I’ve always been leery of owning two homes at once. I’ve heard too many stories of people stretched thin between two properties — trying to sell their previous home while setting up life in the new one. The costs of maintaining a second, empty residence can be punishing.
So, when we put our house on the market last spring, our vision was that we would travel and live out of short-term rentals until we were ready to settle down again. But when our house sold in the first 24 hours, we had to put that plan into action sooner than expected!
The lead-up to closing day — packing, moving, cleaning after almost 17 years in the same house — was so draining and all-consuming, that we literally found ourselves leaving the closing with no idea where we were going to spend the night!
And, even though we had plans to spend some of that first week with a nearby relative, the rest of the summer was an open book. We didn’t know if we’d be camping, couch surfing, or staying in hotels, apartments, or houses. Despite being pretty experienced travelers, we didn’t have a very good feel for the economics of short-term housing either, because we’ve spent most of our time in recent years traveling in our small RV, or staying with friends and relatives.
We haven’t typically required much living space or luxury on those trips, given that we always had our comfortable home to return to at the end of our travels. But now, without that familiar endpoint, we found ourselves wanting somewhat more spacious and comfortable accommodations along the way….
So how have our short-term living arrangements unfolded? And, importantly, how much have they cost?
Hotels: Nightly Rates
We wound up spending that first night after the closing in a newly built Holiday Inn Express on the outskirts of town. We were exhausted and needed a guaranteed good night’s sleep. This set us back nearly $130 with taxes. The room was new and large and nicely furnished, but was a far cry from a place we would want to call even a temporary home. There was no desk, no sofa, and no kitchen, for starters.
Later in our travels we stayed at a nice new Hampton Inn for a similar nightly rate. The room was even more plush, to the point of being overly formal for our tastes — heavy drapes, built-in mahogany veneer desk, and so on. Yet it still didn’t have a sofa or a kitchen — basic amenities for longer-term living.
Those nightly rates at upscale chain hotels like these, without discounts, would come out to nearly $4,000/month — enough to rent an enormous luxury home in most markets! Clearly the nicer hotels are not a practical solution for short-term living. But that’s the price of convenience and an ultra-short time commitment of only one night.
If you cut back on quality, you may begin to test your comfort limits. At the end of a long driving day, we stayed at one of the national value chains just off the interstate in a mid-size southern town. With taxes the cost still came to nearly $70/night. The hotel was dated and a little grubby, the bathroom wasn’t in perfect working order, and the surrounding neighborhood wasn’t the best. We were only there for 8 hours and we slept OK, but it wasn’t an experience we were eager to repeat.
Nobody should be surprised to hear that paying nightly rates at regular hotels is a poor option for short-term living. We try to limit that option to the occasional transition night.
Extended Stay Suites
When we returned to our former home town for a couple of weeks to take care of business, we had a bit more time to research accommodations. We explored a couple of name brand “extended stay” hotels that advertised weekly rates in the range of a few hundred dollars. Unfortunately the customer reviews were mixed. Aesthetics, safety, and cleanliness have to be somewhat comparable to our former home, or we simply don’t want to be in a place more than a night or two.
At last I found a Quality Suites that offered a decent rate. Ironically, it was the same hotel where we had spent a few nights 17 years previously, while exploring the city for the first time. We were comfortable there then, though it was beginning to show its age now and could have been cleaner. But they put us in a quiet back corner, and gave us a discounted weekly rate which came to about $80/night with taxes, reflecting about a 25% discount. We had a sofa, microwave, and fridge, but no kitchen. It was workable for a week or two.
A few weeks later, in Santa Fe, we found a somewhat better deal. This was a local, non-chain suite-style hotel with aging but comfortable efficiency rooms featuring a queen bed, sofa, coffee table, and small kitchen with a built-in dining table. The rate with taxes was a little under $65/night. We’d stayed there for a week 3 years previously and were again comfortable, feeling like we got our money’s worth.
Further down the road in Tucson we found a similar deal. A local boutique hotel that had been bought out by an international time-share brand. They offer special deals through Expedia to help fill up their vacancies. (Be sure to check Expedia for these kinds of deals, which may not be available directly.) The unit was a spacious 1-bedroom apartment, nicely appointed, with comfortable living area, functional kitchen, porch, and jacuzzi tub. The rate again, came in at a little over $65/night with taxes.
That rate of $65/night for an above-average suite style room from a local brand, sounds pretty good. Still, that comes out to nearly $2,000/month. In many markets you can still rent a spacious, higher-end house or apartment for that kind of money.
If short-term rates at hotels are too pricey, what can you find in short-term rentals at conventional apartment complexes?
We spent several days apartment shopping this summer, thinking that might be an option for portions of our itinerary. We figured we could retrieve a minimal number of our belongings out of storage in order to furnish a 1-bedroom apartment. And we thought, even if it might be unoccupied some of the time, the rates might work out to be favorable if we were going to be somewhere for more than a month.
But there is a major obstacle to renting an apartment for the short term: leases. Only a fraction of the nicer apartment complexes in our area even offer short-term leases, and none for less than 3 months. Additionally, they often charge a premium, something on the order of 5% of the rent, for those short-term leases. So, unless you truly need to be somewhere for the full 3 months, this can still be an expensive solution for short-term housing. Add to that the usual overhead of a longer-term rental: credit checks, deposits, starting/stopping utilities, and so on — and the appeal declines further.
