Gen Zers Found A Clever Way To Buy Homes While Keeping Up with Inflation
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With ongoing inflation and rising mortgage rates, it never hurts to have an additional revenue stream, and it appears the younger generations love a side hustle. Recently released Realtor.com data reveals that 35 percent of Gen Zers and 34 percent of Millennials have rented out part of their residence or plan to (in contrast to 13 percent of Gen X and 7 percent of Boomers). Their goal? Use the bonus income to pay off their mortgage faster or save up for a new home.
Realtor.com Executive News Editor Clare Trapasso explains that several options exist if you’re considering doing the same. “There’s a mix of folks who live in their homes and rent out a spare room, or even a couch, rent out an ADU on their property, or their entire home,” she says. “It really depends on their strategy and what local regulations will allow.” Ahead Trapasso walks us through five questions you should ask before you think about putting up a rental listing.
Are you emotionally equipped to be a host?
Guests can damage furniture, cause problems with neighbors, inundate you with questions, and generally be a nuisance. You should make sure this is something you really want to do before jumping in.
Do you have the time to be a host?
Running a short-term rental is a lot of work. They need to be furnished, cleaned between stays, maintained and repaired, and stocked with essentials like dish soap and toilet paper.
Does it make financial sense to run a short-term rental?
First, check out the local laws to see what you’re allowed to do, and then study the competition before embarking on this venture. You want to run the numbers before you drop a lot of cash fixing up your home or rental room to make sure that you have a good chance of financial success. To start, you can quickly review earnings estimates, provided directly by Airbnb, from the past year for similar listings of the address you claim in the Realtor.com MyHome dashboard.
Do you have the proper team in place?
Whether you’re renting out a room or a whole home, you likely won’t be doing this on your own. You’ll need proper insurance for a short-term rental, which is often different from a homeowner’s policy. You’ll want to retain cleaners unless you do that work yourself. You also may want to put a handyperson or property management company on retainer so that if a toilet overflows at 3 a.m., it’s not your responsibility to fix it.
What is your exit plan if this doesn’t work out?
If you find you’re not enjoying the journey or you’re spending more than you’re making, have an exit plan in place. Will you sell the property? Will you convert it into a 12-month rental? Will it become a vacation home? Do you have family or friends who may move in? Look at monthly rents for year-round tenants as well as home price appreciation if you think you might sell down the line. This will give you better odds of financial success even if being a host doesn’t work out.