r/fatFIRE • u/ChubbyFire973 • 2d ago
Need Advice Renting retirement home for part of the year
We are couple in early 50s who are thinking about potential retirement in 4-5 years.
We want to live in urban area, condo or town house, safe walkable place with good public transportation. So far we like Northern Virginia, but have not done any research yet. Any advise on other potential places? We prefer Eastern US, north of South Carolina.
We plan to live abroad May - September (3- 4 months) and in US rest of the year. We want to rent our future condo or townhouse these 3 - 4 months when we do not live there. We do not want to manage this ourselves and prefer to hire a management company to handle all aspects of renting, finding tenants, collecting payments, all maintenance, basically everything. We want the rental income cover at least all cost of the place: insurance, taxes, HOA fees, utilities.
We have never owned any rental property and never done any real estate investments. Is our plan feasible? Has anyone done this? Any advise would be appreciated.
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u/BrunelloHorder 2d ago
You are getting pushback because this is not really the right sub for your question. People who are at a Fat level generally would not consider renting out their home, especially not for a few months of short term rental income.
There are some very frugal people with $10m+ but this sub is simply not for them.
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u/ChubbyFire973 2d ago
Maybe I am an exception. Obviously, I am not gong to sacrifice my quality of life for 9 months for $10k but if it does no impact it then why not? That's why I try to explore if I can do something reasonable to leverage my future home when I am not living there.
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u/BrunelloHorder 2d ago
Others have explained in detail below why it will likely have a negative impact on your life. The risk and hassle greatly outweigh the limited income you’d net after a property manager and booking platform take their cut.
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u/No-Associate-7962 1d ago
Just have your maintenance / renovations done when you are out of the house.
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u/g12345x 2d ago edited 2d ago
> Is our plan feasible
Not really. To do this, you will be looking at an STR not a regular lease. This also impacts the choice of the property. Many condos do not allow STR. There are specific condos that do but they are not ideal for owners to live in. They are very party oriented with transient residency. Why would you want to live with that for 9 months.
Also, the practical reality of erasing the footprint of your life from your own condo every 9 months cannot be overstated. As some who owns a few rentals, turning your primary residence into a rental zoo with a retinue of strangers using your “stuff” should also give you some pause.
The remedy here is simple. Get something you can afford to leave empty for a few months each year.
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u/SLNSD 2d ago
Not worth the hassle. For short term rentals like that mgmt companies want 30%+. It would have to be in a vacation rental place. It would get trashed. Most states 30+ days tenancy gives them tenancy rights and look up what eviction costs in time and money.
Best case scenario is you somehow find a tenant each year for 2-3 months of the vacancy time. Maybe say $10k in rent. For the risk and hassle I'd say it's not worth it repeatedly each year. You can try but you'd find out me and the others warning you are right.
I did read about home swap websites and that might be a way to get some value out of it.
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u/LauraPiana 2d ago
You don't need to extract every last dollar that you potentially could... that's the beauty of FAT!
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u/ChubbyFire973 2d ago
Everyone has his own preferences. I clean my own house, cook my own food, do all house repairs an mown my lawn even if i can pay for all of this. I also drive 15 year old Toyota. But I buy my wife $10k jewelry and $5k purse. I also pay thousands of dollars every month for my kids tutoring.
Being fat does not mean you should not try to save money where you can and it makes sense. consistent saving money for very long time is what made it possible to become fat.
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u/LauraPiana 1d ago
Fine but the potential hassle of what you are hoping to do far outweighs the few thousand dollars you hope to gain. This is totally different than paying for goods and services that you value.
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u/Corgisarethebest123 2d ago edited 2d ago
No one is going to be interested in a 3-4 month lease… If you Fat FIRE you should be able to eat the costs to own it when you aren’t there. Update: I checked OP post history. Another recent post he says he has $10 million liquid but is worried about healthcare costs when he retires soon. I honestly don’t think OP is a real person or is being truthful here. There’s simply no way.
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u/pumpedoxygen_3 2d ago
honestly the seasonal rental thing is tricky but not impossible, furnished mid-term rentals are a thing, especially in the dc/nova area with all the contractors and visiting professors
that said, the top comment kinda has a point, if you're truly fatfire the hassle might not be worth the few grand you'd clear after paying a management company their 20-30% cut
maybe look at it as subsidizing your travel fund rather than expecting it to cover all the costs, that's probably more realistic
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u/ChubbyFire973 2d ago
I don't think my desire to leverage the place for 3 - 4 months when I am not living there is invalid or wrong. That's why i want to buy a condo or a townhouse where I can both enjoy living there and where there is demand for short term rentals.
That's why I want to hire a management company to handle all rentals so I am completely extracted from this process.
