Frustrated Sellers Turn Homes Into Vacation Rentals

In the winter of 2009, Linda Powers was ready to retire and move with her husband from her bucolic community in the Colorado resort area of Crested Butte to Denver, closer to her children and grandchildren. But her retirement plan was based on her selling her 8-year-old home, once assessed for $1.2 million. She wanted to sell her house, but she ended up renting it to vacationers.

"It was the right time to let it go, but the timing was bad," Powers says. Because she considered her home her retirement fund, she said, she needed to sell it for close to that $1 million mark. But in this market, she expects she could only get about $800,000. After selling her business, she couldn't afford to keep paying the $3,000 mortgage. Unwilling to sell for less than she wanted, Powers turned to a solution that is becoming more popular with homeowners who find themselves in a tough housing market: She turned her home into a vacation rental that would generate enough income to help her make mortgage payments and allow her to continue on her retirement path.

Powers is now charging up to $400 a night for the three-bedroom, 2.5-bath home, through VRBO.com, a division of vacation rental site HomeAway Inc. She and her husband are now able to cover 75 percent of the mortgage.

"I got a lot less than I had hoped when I sold my business," said Powers, who had owned a toy store in Crested Butte for 31 years. "I needed to sell the house, but I didn't want to give it away at the wrong time."

Powers is just one example of those who have discovered a way to avoid financial straits as they navigate through the tricky waters of the real estate market.