Brave New Market for Landlords

Renting out the house is becoming an economic necessity

Economic necessity is driving more and more people to search out low interest loans and emergency cash loans. At the same time, the growing pressures of foreclosure and difficulty paying bills — along with changes of opinion about how to live in an economic downturn — are forcing owners to rent out their homes rather than occupy them.

The neighbors don’t appreciate it

Because of the tightening credit market, many former homeowners who can’t afford a mortgage are being forced to rent. At the same time, homeowners who need to relocate but can’t sell their houses – or who have vacation properties they can’t sell – have grudgingly become landlords. Across the country, neighborhoods and municipalities aren’t sure how to deal with the new rental economy. Towns and subdivisions are barring their doors, arguing that tenants usher in neglect, misbehavior, and even violent crime.

Many communities governed by homeowner associations limit rentals or ban them altogether. Some neighborhoods have eased these restrictions in order to keep homeowners out of foreclosure. But others have responded with even stricter rental rules in an effort to protect home values.

Rents are down, and that’s good and bad

The increase in rental properties is driving down monthly rental payments. Landlords may not welcome the news — unless the landlords are renters, too — but renters have some bargaining power in the current market. There is presently a nationwide glut of unoccupied condos and houses. The rising rental-vacancy rate plays an obvious part in falling rents, but rising unemployment rates are also an important factor. Young adults are normally a large segment of the renter population. But today, many young adults are unemployed and staying with family or finding roommates instead of renting homes of their own.

Renting is often the only sensible option

Few homeowners exit the housing market for financial gain or speculative reasons. Most don’t like shifting from owning to renting. It can takes years to adjust to the lifestyle changes involved. For this and other reasons, renting out a home is not ideal for most people. Many desperate homeowners have never relished nor even considered the role of landlord. But today, such a change is often the only sensible option.

Do the research before you put your house on the market

Before you put your house on the market for rent, get in touch with a property management company to find out how much you can realistically charge. If your home is highly leveraged, you may be unpleasantly surprised to learn that it will not rent for anything near the amount of your monthly mortgage payments.

If you decide to rent it out, research your local landlord-tenant laws and customary tenant-screening procedures. Landlord.com and similar websites are helpful online sources of information. Be thorough when you’re preparing to rent out your home. After all, you’ll be handing over the keys to what may be the biggest single investment you’ve ever made.