5 Biggest Expenses You Face Renting Out Your Second Home
BOSTON ( TheStreet) -- If you have a vacation property or second home that sits unused for portions of the year, it may make sense to rent it out. Whether you offer a long-term lease or short-term stays via sites such as airbnb, there are expenses associated with opening your property to a renter -- and experts caution that many first-time landlords don't understand how quickly the overhead and incidentals can add up.
Here's a look at the five biggest expenses associated with renting out your property.
Renter turnover is one of the biggest deciding factors that can turn your property into a source of cash flow or a money pit, says Michael Corbett, Trulia's real estate expert and author of Before You Buy .
"This really is the biggest consideration," he says. "People think if one renter doesn't work out they can just move in a new one -- and that's true -- but the cost in doing so can be substantial."
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For example, if you rent your apartment out for $1,500 per month, when someone moves out and leaves it vacant, you'll lose $1,500 on that month's rent, Corbett says. This is to say nothing of the cost to clean and spruce up the apartment properly for the next renter.
"When a renter moves out and a new one moves in, the carpet will need to be cleaned, the walls will need to be spackled and painted, and that's if they've been there for a month, a year or five years," says Vik Raghavan, co-founder of apartment finder RentalRoost.
There's a reason hotels have such a huge maintenance staff, Raghavan says.
"Moving in and out is an inherently damaging process. There's wear and tear with every move -- more if your renter has kids or pets," he says.
Even if you have a neat renter who lives alone and never hung anything on the walls, the property will still require a major scrub down when they move out, Corbett says. A professional cleaning service typically charges around $300 for a small apartment or condo.
"It has to be sparkling clean when a new tenant gets the keys. They aren't going to move in to anything less than spotless," he says.
Renter "landlord" insurance:
Although renter insurance (also called "landlord" insurance) is optional, it's a good investment, Corbett says. It typically costs more than a regular homeowner's policy, but offers a lot of great coverage that protects you and the property.
"It's becoming a lot more popular lately," he says. "It covers you if the property burns down because the tenant starts a fire or causes other damage. If you're renting a property with just regular homeowners insurance on it, the insurance company can deny your claim. A rental property insurance policy is completely different, and you need it to protect yourself."