When the Economy Gives You Lemons…Find a Way to Make Lemonade

  Amidst the bleak news about failing industries, businesses, and the economy as a whole, it was comforting to discover that some people are making a killing off of the housing crisis. Companies such as Showhomes are taking advantage of the unprecedented number of vacant homes that are currently on the market by selling the services of a “home manager” - a person or family who lives in the vacant home until it sells. 

I think the business model is genius. According to a survey conducted in 2004, vacant homes (even if they’re staged) typically sit on the market for 30 to 60 days longer than occupied homes, and sell for at least 10 percent less. Owners of vacant homes pay for the upkeep and utilities of the house, in addition to the staging fees and insurance costs, only to find that the house doesn’t sell. By hiring a company such as Showhomes, the homeowner pays an upfront staging fee of $1000-$3000 and, after the house sells, coughs up about 0.5% of the selling price. However, the homeowner no longer has to pay for utilities or maintenance as the home manager takes care of that, and the insurance costs get covered by the company. And most importantly - the house sells. One 2007 study conducted in Chicago showed that managed homes sold at 93% of the list price, while comparable unoccupied homes sold at -14%, if at all. 

But why would anyone want to live in a house that they could get kicked out of at a moment’s notice? There are a couple of reasons.

1) Many of these houses are listed at $1 million or more, and Showhomes “rents” them for about half of what they’re worth. The lowest listing price for a Showhomes house? $500,000. Not too shabby!

2) The fact that there is no lease is ideal for some folks. For example, a professional who is starting a new job in another city but needs a place to live while looking for the perfect house, or a professor looking for a temporary home while on sabbatical. 

3) Did I mention the extremely low cost of “rent”? 

I am impressed - and am kicking myself for not doing it first.  These house management companies profit from both the homeowner and the “renter,” have minimal costs, and are currently experiencing an enormous market. Why didn’t I think of that?