With the current trend in real estate, this may not be the best time to try to sell your home. If you bought your house before the market crashed, you may owe more than the current market value of the home. For this reason you may be thinking about renting out your current home. Before you do, consider the following pitfalls to renting out your home.
Flaky renters can cost you double
Renting your current home could enable you to move up and purchase the home of your dreams, but be wary of your prospective renters. A flaky renter could skip out on rent and leave you in a tight spot. If your renter doesn’t cough up the dough on rent day, you’ll still be responsible for the mortgage payment. If you can’t afford the mortgage payment for both homes, you could find yourself in trouble with your lender.
It can be difficult to get a deadbeat renter out
You’ll need to check your prospective renter’s references and run a credit check. A deadbeat renter can become a real problem. Getting a renter in is easy. Getting them out, however, can be time consuming and costly. Renters have certain rights and missing a rental payment may not be enough to force them out. Check your state and local laws and be diligent in checking out your prospective renters.
Cost of utilities
You’ll need to charge enough rent to cover the mortgage payment. If your mortgage payments are high, renters may expect you to offer free utilities, such as water and electricity, for the rent price you are asking. Paying these yourself could cause you to come up short on mortgage day. You’ll need to negotiate a fair but equitable price with your renter.
Maintenance and repair
As a landlord, you will be responsible for repairs. If an appliance goes on the fritz, you will either have to hire a costly professional to come out and make the repairs or do it yourself. Expect late night frantic calls. They rarely come at convenient times.
Even if your renters seem ideal and always pay their rent on time, you may find some hidden costs later. Many times a landlord will find himself dealing with expensive repairs after a renter moves out. Often there is damage to walls, floors, doors and other parts of the home. These things have to be fixed before renting the home again or attempting to sell it.
Before you decide if being a landlord is right for you, consider these things. You may just decide that your current home is right for you after all.