Should You Rent Your House Out?
Lots of people entertain the idea of renting out their home to others, but may not have enough information to make an educated decision on the subject. Renting out your house can have many advantages, many disadvantages, and could even take you to places you’ve never been before.
One of the great advantages to renting your home out to other people is that they can make your house payment for you. This can be very convenient especially if you are having economic troubles. If selling is out of the question or the market isn’t supportive of a quick sale, having someone else make your house payment for you in addition to putting a little extra cash in your pocket is definitely a plus. In truly tough times, I’ve seen home owners live in fifth wheels while their home was occupied by their renters, giving them enough time to get back on their feet.
Unfortunately sometimes these new inhabitants don’t make their payments on time. If you don’t have money saved for a rainy day and are dependent upon their funds to pay your mortgage then renting out your property can be disastrous. It can hurt your credit and cause you undue stress. I’ve had renters in my home before and due their lack of punctuality I had to forgo paying my own rent to cover the house payment while the renters scurried to come up with the difference owed. In exchange for money I have been offered trucks, trailers, and sweat equity. So be prepared for just about anything.
One big positive about renting your home can mean that it won’t sit vacant if you are relocated. Many times workers are transferred to other areas of the country for job reasons. If this is a sudden event and there isn’t time to sell the property, renting can be a valid solution. You don’t have to worry about vandalism, break ins, or winterizing the home in the colder months.
Remember that renters may cause damage to your home. Renters typically do not treat a rental like they would their own property. The thoughtful care that you might put into your home is not always duplicated by tenants. You as the owner are responsible for repairs, hopefully there has been an adequate deposit exchanged at the beginning of the lease to cover any damages. And just because they say that they “know how to paint” or perform other sweat equity doesn’t make them an expert by any stretch of the imagination. My home was painted by a so-called handyman of a renter who got paint all over the trim and woodwork.
A good thing about renting your home out is that each payment made goes toward reducing your principal. If your local market is relatively stable then as your tenants are paying their monthly payment the equity in your home will continue to grow. When the time comes to sell, your net proceeds will be higher than before you rented out the home.
Unfortunately, if you have a long-term lease for your home, you will need to wait until it expires to move back in. Most owners like a long-term lease of six months or more. But if for some reason you are in the situation where you would like to move back into your house, you are bound to the terms of the rental contract. I had the misfortune of signing a two-year lease for some tenants who were habitually late. That was a very long and strenuous struggle each month getting the full amount of the payment from them. As long as the tenants are making their payments before their eviction date, they will be a permanent fixture until the lease expires.
For information on the do’s and don’ts of renting your house out, visit Nolo.com. There are also extensive forms that have been drawn up by attorneys.