While some people buy vacation homes through a place like Cimmaron Vacation Home Realty to build family memories, others try to blend a personal vacation home and a rental property. Many people who decide to buy a vacation home seek to help cover the expense of the home by renting it out when they are not using it. While this may seem like a good way to recover some of your expenses and reduce your monthly mortgage, and it works well in certain areas, there are several reasons why you should think carefully before you decide to use your vacation home as a rental.
Rental Managers Will Likely Take a High Fee
Whether you are renting out your property or not, you will likely need to hire a property manager. However, a property manager that simply maintains your home and prepares it before you go to visit it is much more affordable than a property manager organizing and overseeing rentals. Also, keep in mind that a rental manager for short-term rentals will charge a much higher percentage of your rental rate than a rental manager for long-term rentals. Before assuming you will make a certain amount per month in the area where you are buying, you should look into the average management fees.
Your Most Profitable Weeks Will Conflict With the Best Weeks for You to Use the Home
In general, your most profitable rental weeks will be during the peak vacation season. If you are buying a home because you love the location and want to spend time there each year, you will most likely want to use your home during those weeks, which will reduce your home's earning potential. However, if you do not mind using your vacation home during the low season or you prefer peace and quiet, then you may not mind not being able to use your home during the high season.
Renters May Not Respect Your Property
Anytime you rent out your home to strangers, you risk property damage. You should keep in mind that the people you will be renting to will likely be on vacation and they may not be on their most responsible behavior. If items go missing or are broken, you may have to pay to have them replaced. You can usually avoid this problem by renting or lending your vacation property only to people you know and trust, such as family members or friends.
Renters Can Rack Up Extreme Energy Bills
Similar to damaged property, short term renters may be likely to leave you with a high energy bill. This is because the cost of utilities is usually included in the rental price and so people are less likely to consider their energy usage. You can get around this by having long term renters who pay their own energy bills or by not renting out your vacation home and keeping your monthly energy expenses minimal when you are not using your home.
Your Taxes Will Become More Complex
If you rent out your vacation home, you will have to claim the money you earn on your annual taxes. This can make your taxes more complex, especially if your vacation home is your only rental property. For many homeowners, it is a better idea to split the cost of a vacation home with another family they trust rather than deal with rental taxes.
Purchasing a vacation home specifically to be a rental property is a different type of investment and can end up making you money. However, if your primary reason for buying a vacation home is for personal use, you should think twice about renting it out. Instead, consider buying a home well within your budget or splitting the cost with someone you know and trust.Share