How to Value a Vacation Rental for Divorce Purposes

Vacation rental properties are usually excellent investments for married couples. After all, if you have a cabin or condo in an exciting place, you can visit as often as you want. When you are not at your property, you can also put it to work for you financially. That is, you can rent the residence to others who want an epic vacation. 

Your vacation property has a market value. If you plan to sell the place and split the proceeds with your soon-to-be ex, you can likely receive a fair appraisal by working with an independent realtor or two. If you want to keep the property and continue to rent it to tourists, though, valuing your vacation rental for divorce purposes may be more challenging. 

Calculate rental income

If you have owned your vacation rental for years, you probably have a good idea about how much rental income it generates. You can, though, calculate future rental income by multiplying the average nightly rental rate by the number of days you rent your unit in any given month. If you have never rented your vacation property before, you may need to compare similar units to obtain a realistic picture of your property’s income potential. 

Deduct monthly expenses

As you know, rental properties can be expensive to maintain. To understand your property’s rental value, you must deduct monthly expenses from rental income. Common expenses include property taxes, upkeep costs, utility bills and mortgage. Rather than creating your own spreadsheet, you may want to use a simple rental income calculator. 

Consider occupancy

After your divorce, you may want to continue to visit your vacation property. During your visits, though, you cannot collect rent from tenants. Still, you must treat yourself as a renter for valuation purposes. For the days you are at your vacation property, you must add the rental rate to your rental income. You cannot treat your visits as unrented time. 

It may be in your best interest to keep your vacation property after a divorce. Before you can negotiate ownership, though, you must know how much your cabin or condo is worth on the rental market. After you deduct total expenses from gross rental revenue, you can compare the rental value of your property to its sale value.

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