SHOULD YOU RENT YOUR HOME?
Renting your home is an option that satisfies a number of problems.
When relocating for possibly a short period of time, renting can alleviate selling a home you want to keep.
Temporary life changes, retirement, or family complications can all be reasons that a family wants to retain their home, but can't afford two house payments. If you are thinking about renting your home, there are several things to be aware of. Many of your problems can be eliminated with a concise and clear lease agreement. A standard lease form purchased at an office supply store may not cover all the points you need clarified.
This is a good time to consider employing your attorney to review all points of the lease. For example, if you live in a condominium or townhome development, there is an excellent chance that there are rules and regulations a tenant must abide by. Include the provision that the tenant must abide by these rules insures the tenant is aware of the responsibilities. This clause will help to avoid jeopardizing your relationship with the townhome association.
Some associations require a form to be attached to the lease giving the name, address and phone number of your tenant with a penalty for failing to do so. By having this information, the association has on record a person to notify in the event of an emergency.
Another sensitive issue is the association rules regarding pets. As a homeowner, you may not be limited to having a pet in your home, however a tenant may be restricted. This is an often overlooked point, so be sure to check with your association to abide by their requirements.
When leasing a property, the homeowner takes a risk with regards to how the property will be cared for during the leasing period. Decide before the tenant occupies the property who will be paying for repairs, breakdowns of equipment and exactly when the actual rent payment is due. Consider using a Leasing services company or Certified Property Manager to handle these details for you.
Timing may be a critical issue for you as a seller paying two mortgages. If your tenant is late with the rent payment, you are forced to carry the burden of an extra monthly payment for a week or longer to avoid late penalties. Carefully determine when the payment must be at the bank to decide when the lease payment should be paid to you.
Another point to be very clear on is changes or decorating improvements. Consider adding a clause to the lease that prohibits any decorating or changes without your prior written consent. Most properties will require a fresh painting after a tenancy anyway. However, painting over bright orange may take more time and patience. Require authorization for other improvements, like wallpaper and excessive wall hangings which may affect the condition of the property.
If your home has extensive landscaping, make specific arrangements about retaining its care. Most tenants will not demonstrate the diligence and attention that you showed to the home. Better not to jeopardize the time and care already invested by making suitable arrangements for the exterior maintenance of your property.
Other points to clarify are those that deal with damage due to negligence. If your tenant left town without leaving the heat on and the results are a lot of damage and frozen pipes, who is responsible? Are the utilities paid in full before your tenant leaves? If not, you as landlord may be responsible.
The most serious problems dealing with a tenant that is doing illegal things in your property. Illegal activities and drug deals conducted from your property could endanger your ownership which could be subject to seizure. If you are an out-of-town landlord, you may not be aware of these circumstances. Be sure to have a dependable person or manager living in the area to help if problems develop.
Not all tenants will cause problems, but as a landlord, you want to make the relationship as good as possible. If you plan on offering your property for sale during the lease term, be sure your tenant understands how the process will work so there is harmony to complete the sale. For best results, have your real estate attorney assist you on the conditions of your lease.
Copyright REEPco, Inc. 1998