Five years ago military families that needed to move quickly could do so because it was easy to sell a home. But, today, the housing market has softened. What if you need to move and you can’t? What options do you have?
One alternative to selling is to become a landlord and rent out your home, and just ride out the market.
You can become your own landlord or hire a property manager to do this for you. For those of you interested in doing this, consider these steps to renting out your home:
1) Determine how much rent you want to charge a tenant. One website I like is rentometer.com. By typing in the rental address, city, state or zip code as well as the type of place the home is, you can see what others pay in the area. Coupled with Craig’s List, this will give an approximate rental amount. If you’re close to a great school and have a fenced in yard, consider increasing it slightly.
2) Determine what utilities you will pay and what the renter will pay. You may pay water and sewer; all other utilities are up to the tenant. (Check the Landlord Protection Agency’s (LPA) website, thelpa.com, for laws in your own state.)
3) Be sure that you’re very clear with your requirements – credit checks, application fees, etc. You will need these to appropriately assess your potential tenant. This is another way to use the LPA’s site. You can run credit checks and download all of the forms you need from their website.
4) Advertise. List your incentives, too. Will you allow a first month free? Do you offer an early rental payment discount? If so, say so. Be sure you stay away from legal trouble and check out the Housing and Urban Development’s list of do’s and don’ts in your advertisements, too.
5) Once you find a renter screen, screen, screen. Ask questions, call references, and be sure information on the application matches with what you learn. Some people are “professional tenants” and know how to scam even the savviest landlords. Use the LPA’s site for information on how to screen out these tenants.
6) Sign a rental or lease agreement and be sure to monitor your property. Follow the laws in each state, but drive by your property or have maintenance persons check on the property when they are on site.
If you can earn enough in rent to offset some of your monthly losses (or all of them), this is an excellent alternative to letting your home mortgage become delinquent or letting your home go back to the bank.
Personally speaking, I’m toying with another option — renting out each room within my home and increasing my rental income. If this works out, I will update readers in a future article.