Even with those drawbacks, we were attracted to a couple of 1-bedroom apartments in the $850-$950 price range. We were ready to rent the first one, filled out all the paperwork, and were then shocked to learn that we didn’t meet the income requirements! Apparently this complex had taken on some government loans to get out of financial trouble and those came with a form of rent control. Even with our reduced retirement lifestyle, and no W2 income except my wife’s teaching salary (soon to end with her full retirement), we made too much money to qualify! Moral: inquire about any income requirements before completing the paperwork….
A couple of weeks slipped by and we located another nice 1-bedroom apartment in our price range, available with a 3 month lease. But, by now, our time horizon had shortened and we just couldn’t justify the hassle and expense of maintaining a place for 3 months, when we really would only require it for about half that time.
So, the management companies at the major apartment complexes had proven too rigid. Perhaps private owners would have the flexibility and low overhead to meet our needs better? With that in mind, we looked into the private short-term rental market….
We turned first to Vacation Rentals by Owner. VRBO, established in 1995, was one of the first vacation rental sites. It was purchased by HomeAway in 2006 and together they are among the leading sites for private short-term rentals. We had used VRBO a while back to book a vacation rental, so I was familiar with the site, and it was natural to return to it.
VRBO can produce some gems, but the first thing to know is that you’ll spend some time unearthing them. In many popular locations, you’ll need to hunt through long lists of properties. The site tries to standardize the vacation rental process, but there are still inconsistencies. Not all properties include all the information you need to make a decision. Calendars may be incomplete or not maintained at all. Full addresses are not always provided. Pricing is generally not standardized, searchable, or sortable. At a minimum you usually need to read individual listings in detail. And even then, it is often necessary to contact the property owner/manager to confirm the particulars. A plus is that VRBO charges the owners to list or advertise, so there is no direct cost to renters for using the site.
After some searching, we scored a huge win in our recent experience with VRBO, locating a lovely 1-bedroom apartment in a remodeled house available for a month in the downtown of our old hometown. The place is tastefully redecorated, immaculate, with comfortable furnishings and modern bathroom and kitchen. It’s in a safe, quiet neighborhood just blocks from most of the city’s attractions. The owners live a few blocks away and are professional, friendly, and attentive. Best of all was the price: $1500/month, or about $50/night.
This place comes closest to feeling like “home” of anywhere we’ve stayed since selling our house. And yet it is also the least expensive! It’s nicer and cheaper than anything the hotels can offer. Though, looking around the neighborhood we see that our furnished, short-term VRBO unit still rents monthly for about twice what it would fetch as an unfurnished yearly lease. So, again, you do pay a high premium for short-term convenience. But this place has met our current needs perfectly. And being able to walk out the door at the end of the month with no obligation or overhead is ideal.
The next chapter in our short-term private rental story will be a designer flat we’re renting for 10 days in a beautiful vacation spot in the northeast. This is more of a “vacation” than it is a frugal renting decision. The place we found was actually one of the most economical options in the area, even at nearly $140/night total cost. This time around we found our rental on Airbnb, which seemed to have a larger and more diverse selection in this particular region.
Airbnb is known for its budget traveling options, including a selection of shared living situations that you won’t usually find on other sites. The payment and security measures seem well designed, but we’ll know for certain after our stay. The site charges the renter a booking fee of from 6 to 12 percent, depending on the total cost of the reservation. The rent and fee are released to the owner 24 hours after you arrive, if everything is as described. The site lets owners choose from a set of carefully-specified cancellation policies, which should reduce the potential for misunderstanding. Unfortunately the policy on our rental was quite strict, so there is little chance of a refund should plans change.
A Rough Formula
We’ve been on the road and in the short-term rental market for several months now. We’ve learned that it takes a lot of your time to find and vet nice places at reasonable prices. It can be worth the effort, because there are some great properties out there, but true bargains seem rare.
When all is said and done, how do expenses stack up for short-term rentals? A very rough formula based on our experience would be as follows:
- Given the nightly rate in your area for the better national hotel chains, you can probably rent weekly for about 50% of that nightly rate, if you shop carefully among non-chain suite-style hotels or listings on VRBO or Airbnb.
- If you can sign a 3-month lease on a conventional apartment, you’ll potentially save another 50% off that weekly rate — at the cost of making a longer commitment and having more transaction overhead.
So, if your better local hotels go for $120/night, you might find a decent weekly suite for about $60/night, or a 3-month 1-bedroom apartment rental for about $30/night.
These are very rough numbers: your experience will surely vary. But it’s a useful rule of thumb based on our experience.
So, yes, you can save money in short-term housing if you’re diligent. But it’s not an easy process. And you may not enjoy repeating the search continually, if your plan is to travel around the country indefinitely.
The strategy we like better now is finding a suitable home base, then traveling out from there on trips of a few days to a few weeks — usually in our trusty camper van, but occasionally renting more upscale digs. And for those occasional upscale rentals, cultivating a portfolio of familiar properties to which we return over the years, is a strategy that could save a lot of research effort.
So that’s what we’ve learned so far about the market for short-term housing. And how about you? Do you have any proven tips, techniques, or resources for getting good, affordable short-term accommodations?
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Many readers have expressed an interest in audio podcasts on personal finance and retirement. My friend Todd Tresidder over at FinancialMentor.com has just kicked off what promises to be a fascinating and excellent series of podcasts. His second session, just released, features an in-depth interview with me about my strategies for early retirement: How to Retire at 50 with Darrow Kirkpatrick. Todd achieved financial independence in his 30′s and is an authority on retirement issues himself, plus an excellent interviewer. We had fun discussing both the tactics for financial independence and some of the deeper underlying issues. Check it out!
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