There’s nothing like buying a lakefront home! What better place to spend your vacations than feet away from the lake? You will be creating tons of memories with family and friends from swimming to boating and enjoying the scenic view. Buying a vacation home on the lake can be tough financially, so you may want to consider renting out your home while you are not using it. Every bit helps to defray the costs of owning a second home. Before you jump at the idea, however, you might want to consider all the pros and cons associated with renting out your lake home. Here are some important pros and cons to consider…
Finanical- There are many great finanical benefits to renting out your lakefront home. Any periods of time where your family is not using the home could be turned into a profit by renting it out to vacationers. That extra money will help offset the mortgage costs, upkeep, maintenance, and you may even have extra revenue to do those upgrades you have always been dreaming about! About half of owners are able to cover 75 percent or more of their mortgage from renting. It can also be a great tax write off because you can easily write off many expenses to off-set the income, including depreciation, loan interest, HOA dues, PMI, furnishings and supplies.
Renovations- With the extra pocket money you will be receiving from renting out your lakefront home you will be able to invest that money into making your dreams for the home come true! Adding a hot tub or upgrading all of the kitchen appliances won’t seem like that huge of an investment, especially since those kind of improvements can help attract more renters and justify higher rent prices.
Helping the Local Economy- If no one is living in the house for a majority of the year, local businesses will be earning less revenue. But if you rent out your home while you are not using it, the local economy will benefit. Supporting your local communities and businesses is an important factor to consider.
The Local Experience- Nowadays many vacationers are looking for a local experience during their stay instead of staying at a hotel. They are looking for advice and recommendations for experiencing and enjoying the local culture that your vacation home exists. These opportunities for personal touch will incline them to come back and recommend their family and friends about their amazing stay.
You Will Still Have Time to Enjoy Your Home- The average owner rents about 18 weeks each year. Many people are able to find a balance between personal and rental use. This is especially true if your cabin’s location affords a mix of seasonal activities.
Wear and Tear- Your home and all of its features and appliances, such as your heating and cooling system, washer and dryer, refrigerator, hot tub (should you be so fortunate) will be used much more, causing more wear and tear and, ultimately, more repairs and maintenance.
You May Have Strangers Living in Your Home- When you rent out your home people will be using it and all of your belongings including your furniture. This can be a challenge for some homeowners. Keep in mind that renters may not treat your home with the care that you would.
You Can’t Take a Vacation on a Whim- You may decide halfway through the week that you would like a weekend retreat to destress in your lake home. Sometimes this may not be possible as the property is already booked out to renters. You will have to be sure to block off times to be able to use your home.
You Will Have to be a Landlord- Renting your home out to those going on vacation can almost feel like a second job at times, as you’ll need to be able to keep track of who has booked the property, when the cleaners are coming, what time they are checking in or out, in addition to collecting money and sorting out the relevant tax and licensing information. Being a landlord is an incredibly time-consuming task, especially with ongoing maintenance and upkeep that will be required for any type of rental property. You’ll be the last line of defense for any maintenance problems. Hiring a property management company to handle these day to day tasks is an option, but along with that option comes a management fee, typically in 15-20% of the monthly rental charge. There are also basic legalities involved with being a landlord – you need to know who is liable for what in the event that there are injuries or damages caused in or around your lake home. You will also have to be aware of the local market to understand how much you can rent your home for and what renters are looking for in your area.
Buying a lake home is an amazing investment to your life. The memories you will create will be well worth the price. Consider these pros and cons while deciding whether to rent it out or not. Many people who have made the bold move find it to be a rewarding investment, especially if they’ve done their research upfront and knew what to expect. If it’s done right then, a vacation rental property can be a solid investment and can help diversify your investment portfolio.
Posted by Scott Freerksen “The Lake Guy”