Many homeowners resist the idea of renting out their property. They fear that the place they've nurtured for years will be badly damaged. Plus, they worry the tenants will default on rent -- forcing them to court to collect what's due.
But Sid Davis, a veteran real estate broker who's owned many rental properties, says the positives of a temporary rental can sometimes outweigh the negatives, especially for homeowners who are unsure whether a move they're making will work out.
"With rising real estate prices in most areas, the costs of moving back could be a lot higher than the costs of keeping that home until your plans gel," Davis, the author of "A Survival Guide to Buying a Home," says.
Retirees who'd like to try out a new location before making a permanent move could also benefit from renting.
"Lots of folks like the concept of moving to a balmy area for retirement. But as enticing as that sounds, they're not certain they'll like leaving friends in their old neighborhood. In that case, they could be better off renting out the old house and also renting an apartment in the new area until their plans are less fuzzy," says Leo Berard, a real estate broker and charter president of the National Association of Exclusive Buyer Agents (www.naeba.org)
"Renting lets you keep your options open about when and where you'll settle down," says Mark Nash, a real estate broker and author of "1001 Tips for Buying & Selling a Home."
Nash urges homeowners to exercise caution before renting out their home. Here are a few pointers for would-be landlords:
-- Investigate the realities of your local rental market.
If the stock of available rentals in your neighborhood outstrips demand, depressing the rental income you could collect, renting instead of selling might not be the best option, Berard says.
As he notes, most large realty firms have rental departments that can help you assess the relative strength of your local market. Agents who list many rentals on the Multiple Listing Service can quickly estimate how much rental income your property could command.
Advertising (online or in print) can also help, Berard says. Survey the ads to see how numerous they are for your type of property (single family, townhouse or condo-apartment) and to gauge the going rents.
-- Factor in the financial implications of renting your home.
When assessing the financial impact of converting your place to a rental, even a temporary one, Nash says you should be sure to factor in home maintenance expenses.
"Upkeep can be a big item. Suppose, for example that your tenants have a major plumbing problem at 3 a.m. At that hour, calling in a plumber could be really pricey," he says.
You'll also want to consider the tax implications of renting out your home. To do so, Nash recommends you call an accountant for advice.
-- Anticipate the need to empty your home of renters before you sell.
Do you intend to rent out your place temporarily with the expectation that you'll probably sell in the future? If so, Davis says you should be aware that it can be tricky trying to sell a home when it's occupied by tenants.
To avoid this problem, Davis recommends you plan to have your property vacated for at least a month before it hits the market. That way you'll have time to paint, clean and do repairs before it's available for showings.
-- Look into professional management for your rental property.
If you're moving far away, you may worry about managing your rental. In such cases, Nash says it could be sensible to consider engaging a professional manager to oversee the property, which would spare you the onerous tasks that come with being a landlord.
He says the sole downside of hiring a good rental manager, who's best found through personal referrals, is that it will cut into your rental income. That could pinch your budget if you're operating with a narrow profit margin.
-- Try to damage-proof your property before your tenants move in.
"Psychologically, as well as financially, people still have an umbilical cord attached to a property they own while tenants are living there," Davis says.
No one can guarantee that your home won't sustain serious damage while a rental. But you can minimize the risk with what Davis calls "preventive decorating."
"Before your tenants move in, repaint your walls with easy-to-clean semi-gloss paint. Seal your hardwood floors with two or more coats of protective coating. And replace valuable light fixtures with less expensive ones," he says.
Davis urges you to be selective in hopes of finding tenants who are tidy.
"One way to screen is to glance into the renters' car to see if it's clean and free of junk. That can tell you a lot about their lifestyle," he says.
As one predictor for whether the tenants will pay their rent as promised, he recommends that landlords seek to rent to those who've held jobs for a lengthy period.
"People who are protective of their jobs won't risk getting dragged to court over lost rent. They know that employers take a dim view of people whose wages are garnished for bad debts," Davis says.
(To contact Ellen James Martin, email her at email@example.com.)