Renting Out Your Home

TIPS:

Renting out your property is no longer the luxury of land barons. Anyone can do it, and today’s Internet resources and real estate experts make it easier than ever—as long as you know where to start and what you want from the rental.

In 2012, approximately 80 percent of vacation home purchasers cited rental income as the main reason for their buy, according toHomeAway Senior Vice President Jon Gray. The Internet vacation rental website lists approximately 711,000 properties across 171 countries—and about half of HomeAway’s clients cover more than 75 percent of their home's mortgage with rental income.

Vacation home owners can also “rent away your retirement,” says Gray. “We’re seeing this more and more. According to the National Association of Realtors 2013 Vacation and Investment Home Buyers Survey, the median age of a vacation home buyer in 2012 is only 47 years old. Many people are discovering that you can buy your retirement home early and pay off the cost in the meantime by renting to travelers—while also using the home personally as a vacation home.”

Another reason to rent? Stave off foreclosure or ride out an upside-down mortgage while the market recovers.

“The ability to rent a home on a short-term basis not only garners higher return than a long-term rental, but it keeps the home in good shape for when you are prepared to perhaps sell it,” says Gray.

Mala Sander of Corcoran’s Sag Harbor, NY office in the Hamptons has seen some whimsical reasons for renting, including a mini-staycation. “One family I know likes to rent out their home and move out to Montauk because they enjoy surfing.

"Another family rents out the house for the explicit purpose of getting into a smaller, no-fuss home for a month, where they don't have to worry about all the to-dos of the bigger home.”

If any of these scenarios sound appealing, follow these tips for a hassle-free rental experience:  

Let go:  “You must be able to accept that your home will be used and lived in by others, and there will be normal wear and tear as a result,” says Sander.

Gray offers this list of to-dos: Get the property up to safety code, purchase vacation home insurance, and know how your taxes will be affected by the income.

Timing: Between Memorial Day and Labor Day is usually the best time to rent out a home because families have the most time to travel, says Gray. Bookings begin up to three months in advance.

Competition: What are your neighbors getting for their rental? Set your price accordingly, says Gray.

Spread the word: Advertise on sites like HomeAway.com, VRBO.com and VacationRentals.com, the three largest vacation rental sites in the U.S., says Gray. Also, “A good agent will match the prospective renters with the types of homes that will appeal to them, avoiding the constant stream of questions and showings for renters that your home won't be a fit for,” says Sander. “A good agent will also smooth and streamline the process, from listing to lease agreement to coordination of the renter's move in and move out.”

Tip 1: Remember, who you rent to may have a negative affect on the community and may result in lower real estate values that could mean you lose money in the long run if the value of your home goes down by the time you want to sell.

Tip 2: Make the lease month to month. That way, if your tenants stink, you won't have to wait a year to get rid of them.

Tip 3: No pets. Animals can not only ruin your home but have a negative impact on the community (see tip 1).

Tip 4: Put in contract who is authorized to live in the house. If you don't you may have boyfriends/girlfriends, friends of friends, distant uncles, nephews, cousins, etc., of the lessee living in your home.