Homes just aren’t selling in this economy, and many owners opt for short or long term rentals to try to defray costs. As always, there are pros and cons with either option.
If you’re not going to use your property for six months to a year, a long term lease might consistently provide money for the mortgage payment, property taxes and insurance. If you’re not offering utilities in your lease, you will still need to account for inevitable repairs in your price. Your price also needs to be in a range similar to other rental properties in the area to be competitive.
If your home is in an area where tourism is a viable option, you might want the higher rates that short term rentals command. Though people will generally pay more for a short term vacation rental, there can be many more costs associated with these rentals. Cleaning expenses, regular maintenance and perhaps a property manager can eat into your profits quickly. In addition to these costs, you need to account for the times your property will be unoccupied.
Before any rental agreement you need to check laws and regulations. Some areas are passing legislation prohibiting rentals less than 30 days. Neighborhood associations and your mortgage agreement might also prohibit any or certain rental agreements.
No matter what length of time you’re planning to lease your property, the biggest challenge will likely be who your renters are. Abiding by all non-discrimination laws, you need to market your property to those most likely to rent it as well as who will be most able to pay and care for it.
Before renting is the time to consult a tax specialist to advise you on how the income and deductions from rental property can benefit or hurt you. You will also want to get legal advice on your rental contract, and decide what type of security deposit you require.