My family lives in a house that is way more than we could possibly need. We bought it years ago and it is very clear to us now that we do not want it any more. We definitely do not hate it; it is just way beyond what we need to live a happy life. When you factor in all of the expenses, it is robbing us of our ability to FIRE. Beyond that, we actually want to move to a new area and basically start a new life without all of the burdens that this house has brought us. I should note that we also have a second home on the beach. We are renting this second home out on a short term basis and for now rental revenues are keeping up with its bills. This second home is underwater, but for now rent revenue is paying for all its expenses. About $1500 per month of those expenses is reduction in principle. None of the above would we do now, but that is the current situation; so, with this in mind, lets go back to out primary residence:
We live in a 4000 sqft home on a lake that is 3/4 surrounded by water. Currently, there is no real "vacation rental" market on this lake. If you look on VRBO there are only 2 listings; however, they do seem to be booked somewhat regularly for around $185 per night in the summer (weekends, mostly,but some weekly rentals). Given my almost 10 years of experience renting our beach house short term, I am aware of most of the pitfalls associated with renting a home to short-timers. I am not worried about that aspect. The plan would be this: my wife and I are college professors and we have always taught in the Summers. What we are thinking of doing is not teaching in the Summer any more and traveling to visit family instead. While gone, we would rent our home as a vacation rental. Once the Summer ended, we would move back in. Summer is the "peak season" as far as lake rentals around here are concerned.
I guess my questions would be:
1) What are the tax implications of renting our primary residence in this way?
2) What about insurance? Would rates rise a lot if we turned this into a rental? I should note that we have a swimming pool. Is this a can of worms?
3) Would 1 & 2 still occur even if we failed to generate much rental revenue? In other words, there is no guarantee that this would actually rent because, like I said, this lake does not have an established history of short term rentals.
4) What other things am I missing? I am not at all worried about making a big profit on this place if we sell. We have tried to sell this place over the last few months but nobody has made an offer, so the tax implications of selling as a primary residence vs. as a rental are probably not much of a factor.
Of note:
I talked to a few people who rent lake properties in the summer and was told that our house would rent for $400 per night. Both told us that they usually rent on another lake but that our place would be better than anything available on this more established lake (very vibrant short term market). Each told me that should we decide to put it up for rent that they wold want to reserve a week at that price. I do not believe that they were just trying to make me feel good--each was pretty emphatic about it and honestly, our house does have lots of amenities that you wouldn't find in a typical rental. This is what has me thinking strongly of the idea.
I ask Mustachians to help me out here. What are some of the things that I need to think carefully about before jumping in and placing an ad? By the way, I do have a guy that I know and can trust that would get the place cleaned and "manage" the place while I am gone. I would plan to pay him 10% of the rental revenue. His wife would do the cleaning for the cleaning fee. I definitely can trust them both 100%. I am not at all married to this idea, but it seems to be a possible way to get this beast of house making something for us instead of continuing to drain us dry. If it worked out, I could see it freeing us from this place and allowing us to go forward with our plan to move to a new location, rent a cheap place and just live the life that we want to live. Thoughts?