wedding venue, where a nice open outdoor space is great for a photoshoot.
Depending on where you live, certain events may require permits.
Usually, permits go from $50 to $100 depending on the season, how many people you have, and the amount of events you will host.
Check your local authorities and see what type of permits are needed to host parties in your backyard.
Parties can be a specific type of event that will allow you to use your backyard for more than one function!
Example: You can buy lots of chairs if you run your outdoor space as a rental wedding venue.
Contact backyard party companies
After deciding the type of party you’re most interested in, it’s time to call the pros to fit the backyard to your own liking.
An example is you could get a wedding party planner to upgrade your lawn to match with the latest trends if you are hosting weddings.
Even though you pay someone and seem to be spending more money, most couples don’t look good at DIY, which sometimes looks like crap!
Find potential renters
Let’s face it, finding renters is the hardest part of renting your backyard.
You can list your home and just sit there waiting for messages to show up for renters.
But that’s unrealistic, you will be competing with hundreds of other people.
The best way to get the word out about your service is to identify potential customers and contact them, like:
- friends of your friends
- local charities
- local churches
- community centers
- schools
You can even put some banners all around your town.
You will have to clean up your backyard and do some repair work to make sure everything stays in good condition.
Once your home has the basics and clean, you can likely find customers, especially minimalists.
You could even consider getting a backyard rental company to come in and work on your lawn, for additional revenue.
It is comparable to staging your home to sell, it just makes your space more visually attractive to potential renters.
Set the rules
Like I said above, you need to explain what kind of behavior you expect from guests in your home during parties.
Started with when the parties can start and when they can end. Next, you need to be clear about the maximum number of guests to ensure that your home doesn’t become overcrowded.
Most importantly – Specify if you want alcohol and/or smoking prohibited.
Also, don’t forget to include information on available amenities and features right next to your rules. People will want to know what they are getting into when they enter your home!
Additionally, it’s also important to explain about emergency response and first aid for accidents.
Set the fee
Determining the price is usually challenging for most homeowners.
A good starting point is looking at what public venues are charging for the party space in your area.
Next, consider the amenities or features you will have. Generally speaking, private spaces cost more to rent than public spaces.
Most folks charge party rentals hourly. A good goal is to set your rental fee high enough to cover your costs, plus a little bit of profit.
As an example – If you sound equipment costs you $3.00 an hour, you’re gonna want to charge at least $8.00 for that service.
You can also list your services all as one and just charge them the total.
Don’t forget to charge for the security deposit.
Again, with the security deposit, only refundable as long as the guests leave your home “whole”.
Who will clean up?
Make it clear to your tenants they must leave your back yard in the same condition that they found it.
If not, they’ll have to pay you back for your cleaning costs.
If they choose to pay you back, you have the option of cleaning it yourself and saving some money, or hiring professionals so you don’t have to clean it more quickly.
Final Words
Renting out your back yard is a great way to add income.
You can earn enough money to start another project or treat yourself to something nice during the peak season.
But you incur costs because you probably have to rent extra equipment to accommodate your guests.
Plus, it is riskier because you are renting your home to strangers. Sure, they will give you a security deposit, but it’s an opportunity to check out your home to see if they have nefarious intent.
Be sure to keep your home off-limits to any guests you do not know.
Lastly, make sure you have a proper insurance policy to cover any incidents that could take place at parties.