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What you Need to Know if you Decide to Rent out your Home

08 Feb

The economy has changed the way people are handling their homes.  Most specifically, many people have not been able to sell due to an upside down mortgage so they rent out their home and wait it out.  People often decide to rent out their home until they have enough equity in the home to sell.

In general this can be a great way of making sure you have money coming in and aren’t at risk of losing your home.  It seems like every other person these days is renting out their home and honestly, rental homes are in huge demand these days due to people having poor credit or not enough money to buy a home.

An ideal situation is when you can get a tenant who would like to sign a rent to own deal.  You are renting the home out, but the possibility of those same people buying your home after a certain length of time increases due to the lease you put together.  If the renters decide not to buy, you get an amount of money that is non-refundable because the renters changed their mind.  It’s more of a win-win situation.

The problem arises when you have a renter sign a long-term lease (say for two years) and then want to sell the home before the lease is up.  Sure you might be able to sell the home depending on the way the lease is written up, but the renters can still stay in the home until their lease is up (unless you wrote something in the lease to the contrary).  This means that any potential buyer has to agree to be a landlord for a particular amount of time before they can take over the property.

There are times when this might not be a bad solution.  If you have a starter home that would make a great investment property, having a renter occupying the home might be a plus.  If you have a bigger home though, you won’t attract the investors and most buyers will look elsewhere.

I encourage you to always contact an attorney and have them write out a lease if you decide to rent out your property at any time.  Make sure you understand all of the issues that could arise if you want to sell at some point down the line.  Just because every other person is becoming a landlord these days doesn’t mean they understand all of the implications of what they are doing.

Research as much as you can.  Get expert opinions and make sure you fully understand what you are about to undertake before you decide to rent out your home.

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2 Comments

Posted by on February 8, 2013 in business, how to, rental property

 

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2 responses to “What you Need to Know if you Decide to Rent out your Home

  1. joannerambling

    February 9, 2013 at 5:09 pm

    I am a renter always have been and think a lease is important for both parties although we signed out lease 25 yrs ago that is how longe we have been here and since we are old tentants we can stay here till we die……………………(we are in public housing) now days it is different you sign a 5 year lease and have it renewed after the 5 years is up, my second daughter just signed a 3 year lease as her 5 yrs were up………..renting privately is different you sign a 1yr lease and it is either renewed after the year is up of reverts to a week to week lease………

     
    • wendymc12

      February 9, 2013 at 5:10 pm

      Thanks so much for sharing your experience.

       

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