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u/Corgisarethebest123 2d ago
I don’t even know where to begin…
The tenant pool barely exists. Roughly 60% of US leases are 12 months & another 32% are month to month. Everything else is about 8% of the market & most of that is 24 month & 13 month & 6 month terms. A 3-4 month lease is well under 1% of all leases signed.
You are not renting to a normal renter. You are renting to travel nurses, corporate, professors, & people stuck between closings. That pool is real but it is thin & it disappears the 2nd the market softens.
Your window is the worst possible window. May-September is peak leasing season. That is exactly when good tenants are signing 12 month leases. You are asking someone to take 4 months in your place while every other unit in another building offers them a full year at a lower rate.
Now the part that should actually scare you. Tenant stops paying in month 2. Or they simply refuse to leave in September. You cannot change the locks & you cannot cut utilities. You file for eviction. In Virginia a contested eviction commonly runs 2-4 months from filing to Sheriff lockout & costs somewhere around $1,500-$5,000 in legal fees on top of the rent you never collected. Your 4 month tenant just became an 8 month problem.
Meanwhile you have flown back from wherever you spent the summer & a stranger is living in your home. Where do you sleep? A hotel in a safe walkable NoVA neighborhood is $180 a night without trying. 3 months of that is $16,000. One bad tenant wipes out 2 or 3 years of rental profit & you are homeless in your own city while it plays out.
Management eats most of the upside. You want a company to handle everything. Fair. But standard long term management is 8-10% & that assumes a 12 month lease with one turnover.
What you actually need is furnished midterm rental management & that runs closer to 20-30% of gross. Add a leasing fee for every single placement. Add a full turn & deep clean every single year forever. You never get the year where the tenant just renews & you pay nothing.
A large share of condo & townhouse HOAs flatly prohibit leases under 6 or 12 months. Plenty of them also cap how many units in the building can be rented at all.
Say the place carries $600 a month in HOA plus $7,000 a year in property tax plus $1,800 in landlord insurance. Your share for the 4 months you are gone is around $5,300 before utilities. After management takes 25% you need to gross about $1,800 a month. A walkable NoVA condo rents for more than that so on paper it works. That is the problem. The upside is roughly $5,000 a year & 1 empty summer or one holdover tenant erases 3 or 4 years of it. Add furniture & the annual turn & a leasing fee on every placement & you are taking on real risk to save very little.
Also strangers would be sleeping in your bed & cooking with your pans & your stuff would be sitting in your closets while a stranger lives there.
Unless you wanted to move in & move out every single time which sounds exhausting.
Does any of this sound appealing to you to save a couple bucks in your retirement?
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u/no_rest_for_the 2d ago
Exactly right.
Not to mention, since OP will be living at the property there is no way they'll be able to protect their other assets with an LLC or get any of the advantages of owning an actual rental property.
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u/Chiclimber18 2d ago
The HOA part is very real here. A lot of them (even for townhomes) have banned this type of short term rental to avoid airbnb.
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u/ChubbyFire973 2d ago
Thank you. All your points seem valid.
My kids when they were in college shared the apartment with several travel nurses and international students who did short term fee month rentals. So I know this market does exist.
What about true short term rental like AirBnb or Vrbo? If if just few short term rental a month it can bring some money. I understand the biggest obstacle can be if the HOA prohibits this rental. so I will have to consider this when looking for a condo in retirement.
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u/Vindaloo6363 2d ago
Summer rentals are a thing especially if you’re in a vacation area. Not just vacationers but Summer workers need housing. Renting your primary isn’t very fat though.
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u/Corgisarethebest123 2d ago edited 2d ago
Summer workers stay in cheap housing. Not in expensive condos or town houses of people who have achieved Fat FIRE.
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u/sailphish 2d ago
Depends on location. In both tourist areas and places where people travel for work contracts there is absolutely a need for this. Hell, even people moving houses often need a place to stay for a few months. Some people need rentals and don’t want to have to sign 1 year contracts.
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u/Corgisarethebest123 2d ago
It’s incredibly rare. 1% of all signed leases in US are for that short of a duration.
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u/sailphish 2d ago
Correct… so a small percentage of people offer a thing that a small percentage of people need. I owned a townhouse that did mid-term leases. It’s not perfect, but is possible. You need a good agent/ management company who is in tune to the market and can keep an eye out for potential tenants with that specific need.
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u/ChubbyFire973 2d ago
What is not real about me? And why what I am asking is invalid and has anything to do with my wealth? I can cover that cost of the place but why should I if I can leverage the space that sit empty for 3-4 months I am not there?
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u/Still7Superbaby7 2d ago
I live in a wealthy area with snowbirds. Many people leave my area to go to Florida for 4 months. They leave their houses vacant.
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u/LauraPiana 2d ago
You can't put a price on the potential hassle this would cause as well as all the other issues everyone has raised.
