In “Rent,” the classic Broadway musical, one of the songs asks “How we gonna pay the rent?”
If you own your home, but temporarily can’t afford the payments and can find a cheaper place to live, the more appropriate tune is “How you gonna pay the mortgage?” The answer? By renting your own home.
If you can’t stomach the thought, consider that the demand for good rentals are on the rise, and significantly so. According to the Joint Center for Housing Studies of Harvard University, the number of renter households is expected to increase by 1.8 million by 2015.
Make no mistake, renting your own home definitely resides in the homeowner’s “last resort” category. Aside from the often-uncomfortable feeling of a perfect stranger residing in your family home, becoming a landlord has its share of potential pitfalls.
For example, landlords who rent their homes are still responsible for paying property taxes and home insurance, and should be adept at handling household repairs, since you’ll be responsible for them.
If renting is an option, consider these key steps, and potential pitfalls, from turning your home into a rental situation.
Only rent to quality tenants. The last thing you need as a newbie landlord is a renter who doesn’t pay his or her bills, or worse, turns your beautiful home into Animal House. To avoid that nightmare, make sure to run a credit check on any potential renters. Any of the three major credit report agencies (Experian (Stock Quote: EXPN), Equifax (Stock Quote: EFX) and TransUnion) can easily walk you through the process. Also, make sure to check references and contact previous landlords to verify that you have a quality renter on your hand. Best bet: Make every attempt to find renters from trusted sources, like family or friends.