Should You Rent Your House or Sell It?
If you’re a homeowner on Martha's Vineyard and ready to make a move, you may be thinking about using your current house as a short-term rental property instead of selling it. This is a great way to hold on to a family home if you just need enough income to pay the taxes and regular maintenance. It also allows you to enjoy the property during the time periods that it's not rented. According to a Harris Poll survey, 28% of homeowners have considered using a rental service to temporarily rent out their home for additional income. On Martha's Vineyard, this usually includes a real estate agency and caretaker.
Turning your property into a short-term rental can be a tempting idea, but you may find the reality of being responsible for one difficult to take on. Here are some of the challenges you could face if you rent out your house instead of selling it.
A Short-Term Rental Comes with Responsibilities
Successfully owning and renting a house takes work. Think through your ability to make that commitment, especially if you plan to use a platform that advertises your rental listing. Most of them have specific requirements hosts have to meet, and it takes a lot of work. A recent article from Bankrate explains:
“Managing a rental property can be time-consuming and challenging. Are you handy and able to make some repairs yourself? If not, do you have a network of affordable contractors you can reach out to in a pinch? Consider whether you want to take on the added responsibility of being a landlord, which means screening tenants and fielding issues, among other responsibilities, or paying for a third party to take care of things instead.”
Not only is there the upfront time and cost of owning a short-term rental, but there are also risks that could come up for you down the road. Investopedia warns:
“Risks of hosting include renting your place to rude guests, theft or damaged property, complaints from neighbors, and potential regulatory violations depending on your location.”
Expectations from tenants have also changed over the past 10-15 years. On Martha's Vineyard, we have seen more and more people looking for a hotel type experience with very little interest in a dated interior with older furnishings. Today's renter is also expecting some basic supplies at the house and someone to call if something is broken or not working properly. There is a relatively new state and local lodging tax as well, which costs the tenant approximately 10% of the rental fee. This added expense has contributed to tenants really feeling like they should be getting a good value for the price they're paying to rent on Martha's Vineyard. The most successful rentals occur when owners treat their tenants like guests, instead of simply an income stream. This tends to create a great experience for both the landlord and tenants with very little complaints and great repeat business.
So, there’s a lot to consider before taking the leap and converting your house into a short-term rental. If you aren’t ready for the work it takes, it could be wiser to sell instead.
Your House May Not Be Ideal for Your Rental Goals
Not every house ends up being a profitable short-term rental either. One of the biggest factors is where your home is located. On Martha's Vineyard, the areas near the beaches and towns command significantly more rental income than those just 15-30 minutes away. An article from the National Association of Realtors (NAR) advises:
“When it comes to the viability of profitable STRs . . . consider factors like location, amenities, and whether the property is appealing. Most people seek STRs in locations where they vacation, so proximity to attractions is important. Likewise, the property should cater to a variety of travelers.”
It’s smart to do your homework and learn how much rentals in your area go for, how much business they get throughout the year, what the extra expenses would be and how this compares to your goals.
Converting your home into a short-term rental isn’t a decision you should make without doing your research. At the O'Hanlon Group, we have a large inventory of vacation rental properties and years of experience working with landlords and tenants. We are always happy to go over the rental process with anyone who's interested and will always keep your best interests in mind when discussing your options. For more information, reach out to us today.