Most of us don\’t think very transactionally when it comes to buying or selling a home, as we may become attached to why we purchased the home in the first place. But when it is time to move from that house, it is important to not only look at what the home would sell for but also consider what it may look like as a long-term or short-term rental.
Depending on the neighborhood, price point, and overall upkeep needs, you may be concerned about getting a long-term tenant in the home who may not cover the expenses or care for it the way you did.
Now these are valid concerns, but before just selling your home, you may want to consider what the house would rent for, furnished or unfurnished. I would start by looking at one of the many rental property sites like Zillow Rentals.
You can look at the estimated rental price for your home as well as those in your area. If you are really unsure of what it would go for based on the improvements you\’ve made, you may consider reaching out to a property management company who can then look at the property and provide you with a proper estimate. Of course, keep in mind that they will typically manage your property somewhere in the range of 8-12% of gross rent per month if you had it professionally managed.
Another option may be turning your home into a short-term rental using a platform like Airbnb or VRBO.
These platforms are optimized for consumer-to-consumer transactions and communication and will allow you to list your property fully furnished and outfitted. The benefits of a short-term rental are the ability to charge per night, adjusting based on seasonality and popularity, and allowing for higher returns if managed properly. Another benefit is the ability to not be locked into a lease in the event that you want to sell the property.
For the sake of an example, let\’s say you own a home worth $325k and could rent for $1,800.00 per month. Depending on your market, let\’s say you could get $135.00 per night, and the cleaning fee covered the cost of turnover. If you have that property rented for half the month or 15 days, you would gross $2,025.00; if you rented it for 20 days, you would gross $2,700.00 per month, and well, if it were at full capacity, you would gross $4,050.00 based on a 30-day month. Now, of course, you need to factor in wear and tear, turnover costs, and the like, but with a short-term rental, this may be an option that may be good for someone not quite ready to commit to selling or doing a long-term rental agreement.
How do you know which is right for you?
Try it out. Try out the option that you can pivot from easiest, which is the short-term rental option as a vacation rental. If this is not a good fit, try doing month-to-month by-room for college students, then moving to a long-term lease option. Now you may be able to find one that works right away without trying different methods, but this will ensure that you are finding one that is comfortable for you, especially if you don\’t need the equity from the sale of your home for another purchase.
CTA:
My call to action is to look at options with your current home if you plan to sell it to move. You may be able to use it as a means of relatively passive income.
