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Should You Rent Your House or Sell It?

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If you’re a homeowner ready to make a move, you may be thinking about using your current house as a short term rental property instead of selling it. A short-term rental (STR) is typically offered as an alternative to a hotel, and they’re an investment that’s gained popularity in recent years. According to a Harris Poll survey, 28% of homeowners have considered using a rental service to temporarily rent out their home for additional income.

Rent or Sell?
 

Owning a short term rental can be a tempting idea, but you may find the reality of being responsible for one difficult to take on. Here are some of the challenges you could face if you rent out your house instead of selling it.

A Short-Term Rental Comes with Responsibilities

Successfully owning and renting a house takes work. Think through your ability to make that commitment, especially if you plan to use a platform that advertises your rental listing. Most of them have specific requirements hosts have to meet, and it takes a lot of work. A recent article from Bankrate explains:

“Managing a rental property can be time-consuming and challenging. Are you handy and able to make some repairs yourself? If not, do you have a network of affordable contractors you can reach out to in a pinch? Consider whether you want to take on the added responsibility of being a landlord, which means screening tenants and fielding issues, among other responsibilities, or paying for a third party to take care of things instead.”

Not only is there the upfront time and cost of owning a short term rental, but there are also risks that could come up for you down the road. Investopedia warns:

“Risks of hosting include renting your place to rude guests, theft or damaged property, complaints from neighbors, and potential regulatory violations depending on your location.”

There’s a lot to consider before taking the leap and converting your house into a short term rental. If you aren’t ready for the work it takes, it could be wiser to sell instead.

Your House May Not Be Ideal for Your Rental Goals

Not every house ends up being a profitable short term rental either. One of the biggest factors is where your home is located. The less likely your neighborhood is to be a travel destination, the fewer requests you should expect from potential renters – and that impacts your bottom line. An article from the National Association of Realtors (NAR) advises:

“When it comes to the viability of profitable STRs . . . consider factors like location, amenities, and whether the property is appealing. Most people seek STRs in locations where they vacation, so proximity to attractions is important. Likewise, the property should cater to a variety of travelers.”

It’s smart to do your homework and learn how much rentals in your area go for, how much business they get throughout the year, and how this compares to your goals.

What To Expect When You Buy A Fixer Upper

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Fixer Upper

It feels like you can’t turn on the TV and flip through the channels without seeing a home improvement show, but don’t be taken in by their simplicity. Remodeling your home is far more complex and usually more expensive than TV pundits lead you to believe. When they even bother to price the items of a project, the labor costs are often conveniently forgotten because they can be 50% of the total expenditure. Contractors don’t appear out of nowhere, and gardeners won’t just magically appear with half a forest for the backyard. You’ll learn an incredible amount about property ownership if you purchase a fixer-upper and set about a major renovation. But if you’re a first-time buyer who’s looking for a bargain to renovate, remember that while it’s a great strategy, you’ll need to be prepared for hard work before you enjoy the incredible satisfaction of creating a wonderful home.

Here’s a quick guide of what to expect to get you started:

  1. Ignore TV shows: Nothing will put you in a world of renovation pain than believing the pricing you see in reality TV shows. Labor costs are a fundamental reality and rarely rate a mention. Budget for the real world.
  2. Create a budget and then some: The most important aspect of remodeling a home is to create a budget that you can afford and then stick to it. But remember most renovations cost more than you think. Experts recommend you keep aside 20% of the project’s cost in case of problems.
  3. Quotes come in writing: Always insist on receiving an estimate in writing rather than believing a verbal estimate that might be contested or ignored later. When the invoice comes in, you may find yourself with a nasty surprise.
  4. Expertise counts: If your budget will stretch, call in the experts. An architect, lighting consultant and interior designer will transform your project. And given you’re investing in your most significant financial asset, consider the dollar value they might add.
  5. Advice vs Opinion: Friends will offer their ideas and opinions, and architects and contractors will provide advice. Be sure to know the difference. Ultimately, the decisions are on you and you’ll need to live with the consequences of your choices.
  6. Focus on you: Unless you want to flip the property, then remodel for your lifestyle and don’t worry about fashions or fads. If you’re flipping, the reverse is true. Make decisions that will maximize the sale price.
  7. Minimize your role: Hire a general contractor who’ll coordinate sub-contractors for the entire project. Avoid the hassle of organizing tradespeople. One bad apple will throw out your timeline and cause friction with the others.
  8. Stop and shop: It can be a good idea to avoid buying materials from multiple suppliers all over town. That quickly gets very confusing, especially when it comes to delivery schedules. Ideally, purchase from only one or two suppliers.
  9. Be tactile: Don’t rely on the internet when you shop. Faucets can look amazing online but turn out to be cheap and nasty when you open the box. Go to each store and literally touch the items you want to buy. Ask for swatches of cloth and colours, buy tester cans of paint, and take your time with all your decisions.

image courtesy of rocinante11