If your home isn’t selling, you might be tempted to ask your Realtor if you should consider renting it out. There are a lot of factors to consider and often it is best to simply lower the price of your home:
- How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations?
- Because of the economy, many homeowners can no longer make their mortgage payments. What percent of tenants do you think can no longer afford to pay their rent?
- Have you interviewed a few experienced eviction attorneys in case a challenge does arise?
- Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
- Will you allow pets? Cats? Dogs? How big a dog?
- How will you actually collect the rent? By mail? In-person?
- Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
- Do you have a list of craftspeople readily available to handle these repairs?
- How often will you do a physical inspection of the property?
- Will you alert your current neighbors that you are renting the house?
- How much time do you have? When you rent out your home, you still have obligations as an owner. You need to make sure that you’re able to meet your tenants’ needs, such as repairs or emergencies while following all landlord and tenant laws. It helps to contact an experienced lawyer to learn more about these laws, too.
- Are you financially prepared? Can you cover the cost of the mortgage if a tenant misses rent or if the house sits unoccupied for a few months? What about the cost of emergency repairs?
- How much do you need to charge? You may want to charge enough rent to cover the cost of your mortgage, taxes, and insurance. If it’s feasible, you might want to set a rent that can partially cover repairs and earn extra income. Make sure that you’re able to ask for enough to prevent it from costing you money — and ask a real estate agent about fair market values in your area. If your rent amount is above fair market value, you may not find a tenant.
- Can you afford the upkeep? Before putting your house up for rent, make all needed repairs. Take care of any other minor improvements that make the home presentable and allow you to get the rent amount you want.
The Bottom Line: There’s no right or wrong answer when it comes to deciding whether to rent or sell your house. Meet with your Realtor and evaluate your unique situation and make the choice that’s right for your needs and your financial future