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

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

 

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Overview of Renting a Home

I received a call yesterday from a person interested in looking at a home.  I began asking all the typical questions needed to understand what their needs were.  Some of the questions I asked were:

1.  What cities are you interested in?
2.  How many bedrooms, bathrooms etc…
3.  How soon are you looking to move?
4.  Why are you moving?
5.  What will happen to the place you are currently living?
6.  Have you run your credit report?

This gave me enough information and I was able to ascertain that this person was nowhere near ready to look at homes.  She would not be out of a lease until December and she had just begun looking.

What do you do in a situation where the person wants to look but can’t get a home if she finds what she wants?

This is what I did.  I scheduled the appointment for the home she just had to see.  This will give me an opportunity to meet her and decide if we will work well together.

When I meet with this customer, I will give her all the paperwork she will need to start the process of getting ready to lease a new place.  I have set her up with our First to Know program in the meantime.  This program will give her daily updates on the homes available according to her criteria.

So after we view this home later this week, she will need to get all of her paperwork together and make sure she has enough money put aside.  This way if she finds a home she likes, she can put in an application right away.

As I have explained to her, rental homes are going fast these days if priced right and in good condition.  There is no point in looking at homes until she is prepared to actually put in an offer and is ready to move.

So, I will take her to view one home.  After that, it will be up to her to get the necessary paperwork together before we will go looking again.

If you are looking to rent, here are some things to keep in mind.

1.  There will be an application to fill out
2.  You will need to run a credit report with a credit score included in the report.
3.  A letter of proof of employment is generally needed.
4.  Bank records and pay stubs are generally needed to prove you have the financial capability to rent a home.
5.  Expect to have at least a month and a half months rent.  There are also cleaning fees and pet fees of up to $500 necessary for some of these rentals.

Every rental is different.  Based completely on that owner’s preferences.  Some rentals are pretty basic and easy to qualify for.  Other rentals will want certain credit scores and salary amounts for the person who moves in.  It is a very individual situation.

If you are thinking about renting, make sure you have the above items taken care of.  The application you can get from the realtor.  It is also extremely important that you are in a position to put down money and move in fairly quickly.  Homes are going fast and you won’t be doing yourself or the realtor any favors by looking before you are capable of moving in.

 
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Posted by on October 30, 2012 in how to, life

 

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Poor Credit, Not Much Money, What To Do?

I am navigating the wonderful world of poor credit and not much money saved.  Unfortunately this is a common theme these days.  Trust me, I can relate.  I have been working with a few potential buyers who have life experiences that have created situations where there is a bit of panic trying to find a home.

What do you do when you don’t think you have enough money for a down payment?  What do you do when your credit isn’t the best?  These are questions I needed answers to so that I could help some customers desperate for a home and scared they might not qualify.

Let’s start with not much money saved.  The best advice I’ve gotten was to consider a FHA loan as an option.  In this situation you only need 3% down.  All though this is a common belief, you do not need to be a first time home buyer.  With homes selling at such affordable prices, if you can swing 3%, now is a great time to buy.

So your other concern is credit.  Credit reports are needed when renting or buying a home.  When renting a home, this has been a big sticking point.  Most people who need to rent right now have lousy credit.  It is the primary reason they are not buying a home.  I have clients who have panicked over the credit report.  Here is what you can do in a situation like this.

1.  Offer more than the asking price for the monthly rent.

2.  Write a letter explaining why your credit is in bad shape.

3.  Show a record of timely payments from the place you currently live.

4.  Basically put together a resume’ of why you would be an ideal candidate to rent the home.

Remember that these are individuals renting their own home.  They tend to be more forgiving than the banks.  Many times they understand credit issues because they are having the same problems.  That being said, if one person isn’t interested in renting to you, there will be another person out there who is.

Having this additional information will hopefully make the process of finding a home to rent or buy in not the best of circumstances more bearable.

 
 

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