May 19, 2024

Jocuri

Mad about real estate

Should I Rent My Second Home?

There are today some 7 million second (or third!) homes in the United States, but only about 1.1 million of their owners (16{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4}) make them available as vacation rentals for at least part of the year. That means that there are about 6 million property owners holding vastly under-performing assets.

Like the majority of real estate investments, most of those second homes will appreciate in the years to come. But in the meantime, you’ll have to pay for maintenance, taxes, utilities, and all the other expenses associated with a house, condo, or other dwelling. Yet these properties sit empty and idle most of the year.

So when someone asks us, “Should I rent my second home?” we say, “Of course you should. You’d be crazy not to. Turn that luxury into a performing asset. Get it to generate at least enough cash flow to come close to paying for itself. And remember, you can’t be in two places at once. So why shouldn’t your second home be working for you when you’re not using it!”

Everything depends on location and season, of course. But think about this: You own a beachfront house that could rent for $3,000 a week during the summer. Call it 10 weeks total. That’s a gross income of $30,000. A year. Every year. Or make it a ski chalet. Or even a getaway cabin in the North Woods.

Maybe we don’t travel in rich enough circles, but we are baffled by the millions of people who leave money like this on the table. Particularly when offering your second home as a vacation rental can be so painless and easy.

You know what’s coming next. Property owners say, “Yes, but what about my stuff? What if the renters break things?” To which we respond: “Look, this is your second home, not your main nest. Buy attractive, high-quality furnishings, but don’t hang your valuable print collection or display your rare antiques. Besides, anything you want to reserve for your personal use can be locked away in the “owner’s closet” when others are renting the place.

And don’t forget that you are always in complete control of when your property is rented and when it is available for your personal or family use. For now, we will pass over the potential tax benefits of turning your second home into an income producer. Other than to say two phrases: “expense deductions” and “depreciation deductions.” We will also pass over the fact that a property with a proven rental/cash-flow history is likely to have a higher resale value than one that has never proven itself that way.

Regardless of how much money you have, if you own a second home, you owe it to yourself to at least consider offering it as a vacation rental when you’re not using it.