If you're struggling to pay off your mortgage and your monthly payments are becoming too much of a financial strain, don't worry - there is still an option which means you can keep your property, and that option is to rent out your home. If re-financing your home is out of reach (which is the reality for most), then renting your home may well be the answer, meaning you don't have to lose your property and you can temporarily release your financial burden.
Here we at GET.com will share with you how to rent out your property to pay off your mortgage and guide you through the main issues to consider and steps to take when renting out your property.
Renting Out Your Property - Tips To Consider
Property Management Basics
When deciding whether or not renting out your home is the right option for you, learning about property management basics is a must. The advantages of renting out your property can be many – income which covers the cost of your mortgage and may not be taxable and the potential appreciation of your property over time while renting it out are just a couple. Disadvantages however include a liability to the tenant, unexpected expenses and also undesirable tenants.
Determining Rental Value
One of the most important steps you should take before deciding whether to rent out your property is determining its rental value. To do this it is best to consult a real estate agent or property management company because they are experts in the field and will compare your property with others in the area. Despite any misgivings, demand for rental properties in your area is probably higher than you imagine, with more and more people choosing to rent and not buy in today's market.
Simple Steps To Renting Out Your Property
If you've weighed up all of your options and decided that renting is right for you, the following are some key steps to take to make sure that everything runs smoothly.
Find the right tenant. Finding the right tenant is essential in giving you peace of mind that your property is being taken care of. Not only do they need to pay the rent on time but also respect and take care of your property and not upset the other neighbors in your building. Smoking and pets are also considerations when looking for the perfect person.
Advertise the property. If you can't find the right tenant through recommendations of friends and colleagues then try placing an ad in a local paper or housing website. This should include all the essential information on the property such as utilities, rent amount and number of tenants, and also specify whether or not a background credit check is required. Asking for a credit check can save you time dealing with individuals who are not financially reliable, but potentially reduce the interest in the property.
Create a thorough rental application form. Once people have replied to your ad, it's a good idea to have them fill in a form with information such as name, employer, salary, references (previous landlords are a good suggestion), proposed names of all tenants, social security number and criminal record. This way you can run background checks such as a credit check to make sure the tenant is suitable.
Draw up a lease. Now you've found the right tenants it's time to draw up a lease, but remember that lease laws vary from state to state. This document should detail the lease term (remember if you only want to rent your property until the mortgage is paid before selling it you must specify that here), the security deposit (usually at least one month's rent), the monthly date the rent is due, who takes on responsibilities and costs for repairs and landscaping, whether pets are allowed, a list of tenants and eviction terms.
One Last Option
If renting out to other tenants doesn't seem like a viable option, there is one avenue left – renting to yourself. This can be done by putting your home into a limited liability corporation (LLC) and then paying the rent to them. As with any agreement, this has a number of advantages and disadvantages, which you should research thoroughly before committing to this undertaking.
As you can see from the information above, deciding to rent out your property is a decision which should not be made lightly, but one which can provide a great solution to those in a tough financial spot. While a good alternative for those perhaps willing to downsize or who are temporarily moving away, renting may not be for everyone. To avoid having to consider this option in the first place, it's important that you have a mortgage which is manageable and right for you.
You can check out GET.com's Mortgage Genius Tool to get the best mortgage rates for your property. Rates are from major US lenders and are real-time rates. Input your information and get rates in seconds!