Wednesday, March 9, 2022 / by Wendi Gladwin
As I’m sure you’ve heard, home ownership is a great investment and can play an integral part in building wealth. Although real estate values move in cycles, home values have consistently appreciated. In addition to building wealth through appreciation, you’re also building equity by paying down the principle of your mortgage over time. Real Estate Investors often build wealth by purchasing homes that they turn around and rent out to a third party, therefore paying down the mortgage without money coming out of their own pocket. What a brilliant idea, right?! The same method can be applied in your primary residence too, meaning you don’t have to buy a separate home before you can start earning rental income. Renting out part of your primary residence or an investment property both can yield great results, if done right. This is what I like to call “House Hacking” – Where you rent part or all of your primary residence or investment property to another party to help offset your mortgage liability. Any of the three following options works for this, depending on your location and subject to city, state, and HOA rules. So here are some tidbits and resources for turning your primary residence, or investment property into a cash machine.
Options for Rental Types:
There are several ways to rent your space: nightly (ie AirBnb); short term (to traveling nurses and professionals on a multi-weekly basis); or long term (monthly-yearly). The first two options require the home to be furnished. The latter is optional (but usually are not furnished). For all of these, you'll want your personal items out of the space that is accessible by the tenant.
Nightly (aka vacation rentals):
Where to List: We recommend choosing one that best fits the audience for your property type. AirBnb is typically the most successful in Salt Lake City, but if you have a niche property that's great for world travelers, Vrbo might be best. Airbnb, Vrbo, and other vacation rental sites do not coordinate with each other and each one has their own fees associated with the site, so we suggest choosing one.
Airbnb - has a very cool tool to estimate rental value for your property
Things to consider: Nightly or vacation rentals require the most hands-on approach, however, there are Property Management companies that specialize in these, so you don't have to do the work. The occupant is looking for a certain level of hospitality, and the better your reviews, the more money you'll make, so choose wisely. This is my favorite rental mode for my personal residence, because it allows me to share my unused space with awesome guests and make a little extra money, but also allows me great flexibility. If you are considering this route, make sure your city or HOA allows nightly rentals.
I often fund my vacations by renting my place while I'm away. This requires planning and time to prepare, but it makes vacationing much less expensive. I personally only use Airbnb now. I started out with Home Away in 2011 before it was cool to do short-term rentals and had great success, but Airbnb has proven to be more productive and also easier to manage.
Short - MidTerm (aka professional or corporate housing)
Where to list:
Furnished Finder - traveling nurses
Short Term Housing
Transplant Housing - all four traveling healthcare professional types
This is a great alternative to the high-maintenance nightly or vacation rental. Here, professionals are looking for a space for a few weeks, usually on a contract, that is furnished and clean. The level of hospitality is not as high and turnover is low, of course. The cost per night is lower, but so are the turnover expenses.
Unlike short-term vacation rentals, long-term accommodation typically leased for periods of one month or longer. Whether it’s an entire home or just one room for rent, in general, renters pay the homeowner each month and typically take care of other expenses such as utility bills.
If you’re interested in learning more about House Hacking to offset your mortgage liability, give our team a call! We can help walk you through all the different options to see what might work best for you!
Property Management Company Suggestion:
(there are unfortunately tons of not-so-great Property Management companies, but I don't share that list. If you are considering one, I'll let you know if my clients have had a bad experience with them.)
Our clients have had great experiences with:
Adam Willis | Nestwell Properties | 801-916-2326 | firstname.lastname@example.org
Matt LedingtonProp - LedProp.com
Tool to get an idea of rental values:
Where to list:
KSL/ Rentler or just let your PM do it.