If you’re struggling to afford your home, you’re not alone. According to recent research, 43% of American households struggle to pay for basics like housing. You don’t want to end up losing your home to foreclosure. If you find yourself in this tricky spot, you still have options. One of the most common options if you’re temporarily unable to afford payments on your home is to lease it out.
While leasing your home to renters might not be your first choice, it’s an easy way to earn income on your home so you can catch up with payments. Today, 57% of consumers in the United States think buying a home is less appealing than renting. This means the rental market is on the rise in most cities, and you can make a pretty penny if you know how to market your property.
However, how do you protect your finances when leasing your home to total strangers? This guide will tackle the best leasing options so you can rent your home with confidence. Stop foreclosure in its tracks and gain back some lost income by renting your property.
1. Understand Your Options
If you’re afraid of losing your home, consider all of your options before jumping to leasing. The harsh reality is that leasing is hard work. Being a landlord isn’t as simple as collecting a monthly check from renters. You’ll be on the line if anything breaks or goes wrong, and there’s also the extensive process of finding responsible candidates.
Before you commit to leasing your home, consider these alternatives:
- Sell your home
- Rent out a single room instead of the whole house
- Work with your mortgage lender about your payment options
If these solutions above aren’t right for you, then renting your home out is likely the best solution. Luckily, the market is on your side. If you live in an in-demand area, you shouldn’t have any trouble finding the right renters.
2. Do Your Research
As we said before, it’s not as simple as you think to run a successful rental property. Professionals have made entire careers out of managing such properties, so there’s a lot to learn if you’re just getting started in real estate. You’ll need to research the rental market in your neighborhood to decide on a competitive price.
You’ll also need to research laws and rental regulations in your state or city. You’ll need to create a contract that abides by your local rules, most of which favor the tenant. It might be worth working with an investment professional with experience handling rentals in your area.
3. Find Quality Candidates
You’ll quickly learn that not everyone is a great candidate for your property. The wrong tenants can wreak havoc on your property and your finances. That’s why it’s essential you do your due diligence to find the right tenants for your space. You can find potential renters in many ways: work with a real estate agent, run a local ad, or post on home rental websites.
Your next step will be to build a rental application form for your potential tenants will fill out if they’re interested in your property. This should include their basic information like their name, employer, and landlord history. It’s also important you check their credit and rental history by contacting references. This step is the most essential since it’s how you’ll decide who will live in your home.
4. Set Clear Terms
When creating the rental agreement, protect yourself with clear, reasonable terms for the lease. Laws will vary depending on your state, but you’ll want to make sure everything is spelled out clearly for both you and the tenant.
Most leases include the following:
- Lease terms – How long will the lease be for? If you’re planning to sell your home or continue living in it soon, a month-to-month lease is likely the best choice.
- Security deposit – It’s smart to require both first and last month’s rent.
- Rent due date – When will you need to be paid?
- Repair responsibilities – Who will be responsible for maintenance, repairs, and property problems?
- “Good conduct” clause – A clear list of behaviors appropriate in the space such as noise levels or smoking.
- Eviction terms – Finally, list any reasons for which you’d need to evict the tenant.
Leasing Moving Forward
The bottom line is that leasing your home is a great option if you choose a quality tenant. You’ll be able to keep your home and have someone else pay for a portion of it. Depending on your lease, you’ll be able to move back or sell your home as soon as you’re on stable ground financially.
You’ll need to build a saving plan to catch up on any missed mortgage payments. Take this time to save as much as you can comfortably. Renting your home to the right tenants frees up your financial stress so you can get back on your feet.