Adapting your home for a vacation rental — whether your whole house, a basement apartment or a room — could be a real help in retirement. America has a retirement cash flow problem, and there is no obvious solution for financially strapped US retirees. So, it's worth running the numbers to see if this type of rental could add the cash cushion you need in your retirement plan.
According to a recent Employee Benefit Research Institute (EBRI) study, 68% of the nation’s retirees reported having outstanding credit card debt. At the same time, approximately half of US seniors said they have “saved less” than they needed for retirement.
Additionally, 59% of retirees told EBRI they have only 90 days of emergency savings, down from 69% in 2022. Meanwhile, 36% of retirees say they have experienced “unexpected spending needs” since their retirement, the study noted.
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With thin wallets and draining bank accounts an unfortunate reality for too many US retirees, getting creative with income generation in their golden years isn’t a luxury — it’s a necessity.
That’s where a short-term Airbnb or Vrbo rental can help, experts say
"For retirees seeking extra cash flow, short-term renting can be a golden opportunity, but only if it fits their property and lifestyle,” says Jen Yacoube, wealth advisor at Adero Partners in Walnut Creek, Cal.
For retirees, an “ideal” setup would convert unused space into a private area with its room, bathroom, kitchenette, and entry, keeping life seamless and secure, Yacoube notes.
“Sharing a space is less ideal and can feel intrusive,” she says. “Equally important is deciding if a retiree wants to embrace the role of a hands-on host or would prefer a stress-free, passive income stream with a property manager. The key is aligning this venture with their vision for retirement."
Getting your vacation rental experience rolling
Starting out as an Airbnb or VRBO host isn’t overly complex, but you’ll still need a comprehensive action plan to get your short-term rental business going. Apply these expert tips to the process of getting up and renting.
Evaluate your situation
David Ciccarelli, CEO and founder of the vacation rental platform Lake, recommends that retirees start their short-term rental journey by self-evaluating. “Ask yourself the right questions,” he says. “Why do you want to rent out your place? Were you previously in the hospitality industry and loved being around and serving people? If you can connect there, it's likely a great fit.”
Yet, if you're looking for a simple way to generate income during retirement, it'll prove more challenging than anticipated. “Short-term rentals require marketing and technical skills to get set up properly,” he says. “These skills can be learned, but expect to spend hundreds of hours just getting going.”
Stage your home via video
Ciccarelli says that your home’s location and photos represent 90% of the marketing on these platforms.
“You'll need to name your property (ideally something catchy and unique) and then create some high-quality photos,” he notes. “If you're not into photography, ask your son, daughter, or grandkids to take "aspirational" and "inspirational" photos of each room in the house.”
Ciccarelli’s data shows that the top properties on his company’s platform have over 20 photos, with over 50 photos, so be prepared to take loads of pictures.
“When I say a photo of each room, I mean it,” he notes. “Include each amenity (i.e., washer, dryer, coffee maker, luxury towels, etc.,) and don't forget the home’s exterior. Be sure to upload photos of the property and the views from your deck or patio.”
Plan your pricing
Before officially signing up with a short-term rental partner like Airbnb or Vrbo, gauge your pricing points.
“Look at other similar rental homes in your geographic area and determine what they’re charging,” says Debra L. Morrison, a certified financial planner at Women Navigating Finances, LLC in Lincoln Park, N.J. “Compare the number of bedrooms to the number of bathrooms the view the accessibility and the location compared with your home.”
Mark your rent prices moderately higher or lower than the competition. “If you’re unsure, Vrbo has an automated system whereby you can check the local competition and their pricing,” Morrison says.
Be mindful of the calendar, as that can trigger higher rental prices in your favor. “Holiday pricing is often higher, as demand is high and supply is low,” Morrison adds. “If your home is located in an area with seasonal appeal, you’ll want to increase the per night rental charge for those weeks/months.”
To book longer stays, offer a 10%-15% rental discount for monthly renters. “That may incentivize folks to book your place for a month,” Morrison adds.
Set up your account
Both Airbnb and Vrbo make it relatively easy to sign up for short-term rentals at your retirement home, but there’s more to the job than that.
“You can either set up accounts on one or both channels, but if you plan on marketing your property on multiple rental sites, you’ll need a channel manager that can sync the calendars from both sites to a central booking calendar,” says Austin Hair, managing partner at Leaders Real Estate in Orlando, Fla.
Retirees can expect to see different property management systems online with varying price points and features, so do your due diligence and choose accordingly. “We use Hostaway as our channel manager and PMS, which allows us to offer our short-term rental on many different platforms, including Vrbo, Airbnb, Booking.com, and our direct booking website,” Hair notes.
Protect yourself
Airbnb and Vrbo provide standardized terms, but retirees may benefit from supplementing these with additional house rules or contracts.
“For example, specifying guidelines around noise, parties, or damage can help mitigate risks,” Hair says. “Consider requiring security deposits and investing in short-term rental insurance for added protection. You can implement a rental agreement with a digital signature by using property management software like Ownerrez.”
Aim for a short-term rental contract, a must-have for retirees working with Airbnb or Vrbo.
“A short-term lease rental contract makes the most sense in so much as you can include a liability protection clause,” Morrison advises. “Very few people starting out renting their homes imagine the worst, yet the worst can happen. So make sure to collect a significant security deposit and name the conditions that cause renters to forfeit a part or all of their security deposit.”
It's also a good idea to automatically include a separate liability policy per rental with a partner like Vrbo. “At about $80 or, that policy provision can provide extra coverage,” Morrison adds.
Check with your homeowners' association
If you have a homeowner’s association, you’ll want to know any association rules governing short-term rentals.
“If you’re a condo or co-op owner and want to work with Airbnb or Vrbo, examine your association’s bylaws,” Morrison says. “If your association rules dictate a certain minimum night stay, you’ll need to put that in your description so you don’t have to answer every single inquiry about minimum stays.”
Last minute tips
A retiree looking to succeed in the short-term home rental market with Airbnb or VRBO should emphasize good customer service and responsiveness.
“If you’re managing the property yourself, aim to respond to renters within 5–10 minutes and set up an automatic message after check-in to address any issues early on, potentially avoiding negative reviews,” Yacoube says. “Build a cushion into your pricing to cover inevitable minor breakages like glasses or dishes, rather than charging renters for normal wear and tear.”
Make the process easier on yourself with small action moves that help.
“Save yourself any hassles by designing your space with durable, easy-to-clean materials that can withstand heavy use,” Yacoube notes. “One of the biggest mistakes hosts make is over-personalizing the space with fragile or high-maintenance furnishings.”
“Short-term rentals thrive on practicality and guest comfort, not perfection,” she adds.
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