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There are some things about the vacation rental market that are legal advantages and you will want to know about them before engaging in renting out you home as a vacation rental. 

1. Application/Reservations Agreement. If you have been renting your home using a regular lease, throw it out. Here’s why. Giving a lease grants tenancy, and it could literally take months to evict a person from your property, depending on the eviction process and location of the property. Instead, use a hospitality contract, which legally allows you to impose immediate departure for violations of the contract. Make the first page of the reservations agreement an application so that it feels more like a privilege than a sales pitch. This sets the tone for respect of your business and your property.
2. Deposits. Consider not taking deposits. If you accept credit cards, write something into the contract that allows charges on their credit card for damage beyond normal wear and tear. A damage deposit usually isn’t sufficient to cover most damage; and the costs of collecting and returning damage deposits are prohibitive. Purchase deposit insurance through an insurance company, allowing you to file a claim for damages (up to $1500) with the insurance company. You collect a non-refundable $50 fee; which covers the cost of the insurance; and make a little extra profit to boot!
3. Vacation Rental Insurance. Offer your guests vacation rental insurance, which covers situations where a guest may need to cancel their rental for a refund. Refunds are difficult in this business because for the time period that you vacation rental was booked you weren’t able to rent it. Even if you do, the work doubles for the same amount of cash flow. By offering vacation rental insurance (for an 7% of the cost of rental) you will make a little additional profit. Include a disclaimer that if they choose not to buy the insurance that no refunds will be able to be made. That way if you get a guest who wants a last minute refund, and tries to trump up reasons to break their contract you can refer them to the insurance company to file a claim; or you can remind them that they waived the purchase of vacation rental insurance.
4. Local Hospitality Taxes. Many towns are not yet aware of Vacation Rentals and do not see them as taxable. Yet some towns require that you have a license or certification; other towns require hospitality tax paid to them if your rental term is 7 days or less. Make an informed decision how you will handle the hospitality tax.