Should You Rent Out Your House?

Lately, there are more people looking to rent a home rather than buy one. It's unlike a few years ago when it was easy to get a mortgage. Banks have tightened the requirements on mortgage applicants leading more people to rent. It's also not a good time to put your house on the market. There are many houses competing with yours that are being sold through short sale or foreclosure. It may be smarter to hold off on selling and rent your home until the market goes back up. However, there are a lot of things to consider and many first time renters don't know where to start.

The first thing you should do is find out how much you can rent your house out per month to decide if it's worth it to you. Deciding what to ask is the most important thing. Of course, you don't want to ask too little. However, if you ask too much you're going to have problems finding a renter. Remember, every month the house sits empty is less money that you could have charged. So, if you're asking $1,200 a month for your house and it takes two months to find a renter, you may have been able to rent right away for $1,000 per month. Sure, $1,200 will bring in $14,000 per year. But, you've lost two months of rent, and if you're paying a mortgage you may as well add that into what you've lost as well. Remember, people are going to rent the house they feel has the most to offer for the least amount of money.

You may be worried about the damage someone might cause if they rent your home. While this can happen, it's important to remember that every business has losses. This is why you check references and collect a security deposit. You've probably heard horror stories from people who have rented their homes. But, typically renters are good. The most you'll probably have to do is get in there and do some heavy cleaning when they leave. You can also hire a cleaning crew to do this for you.

Also take into consideration that maintenance is your responsibility. You are required to make sure that the plumbing and electrical are in working order. If it breaks, by law you have to get it fixed. It's important to read literature on landlord responsibilities in your state before you rent. Remember that every house suffers normal wear and tear. The carpet is going to get worn over a year's time and the paint isn't going to be as vibrant. You'll eventually have to purchase a new water heater or fix a leaky roof. These are expenses you have to prepare for.

Be careful how much you ask for up front. You may want first, last and security. Well, if you're asking $1,200 a month and then $1,200 for security that's $3,600 up front. You may shy away a lot of potential renters this way. So, research what similar houses are asking for in your area and be comparable with them. It may make you feel better about renting by requiring more money up front, but remember that there as just as many bad landlord stories floating around as there are bad renter stories. Your potential renters have the same concerns as you.

It's also a good idea to be flexible with the lease term. Requiring a year lease may put you in sound mind. But, there are a lot of people who only need a place to stay for a short period of time. They may be building a house or only staying for the summer. It's also fair to ask for a little bit more monthly if you're going to offer a shorter lease. If your house is in a popular vacation spot, a college town or near a military base you may hear this request more often.

Also remember that you can't discriminate. You can't just decide you're not going to rent to a specific group such as college kids. If you are declining them, you have to be able to provide documentation saying why such as poor credit history or inability to prove they can pay. If your applicant is qualified, you can't deny them the opportunity to rent. If they are handicapped, you have to allow them to build ramps, install handles or whatever they require. You don't have to pay for this. But, you have to allow them to do so. It is also their responsibility to return the property the way it was before they moved in.

It's recommended that you hire a property management company. They will take care of everything for you. They will advertise, screen applicants, show the property and handle the rent payments. Of course, there is a charge for this service. But, remember the saying "time is money". You may not be able to leave work to go out and show your property or you may not know how to handle a situation where your renters aren't paying the rent on time. Hiring a management company will give you piece of mind, especially if it's your first time renting. It will give you somewhere to turn for legal questions and ease the stress of the technicalities involved with renting.