Thanks to a recovering but still uneven housing market, a lot of people are finding themselves in a tricky situation: their home isn’t selling, they’ve already moved, and they can’t carry the extra mortgage.
The solution many have turned to? Take the house off the market and rent it out, using the profits to pay the bills. Just because you may not have another option doesn’t mean you should go into the situation blind.
Here are 6 things every good accidental landlord should keep in mind.
1. Use legally binding agreements.
Even if you’re leasing to friends or family, it’s vital that you get a legally binding and easy-to-understand tenancy agreement. This will protect both you and your tenant in the event of a disagreement or misunderstanding and lay out things like payment dates and what things the tenant is (or isn’t) allowed to change.
2. You’re not guaranteed income.
Traditional wisdom says rental properties are a great, simple way to make some money on the side. That’s always a good goal, but if you still have a mortgage, then making enough to cover monthly payment, taxes, and upkeep is really what you should worry about. Do you research before you start looking for tenants–what is rent like in the area you live in, and what will that mean for your finances?
3. You’re going to need good people skills.
Dealing with tenants is often one of the hardest parts of the job. Not only do you have to be a good judge of character before any agreements are made, but you have to be able to handle disputes fairly.
4. Make sure your insurance company knows.
Renting a property requires different coverage than your typical homeowner’s policy provides. If you don’t approach your insurance provider with the changes, then there’s a good chance your policy will be invalidated, and that can get expensive in an emergency.
5. Savings are your friend.
Being a landlord has just as many costs as being a homeowner, plus some. General maintenance, emergencies, turnover cleaning and repair, the list goes on. Even if you are making a little extra, make sure to keep a cushion—you may need it.
6. There is a time commitment involved.
Though it may not seem like it, being a landlord is a part time job. You tenant may not need you every day or every week, but you are always on call. Trying to keep a little flexibility in your schedule will go a long way towards making your life easier.
Filed Under: General, Housing Market, Saving
Tagged with: accidental landlord, house not selling, how to be a landlord, how to rent a house, landlord, rental property, renting your house, should i rent out my house