Image source: Getty Images
Many years ago, my husband and I decided to buy a vacation house. We initially intended to purchase a home we could rent for part of the time and visit for part of the time. Our goal in doing this was so the rental income could help us cover the costs of owning the home — and perhaps even help us make a small profit.
Ultimately, though, once we started looking for properties seriously and considered our goals and financial situation, we decided that renting it out wasn’t really the right move. Here are four reasons why that’s the case.
1. We didn’t want to deal with problems tenants could cause
The single biggest reason why we decided against renting out the house was because we didn’t want to cope with potential damage to our property.
We visited numerous homes with our realtor that were used as vacation rentals. All of the properties had a lot of wear-and-tear on them, even though they were very nice and commanded a premium price. The neighborhoods where the rentals were located also weren’t very clean, despite being upscale areas with roving security. And when we visited one home before the cleaners had come, it was apparent the tenants had left it very dirty.
We realized that even rental properties that were relatively expensive were not necessarily well taken care of by vacationers. And we didn’t want to have to constantly be repairing or replacing items in our home because they were damaged by mistreatment.
2. We wouldn’t make enough money to justify the hassle
When we did the math on how much we could make by renting out a property, we decided it simply wasn’t worth it.
See, buying properties in areas that allowed short-term rentals was significantly more expensive than purchasing comparable homes in a neighborhood where vacation rentals weren’t allowed. Once we took added mortgage costs and extra home insurance costs into account, along with property management fees, marketing costs, and taxes, we would hardly make any money at all — not even enough to cover all the bills associated with the home.
Since we didn’t want to deal with a lot of additional stress for very little money coming in after factoring in mortgage payments and other expenses, we opted to just buy a less costly property we wouldn’t rent.
3. We wanted to be able to use the property whenever we want
In order to maximize the chances that we would be able to rent out the property successfully, we would have had to make it available to renters during peak season. We would also have had to commit to renting for a certain number of nights with many property managers we talked to. And we would have had to schedule the dates we wanted to use our own property well in advance so it was clear what days it could be rented.
We didn’t want to deal with this, since we like the flexibility of being able to travel at the spur of the moment. And we wanted to be able to visit our own house during the best time of the year.
4. We didn’t want to have to remove our personal items
Finally, if we rented our property, we would have had to remove personal items like clothing and toiletries. We wanted to avoid this and just have our home set up and ready when we got there.
We were lucky enough to be in a financial position to buy a vacation home without rental income helping to defray the costs. This isn’t the case for everyone. But if you’re considering buying a house to rent it out part-time, be sure you consider the downsides of doing so before deciding if that’s the right move.
The Ascent’s Best Mortgage Lender of 2022
Mortgage rates are on the rise — and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.