If you’re getting ready to move, you may be wondering whether to sell your current house or keep it as a short-term rental. The possibility of additional income is appealing. But before you decide, look beyond the idea of collecting rent and consider what owning that rental would require.
A short-term rental, often called an STR, is typically offered as an alternative to a hotel. These rentals have grown in popularity as an investment. According to a Harris Poll survey, 28% of homeowners have considered using a rental service to temporarily rent out their home for additional income.
That interest is understandable. Still, considering a rental and being ready to manage one are two different things. Your decision should account for the work involved, the risks, your location and your goals.
Start With What You Want From the Property
Before looking at rental listings or deciding to sell, ask yourself why you want to keep the house. Is additional income your main goal? Do you actually want the responsibilities that come with renting it out?
Those questions belong together. A short-term rental is not just a house you keep after moving. Successfully owning and renting a property takes work, and the reality can be difficult to take on.
The question is not simply whether you can rent your house. It is whether you want to take on the commitment and whether the property supports your rental goals.
Use that as your starting point as you work through the following considerations.
Understand the Responsibilities Before You Commit
Think honestly about the time and effort you are willing to put into managing a rental. This is especially important if you plan to use a platform that advertises your listing. Most of these platforms have specific requirements hosts must meet.
Bankrate describes the commitment this way:
“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.”
Decide Who Will Handle the Work
Before moving forward, picture yourself responding to a repair request or another rental issue. Would you handle it yourself? Would you call a contractor? Would you pay a third party to manage those responsibilities?
There is no need to pretend you want a hands-on role if you do not. The useful step is to be clear about what you are willing to do and what you would need someone else to handle.
- Are you able and willing to make some repairs yourself?
- Do you have affordable contractors you can contact when needed?
- Are you comfortable screening renters and responding to issues?
- Would you rather pay a third party to take care of management?
- Have you reviewed the hosting requirements of the platform you plan to use?
Answer these questions before committing, not after listing the property. If the responsibilities already feel like more than you want to take on, selling deserves serious consideration.
Look Beyond the Upfront Work
A short-term rental involves upfront time and costs. It also comes with potential risks after you begin hosting. Those risks belong in your decision alongside the possibility of additional income.
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.”
These are possibilities, not a prediction of what will happen at your property. Still, do not leave them out of your thinking just because they are less appealing than the income potential.
Ask yourself how comfortable you are with the possibility of property damage, difficult guests or complaints from neighbors. Have you researched the rules that apply to short-term rentals in your location?
If you are not ready for the work and potential problems, selling may be the wiser choice. Keeping the house as a rental should be a deliberate decision, not one based only on its appeal as an investment.
Evaluate Whether Your House Fits Rental Demand
Not every house becomes a profitable short-term rental. One of the biggest factors is location.
The less likely your neighborhood is to be a travel destination, the fewer requests you should expect from potential renters. That affects your bottom line.
The National Association of Realtors offers this guidance:
“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.”
Look at the House From a Traveler’s Perspective
Set aside what you like about living in the house and consider why someone would choose it for a short stay. Is it near attractions? What amenities does it offer? Would it appeal to a variety of travelers?
These questions help you examine the property's fit for short-term rental use rather than assuming that a home you enjoy will meet your rental goals.
Research Local Rentals and Compare Them With Your Goals
Before deciding, do your homework on rentals in your area. Focus on what they charge, how much business they receive throughout the year and how that compares with what you want to accomplish.
- Review local rental prices. How much do short-term rentals in your area go for?
- Examine demand throughout the year. How much business do those rentals get?
- Compare the findings with your goals. Does what you learn support your reasons for keeping the house?
- Revisit the commitment. Are you still comfortable with the responsibilities and risks?
The goal is not to talk yourself into renting or selling. It is to make the choice with a clear view of both the property and the work involved.
Make Your Next Move With a Clear Plan
Converting your house into a short-term rental deserves careful research. Start by writing down your rental goals, reviewing local rental activity and deciding which management responsibilities you would handle yourself.
Then reach out to Ed Parcaut to talk through your plans and whether selling your house may be a better alternative.
