Author Topic: Rent out little-used second home?  (Read 713 times)

harvestbook

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Rent out little-used second home?
« on: October 31, 2017, 08:34:02 AM »
Hi MMMers,
I've read many of these threads but haven't found a situation exactly like this one. We own a second home on the NC coast. My mother bought it and we've spent 20 years renovating, as much as a hobby as a resource. I bought it outright from my mother five or six years ago--all cash, so no mortgage owed. We only get down there about two to three times a year for a few days, since it's a six-hour drive. (Usually it's a day or two of reno work and a day or two of vacation.) The work is nearly done but visiting seems more like an obligation than a pleasure at this point--drive down, check up on maintenance, clean, fix everything that eroded since the last visit, etc.)

We're thinking of renting it out. It's a modest older home, 3 BR, 1 bath, with new HVAC, roof, siding, plumbing, appliances, paint, etc. Checking the area comps, we'd probably only get $650-$700 a month in rent. We keep water and power turned off (water lines drained) when we're away, so my main cost is $80 a month for mowing. The guy who mows it lives in the neighborhood and keeps an eye on the place, so I consider him more of a friendly caretaker, so I would continue doing this even with a renter. Taxes and insurance are relatively low, so my average annual cost of the house is less than $3,000.

While that is low, it still feels like a needless liability when my goal is FI. I would sell it but my late brother did a lot of the reno work, and my mother is emotionally attached to the house, so I can't sell until she has passed on (she visits it about once a year and is fine with me renting it out.) I definitely want to do one-year leases rather than churn or AirBnB because of our distance, which prevents me handling emergency repairs and problems on the spot.

My accountant said there would be some favorable tax advantages in depreciation, and I understand there would be limits on how much I could stay there between rentals. Figuring an extra $1,000 a year for unanticipated surprises in addition to the bigger risks, with the hope of making $3-4K a year, does it seem worth the hassle of trying to turn this liability into a small asset?

Problems I can foresee is possible need for a property manager, on-call repair person, umbrella insurance. We also want to be respectful of the neighborhood, which is mostly senior citizens who've lived there all their lives.

Thanks.
« Last Edit: October 31, 2017, 08:38:39 AM by harvestbook »

waltworks

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Re: Rent out little-used second home?
« Reply #1 on: October 31, 2017, 10:11:20 AM »
How is your mom going to visit if there are renters living in the house on a long term lease?

It sounds to me like you should have a conversation with your mother and see if you can get permission to sell the house.

-W

harvestbook

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Re: Rent out little-used second home?
« Reply #2 on: October 31, 2017, 06:52:13 PM »
Thanks, Waltworks. Even discussing a sale of the house would be too painful for her. (We've never had a conversation about the house where she fails to mention how much he enjoyed working on it.) The idea is if there is a gap between renters, it would make her or us more likely to actually take advantage of that opening to visit. Personally, I'd have just as much fun camping at the beach as having a house to go to.

This isn't a pressing decision by any means, just trying to turn a liability into an asset. I don't mind waiting to sell it until my mother passes, even if things continue as is. Just wondering about the practical avenue of renting for relatively little advantage.
« Last Edit: October 31, 2017, 06:53:52 PM by harvestbook »

waltworks

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Re: Rent out little-used second home?
« Reply #3 on: October 31, 2017, 08:30:56 PM »
I guess I'd go ahead and rent it, given that it'll otherwise just sit there and cost you money. Tough situation. If you're not regularly there, hire a property manager. Cashflow will be pretty minimal, probably, but it'll be better than nothing.

-W

Kayad

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Re: Rent out little-used second home?
« Reply #4 on: November 16, 2017, 07:17:27 AM »
One thing to look into- there are companies that manage short term rentals (vacasa is one). Could be a way to generate some income and still have some access, if there is one that does  your area.

soccerluvof4

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Re: Rent out little-used second home?
« Reply #5 on: November 18, 2017, 03:22:11 PM »
If its fully renovated and on the NC coast it seems to me that you would get more than that for a week. Seem to be missing something here. The NC coast seems to be in pretty high demand?
" In life you don't get what you deserve you get what you negotiate"

Clever Name

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Re: Rent out little-used second home?
« Reply #6 on: November 27, 2017, 07:26:50 AM »
You really should look into hiring someone to manage it as a vacation rental. They will charge more than a manager for a long term rental, but on the NC coast you should still be able to get way more money that way.

Tobias

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Re: Rent out little-used second home?
« Reply #7 on: November 28, 2017, 10:28:32 AM »
Tenants may want to live there more than one year, and if they are good tenants, you will want to keep them, so your mom may not be able to visit annually. I agree that looking into a vacation rental management company is a good idea. Then your mom can still use the house when she'd like.

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hoping2retire35

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Re: Rent out little-used second home?
« Reply #8 on: November 30, 2017, 07:48:48 AM »
Is it by the coast or just a coastal area? Like walkable to the beach or minutes drive?