There’s a house that my family owns that nobody lives in, and we’re not sure what to do with it. Right now, we all share a stake in it–even the younger generations, including my siblings and me. So whatever we decide to do with it, we’ll have to decide together.
The big debate right now is whether or not we should rent the house out. Most of us agree that we shouldn’t sell it because it has some meaning to us and one of us may want to live there someday. But we want to make some money off of it in the meantime so that it’s not a waste to pay property taxes and stuff. So we’re thinking about renting it, either long-term (with a lease) or short-term (through Airbnb or something). Experts, what are the pros and cons here?
Owning real estate can be a powerful way to build wealth, and your family clearly has an attachment to this property. But, of course, owning and maintaining a property isn’t cheap! It’s very understandable that your family would want to see the property earn them some kind of income. And renting is certainly one way to do that–in real estate parlance, a rental property is, quite literally, an “income property.”
Of course, renting is not without its risks. When you allow someone to live on your property, you’re accepting the fact that properties with people on them deteriorate faster than unoccupied properties. While your tenant might help you find problems and repair needs more quickly, they’re generally going to accelerate the rate at which your place suffers wear and tear.
And a bad tenant can do much worse than that. A sloppy or, worse yet, destructive tenant could end up costing you dearly. And if a tenant refuses to pay, you could be faced with a costly legal battle to get them out.
Fortunately, there are some safeguards and tools you can use to protect your space. Free tenant screening options, insurance policies, and other essentials can insulate you from the biggest risks. You could opt to partner with real estate agents to get the place rented out to a trustworthy tenant, and you should certainly speak to an attorney about making sure that the property is set up legally to be rented.
As for the difference between short- and long-term rentals, you have more pros and cons to deal with there. Short-term rentals can give you the freedom to use your space when you want to, and daily rates can be higher than monthly ones–though, of course, your property won’t always be occupied! You’ll have to keep the property furnished, and your protections may be limited, as a few unfortunate Airbnb renters have found out! Long-term rentals lock you into a relationship with one tenant (or group of tenants), but that can be a good thing if the tenants are reliable, and you’ll be able to enjoy reliable income.
You should discuss this with your family and consider your options. You will want to loop in legal experts when you make your final decision, and you should remember to protect your space with the proper insurance policies and other tools. Good luck!
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