If you plan to rent your home as opposed to a straight-up house swap, this is an important decision. Ask too much, and you won’t get inquiries; ask too little, and the work might not be worth the effort. Once you settle on a reasonable rate, figure out whether the amount will cover enough of your travel costs to make it worthwhile.
How to decide the right rate for a short-term rental:
- Research short-term rental rates in your area. Visit several short-term and vacation rental sites. (You can find a comprehensive list here.) See what other people in your area are asking for homes similar to yours.
- Find out what local hotels are charging. You’ll be offering your home as an alternative, so you may be able to make it more attractive by keeping the per-night price below that of a hotel room. (Depending on your home is and where it’s located though, you may be able to charge much more!)
- Decide whether to charge per night, per week, or per month. The per-night cost of a short-term rental is typically higher for a shorter stay. We rent out our condo only by the month. When we made an exception for the parents of a neighbor in the building who were visiting for a week, we divided the monthly rate by four and added 25 percent.
- Decide whether to use seasonal pricing. You can charge more in the winter for a home near the ski slopes, in the summer for a home on the beach, and nearly everywhere over the holidays. You can also ask a higher rent during periods of high activity at convention centers, festivals, and popular tourist attractions.
Calculate the Bottom Line
Your primary reason for renting out your home is to subsidize your travel costs, right? Figure out how much rent you can earn for the time you’ll be away and then subtract costs you are likely to incur, such as website commissions, cleaning fees, and so on. If the net amount won’t make much of a dent, you might want to rethink the whole idea.
When setting your rates, keep in mind that money isn’t everything. This is your home. It might be worth charging a lower rent for responsible tenants who will take good care of your place. On the other hand, it’s a good idea keep the rent high enough to discourage people without a home of their own from wanting to make yours their permanent residence.
Set the Minimum Rental Period
Maybe you’ll be away for three weeks, but someone wants to rent your home for only one. Or three different renters might want to stay for only a few nights each. Should you agree?
It depends. We’ve found that the work involved is usually not worth the return. Every time a tenant moves out, the place has to be cleaned, and the new guests need to be checked in. Unless you have a trusted friend or relative who is willing to handle the details, you may need to pay a manager and a cleaning service. Also, the more tenants you accept, the greater the odds that you’ll run into problems.
What’s Next: Where should you list your home?