Take risk out of second-home rental
Take risk out of second-home rental
Friends, neighbors often among best candidates
Question: Allison, we have owned our condo in Wildernest for 10 years and have never rented it. We’re considering renting it now, but extremely nervous about the consequences of unknown renters. Do you have any suggestions?
Answer: Good question! While rent-by-owner agencies say it's a snap to find renters for your mountain property on the Internet, the best way to ensure your sanity -- and your second home's safety -- is to first consider renting mainly to family, friends and neighbors.
It's simply human nature. In most cases, consumers choose familiarity over the unknown almost every time. For example, borrowers historically have selected fixed-rate loans instead of adjustable-rate mortgages because they are predicable and not as risky.
When you consider family and friends first, you usually get the renter that you know and hopefully trust, who will give you less hassle and who is most likely to leave your getaway in the condition they found it.
The best potential pool of renters could be from the families that had properties close to yours. However, never overlook the business associates, teammates and casual acquaintances you see all the time in town. These two separate and independent groups can produce more than enough folks to fill your last-minute rental calendar.
Think about it -- how many weeks do you realistically have available? Wouldn't you want to fill your available weeks with somebody that you know? Why rent to a stranger who has contacted you off the Internet when the Fitzgeralds from the parish church known for their altar-boy kids would die to have the week you can't use before Labor Day?
It's a huge advantage to have personally witnessed how potential renters keep their own home. You'll rest easier knowing they probably will keep your place in much the same condition that they keep their own home. (Conversely, your visit to their home may be the primary reason NOT to rent to them!)
Casual friends and acquaintances often know the going rate and usually expect to pay -- so charge them. If your place clearly is on a resort's 50-yard line, has the best views, hot tub and feather beds, your friends and neighbors will be prepared to pay top dollar for your top spot. Rental agencies have found that the best locations and expensive abodes typically receive the most attention. Given a choice, the average person will splurge and select elegant over ordinary for a short period of time. It's especially true when you are on vacation or a corporation is picking up the tab. (Certain family members will never splurge, creating interesting dynamics)
If the getaway is in the middle of nowhere with no obvious amenities (besides serenity) and you have never rented it out, at least consider covering your utility and cleaning costs even if "nobody would be using it during that time anyway."
If you are renting to someone you already know, the chances are you probably won't sign a rental agreement. One of the most important things to do is try to set some ground rules before they move in. Discuss any issues (broken pipes, best place to park the boat trailer, no lifeguard at the pool) that you think could arise while they occupy your place. Preparation always helps prevent some awkward situations down the road.
Remember that you can receive tax-free income for renting your place a maximum of 14 days. Take a few moments to think about if there is a popular segment before the end of the year that would bring the biggest bucks. Is there a popular water-ski tournament that lures the best performers in the region to your lake? Given the economy, is it a good year to pass on the traditional winter carnival, thereby freeing up your slope-side cabin to a family very willing to pay top dollar for ski-in, ski-out accommodations?
For example, residents near Mount Vernon eagerly await the annual Once Around Lake Cavanaugh Footrace, an eight-mile fun run circling a crystal clear lake in the north Cascade Mountains. When the race date is chosen, families with homes near the lake plan their vacations. The days before and after the event are jammed with picnics, Hobie Cat regattas and fundraisers for the volunteer fire department. Lakeside cabins are scarce during "race week" and bring more rent than any other week during the year.
What is your remaining prime rental time this year? First consider the number of possible conflicts -- family reunions, weddings and can't-miss business trips -- on your upcoming annual calendar. If these events, coupled with the economic downturn, will keep you from taking your traditional vacation weeks, get the word out now. Copyright Inman News 2009.
For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit www.SummitHomeValue.com