Renting- An Alternative to Foreclosure

Millions of Americans have gone in to foreclosure in the past couple years and I can’t help but wonder why that is. I understand that they got in to mortgages that they shouldn’t have been in and that they couldn’t afford them when rates adjusted. What I don’t understand is why they didn’t just decide to put up their house for rent. Renting out your house and moving in to a smaller house or even an apartment until you can get to the place where you can either pay the mortgage on your own or sell the house is a great alternative to foreclosure.

Now is a great time to rent out your house. With all the foreclosures, there are plenty of people needing a house to rent, so why not yours? Here are a few steps I’ve used to keep my house rented out:

Make it look good- Get the house as clean as possible, remove all of your items and make all the necessary repairs.

Price Accordingly- Find a price that is reasonable for your area and the amenities of your house. You may not be able to cover your full mortgage, but in most cases you should be able to get within a couple hundred dollars a month.

Advertise- Using sites like Craigslist and other free classified ads sites is a great place to start advertising. If those are not yielding renters, check your price. You may also want to consider advertising in your local paper if you still aren’t getting any interest.

Screen Potential Renters- You can get online background checks for potential renters. They will cost money, but most renters are willing to pay an “Application Fee” that you can use to cover the cost of the background check. At the minimum do a criminal background check and also call references and even verify employment.

Use a Solid Contract- You can get rental agreements online for a small fee, or you may want to talk to friends that have done rentals in your area. Either way, you want to make sure you have a solid contract that covers payments, inclusions, exclusions, and penalties.

Check In Regularly- As part of your contract, include a clause that will enable you to do walk throughs of the property every 6 months or so just to make sure that the property is being maintained.