The pros and cons of renting out your home to strangers.
It’s spring break season! As the weather slowly warms up, so might you to the possibility of opening up your home to vacationers. This time of year, homeowners around the globe will take advantage of the opportunity to rent out their homes and make some extra cash. Will you? Here are some advantages (and potential pitfalls) to renting out your home.
pro: can give you extra income
Probably one of the most common and convincing reasons why homeowners rent out their home during spring break is because of the allure of extra income. While some people might take up a part-time job to bring in a little side money, others take to renting out their home. Doing so can help offset the costs of homeownership.
If you’re renting out a couple of rooms in your primary residence, this cash from renting out your home can go toward your utility bills, taxes and insurance, or your mortgage’s principal balance. However, if you’re renting out your investment property during that week, you may not make enough from spring break alone to cover the cost of owning that property—but you could at least make a dent in what you owe.
con: your visitors might not be the greatest
So you can make extra money by renting out your home to vacationers. Sounds great! If that’s the case, why wouldn’t you do it? Many homeowners forego renting out their property during spring break because they don’t want to deal with potentially bad tenants. The truth is, some guests aren’t the greatest. They might be messy, dirty, or disrespectful to your home. They may not leave the place better than they found it (which is what you’re hoping they’ll do, right?).
Two things can help you decide to rent or not to rent out your home: one is checking with your insurance company. You may or may not be covered for damages made by your tenants. Definitely review the terms of your home insurance coverage and even call your insurance company to get further confirmation. But let’s say you’re covered—another thing that can help you decide is screening your tenants. More on that in another blog post, but basically, homeowners often say OK to renting out their home because they have the ability to screen and/or interview their visitors, which helps instill a bit of confidence in the type of stranger they’re welcoming.
pro: you might get a tax break
Homeownership has long been a major part of the American dream. For some, it may still be. And for good reason. Not only do homeowners experience the freedom of owning their own place and the financial benefits of building equity and good credit, many also receive tax breaks when tax refund season comes around. (Due to the new tax reform passed in January, the new cap on mortgage interest deduction is set to $750,000 for new mortgages only.) Pretty sweet deal if you ask us!
con: if you’re not used to being a landlord, you might not like it
Similar to having not-so-great visitors, if you’re not used to being a landlord, you might not enjoy it, even if it’s only for one week out of the year. During your visitors’ stay (if you haven’t hired a property manager) you’ll have to be on call for any problems that arise—from getting locked out to clogged toilets, there’s a whole slew of issues you may have to resolve for your visitors! For some homeowners, a lack of wanting to deal with mishaps like these is reason enough to say no to renting out their home. Will this be a determining factor for you too?
pro: there are lots of resources out there to help you
Lots of homeowners choose to rent out their property during spring break because they have the support of many tools and resources to help make it happen! Airbnb is an ever-popular site for renting out your home, but alternatives are out there if you’re willing to try something different. These sites offer great services for listing your home, including receiving inquiries and managing your relationships with your tenants during their stay.
We also recommend consulting a legal, financial, and/or real estate advisor to help you manage this new endeavor. Many homeowners solicit help from such an advisor because they have the professional experience and legal backing to properly advocate for you and help you through the process.
Are you interested in purchasing an investment property for the purpose of renting it out to make some extra income? We can help! Our industry-leading Conventional and Jumbo financing could be the loan you need to finance your next rental property. Call us today!
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