This week I'm going to tackle the age old question.....should I rent my home out, if it doesn't sell? A recent study did show that 39% of sellers prefer to rent out their last residence than sell it when purchasing a new home. With many homeowners refinancing at a low rate, and the housing market struggling with low inventory, the amount you could charge for rentals has gone up.
If you are a residential real estate investor, than this tactic makes sense. However, if you really don't want to become a landlord and are only looking at it as a way to purchase your new home, while covering the mortgage on the original home...then you need to ask yourself these questions:
1.) How will you respond if your tenant says they can't afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
2.) Because of the economy, many homeowners can no longer make their mortgage payment. What percent of tenants do you think can no longer afford to pay their rent?
3.) Have you interviewed a few experienced eviction attorneys in case a challenge does arise?
4.) Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
5.) Will you allow pets? Cats? Dogs? How big a dog?
6.) How will you actually collect the rent? By mail? In person?
7.) Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
8.) Do you have a list of crafts people readily available to handle these repairs?
9.) How often will you do a physical inspection of the property?
10.) Will you alert your current neighbors that you are renting the house?
Once you have answered these questions, you will be in a good position to decide what is best for you and your family.
(Information courtesy of KCMBLOG)
