Downsize Your Home, Increase Your Income: A Guide to Renting After Downsizing - Article Banner

There are a number of good reasons to downsize your own home. Perhaps the kids have moved out, you’re thinking about retirement, or you simply want to save more money as economic futures become more and more uncertain. 

Working with a Sarasota property management expert can help you plan for what could become a very lucrative move. By downsizing your home and renting it out instead of selling it, you can earn some consistent and recurring rental income and hold onto a valuable asset while it appreciates. Meanwhile, your well-qualified tenants will help by paying down any existing mortgage with their rental payments. 

Let’s take a look at how this might work for you.

Benefits to Downsizing

Before we get into the how-to of downsizing in order to earn more money off your home, let’s talk about why downsizing can be a good move for homeowners. 

Perhaps maintenance expenses have been rising and you’re tired of being responsible for finding the vendors and service professionals that you need to make minor and major fixes. Or, keeping up with the cleaning and the clutter in a large home is starting to lose its charm. Maybe the idea of a smaller, cozier space is really better aligned with your desired lifestyle. 

For many homeowners, the appeal of moving on from the large home that has served them well for many years into a smaller place that fits their current needs is a refreshing change of pace. 

Renting Out Your Home

Once you’ve decided to downsize, the question becomes: what to do with your current home? You don’t have to sell. Downsizing isn’t just about moving to a smaller space; it’s about re-evaluating and optimizing your life for your current needs. Renting out your current home is a strategic move that can supply a consistent income stream, help you build equity, and offer tax advantages. 

In a market like ours along Florida’s Gulf of Mexico coast, you have a number of options even when you decide to rent out that home. Is it better to rent out short-term, long-term, or both? There are always visitors and tourists coming into the area, ensuring that your short-term vacation rental would likely stay occupied and profitable. But, the stability of a long-term tenant is also attractive. 

Let’s explore.

  • Benefits of Long-Term Rentals

Long-term rentals provide steady monthly income and can be less hands-on for owners than short-term rentals. You’ll typically deal with tenant turnover less frequently and won’t need to furnish the property or pay utility bills. It’s a more predictable, lower-maintenance option, particularly appealing if you’re thinking about relocating and you’ll be living in another city or state. You can plan and budget more easily because you’ll know exactly how much rent you’re going to have coming in for a year or longer. You’ll focus on retaining your good tenants so you can keep that consistency and raise the rents according to market demands year after year. 

  • Advantages of Short-Term Rentals

Short-term rentals are not without their own merits, especially in Florida. These will often command higher rental prices per night. They can also be more flexible; you can block off times for personal use or adjust pricing based on demand. Platforms like Airbnb or Vrbo have made short-term renting accessible and profitable for many homeowners. Those platforms are great for marketing and scheduling, however, your short-term rental home will still require a closer management approach, more frequent maintenance, and marketing efforts to keep the bookings coming. There will be frequent cleanings, more repairs, and a lot of upkeep when it comes to your furniture, linens, and conveniences. Guests will expect comforts similar to what they’d find in a hotel.

Downsizing and Renting: A Step-by-Step Process

As you prepare to approach the transition, you’ll need to be prepared to move out of your own home and then move into whatever home you have chosen for yourself next. Once you know where you’re going, it’s time to think about your strategy as a rental property owner. 

Here is a quick checklist that explains what a professional property manager will do for you while you’re downsizing and renting out your property. 

1. We Will Analyze the Market: It’s always best to consult with local property management professionals because you can leverage our data and resources to gauge the rental market in the specific neighborhood in which your home is found. We can tell you what kind of rental values the market is demanding. While you might have an idea of what you want or need to rent your home for, that price point will ultimately be driven by demand and competition. Make sure your expectations are realistic. We’ll talk to you about those expectations, and we’ll also talk about how long it takes to typically rent a property. We’ll walk you through what kind of amenities and features are especially popular among good tenants. 

2. We Will Prep Your Home for the Rental Market: Decluttering and de-personalizing your home after you have moved out of it is especially important. If you’re leaning towards short-term rentals, you’ll have to keep it furnished, and we’ll recommend comfortable, durable furniture and help you stock up on essentials that create a welcoming stay. If you’re going to rent your home out to long-term tenants, we’ll work with you to get everything cleared out. You don’t want to leave behind a toaster because you think tenants might like it. Tenants renting a home for a year or longer will want to move their own things in. And, during the marketing and showing process, we will need an empty, clean home so tenants can imagine moving their own furniture and belongings into the space.

3. We Will Maximize Your Rental Home: Leave the marketing to us. We can tell you how your property will stand out from other homes on the market, and we’ll use our proven strategies to attract the best tenants and the highest rental values. We may talk with you about making updates or minor renovations that can increase your property’s value and appeal to tenants. This could be as simple as a fresh coat of paint or as complex as a kitchen remodel. Tenants today are especially interested in energy efficiency and smart home technology. If your kitchen appliances are aging, we will recommend replacing them with models that carry an Energy Star rating. Video doorbells and smart thermostats are especially valuable in the market these days.

4. Helping You Navigate the Legal and Financial Considerations: Understanding the legalities of renting out your property is not always easy, and this is where professional property management is especially necessary. There are fair housing laws and habitability standards. We understand security deposit laws and the necessities of a Florida lease agreement. We will handle rental increases and ensure that evictions are unnecessary and avoided.  

 

Property management really is critical, especially if you’ve never been a landlord before. The market is always changing, and the process of leasing, managing, and maintaining your home requires skill, experience, and resources. Not only do you get extensive services such as leasing, tenant screening, rent collection, and preventative maintenance, you also get the opportunity to leverage the resources, experience, and technology of your property manager. This is important in managing your rental property successfully. 

Once you have your property on the rental market, we’ll take care of screening your tenants carefully and within compliance with all fair housing laws. Our process is consistent and fair, but rigorous. Property managers have the technology and the tools to handle credit checks, background checks, and eviction checks. We can examine rental histories and choose a qualified tenant who is likely to pay rent on time, help take care of your home, and follow the terms of the lease agreement. 

Earning Money on your Home

With lower housing expenses of your own thanks to the downsizing and extra earnings thanks to the rental arrangement you’ve established, you’ll find that you have a lot to gain. We believe that moving out of your current home into something smaller and more manageable while renting out that property that you’ve left can be a great way to pay down debt, save more money, and invest for the future – whether it’s retirement or education or a long-awaited trip around the world. 

Ensure your success by partnering with a local property manager who can help you make good decisions.

Downsizing doesn’t mean you’re stepping back from homeownership. Instead, it can be the beginning of an astute investment strategy that not only reduces your living expenses but also puts you on a path towards financial gain. By transforming your larger home into a rental property, you’re strategically leveraging real estate to work in your favor.

Consult Property ManagerIf you’re ready to downsize and open up new possibilities for income, let’s talk. We would be happy to help you navigate this process, and we know that our experience within the Sarasota real estate and rental markets can be extremely helpful. Contact us at Sarasota Management & Leasing.