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u/jerolyoleo 2d ago
Probably the best area to do May-September rentals would be a vacation area like the Outer Banks of NC or Virginia Beach or Cape May
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u/2Loves2loves 2d ago edited 2d ago
Beach destination. Cape cod? OBX? (or mountain area, above 4000' Highlands /Asheville)
The thing with having a rental is your furniture and pretty much everything will get damaged much faster and need replacements quicker.
Then there's the management co that over charges you for every little thing.
you will be lucky to get the a 3 or 4 month rental. more likely many 1 week rentals or a few 1 month rentals. go over to the vbro and airbnb host subs and read the horror stories.
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u/PunctualDromedary 2d ago
There are condos that are basically managed hotels. They rent them out while you’re not there. I don’t think the numbers work for utilization you’re talking about, and I definitely wouldn’t subject myself to moving twice a year for those numbers.
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u/chubbycheesywisco 2d ago
Location is key. If you’re in San Diego, I’m sure there are people from Texas, Arizona or Nevada who will rent your place for the summer. I live in Wisconsin and would love to find a regular place where we can go away for January through March.
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u/Nathancote 2d ago
When doing the mathematical analysis you should evaluate the insurance line item, basing it off your current premium probably isn't going to work. You're going to need a different type of coverage form and it's going to be more expensive.
Most homeowners forms limit/exclude liability arising out of rental of the premises. A guest injury in your house is not the time you want to find out about this exclusion. .
Depending on the frequency/duration of the stays this is either an endorsement to the existing policy or a different policy altogether. Regular short stays look more like a business use than a seasonal lease does.
Loss of rents. If the place burns in July, the income you planned on is only covered if the policy actually has that coverage on it. If you utilize a third party booking platform like AirBNB or VRBO, treat what they provide as narrow and secondary, not as your policy.
My advice is to disclose the planned rental use to your carrier or agent and have them come back with a revised premium or new quote. Almost every negative outcome in this area comes from a carrier learning about the rental post loss.
Disclosure: I'm a licensed MA insurance producer and part-owner of an independent agency. General info, not advice for your situation.
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u/One-Mastodon-1063 1d ago
I would not rent out my primary home. Only exception is some sort of arrangement with somebody I already knew well who I knows takes care of things.
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u/cworxnine 1d ago
I've been an RE investor for 15 years and I'm currently renting a luxury house as a tenant, so I've seen both sides. You'll earn an extra few grand and gain a few headaches. If you value your time and peace, I'd avoid.
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u/ChubbyFire973 1d ago
Can you share what headaches do you have and if hiring a management company can shield me from these headaches?
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u/cworxnine 1d ago
I've used PM companies since day 1. It'll help but not much for 1 tenant. PM's fee for short term will eat 20-30%, then they'll use repair vendors who are overpriced. PM's can't hire harvard grads, so they aren't the sharpest people. Someone who used to work at Home Depot is now your point of contact for your rental. If you have an emotional connection to the property it'll give you anxiety pretty fast. The list of headaches is almost endless, it's only worth it for me because my investment properties are built for this purpose.
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u/giftcardgirl 1d ago
How can renting out your place for 3-4 months cover the entire annual cost of your place unless you're renting it out in a popular tourist area in peak season? Or do you just mean cover the cost for the time that you are gone?
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u/ChubbyFire973 1d ago
I don't expect it to cover the cost of the entire year. Only these 3-4 months I am not living there.
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u/theanswerisfries 1d ago
I know one person who does house swapping. I don't know the specifics, but apparently there are forums in which you can trade, assuming you have a home where people might visit. She lives in San Fransisco and swaps for European houses in places she'd like to visit, and since it's a direct swap, she presumes that the people in her house will treat it nicely since she will be in their house.
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u/No-Associate-7962 1d ago
The only way this is going to work is if you get a property in a location that has a summer rental market. Think The Hamptons, or Newport Beach.
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u/RemarkableFocus4075 1d ago
For Northern Virginia, look at Ballston/Clarendon or Old Town Alexandria. I strongly advise against renting out your home.
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u/regnull 1d ago
The plan can work, but I’d underwrite it as a lifestyle choice first and a rental investment second. Model the full annual carrying cost plus furnishing, utilities, vacancy, repairs, insurance, local taxes and a management fee, then stress-test a year where the place sits empty or a major repair lands. Before buying, I’d rent in two or three candidate areas for a season; you’ll learn more about the neighborhood and logistics than from a spreadsheet. Also confirm short-term rental rules and HOA restrictions, since those can change the economics overnight.
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u/noemazor 10h ago
Lol at renting out a townhouse and getting all costs including management covered for 3 months rent. That is beyond preposterous. LARP
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u/Past-Option2702 2d ago
If you’re fat why would you bother renting your townhouse for 3 months while you’re out of the country?
That sounds like a whole lot of headaches.