“Overall it’s been a pretty good experience because I have reliable tenants who haven’t damaged my home,” says Newsome-Hill, “and who have managed to pay the rent within a reasonable timeframe every month.”
Seventy-five percent of U.S. cities saw home prices decline during the first quarter of 2011, according to the National Association of Realtors. During the same period, U.S. apartment vacancies dropped to the lowest level in almost three years, as the stagnant home-buying market created more rental demand, reports New York-based real estate research firm Reis Inc.
This has created somewhat of a “perfect storm” for homeowners who don’t want to sell but who have to move. “If they can’t sell their home within 60 or 90 days, I talk to them about renting,” says Tanya Waxler, broker-owner at real estate firm UKeepCommission in Lakewood Ranch, Florida. “As soon as that ‘For Rent’ sign goes up, owners start getting calls.”
To ensure a smooth transition from homeowner to landlord, Waxler says tenant screening is a must. She even advises owners to call the potential renter’s current neighbors for feedback. “Find out if they leave their trash cans on the curb for weeks or play loud music at 2 a.m.,” says Waxler. Credit checks are also critical, she says, as are phone calls to references, including past landlords and current employers. This background check is crucial because depending on your state or local laws, evicting a tenant can be costly and tedious. “Don’t hand over the keys to your house until you’ve done a thorough check.”
Once the new tenants are in place, keep an eye on your property. “You can’t just move them in and forget about them. You have to manage the tenants,” says Waxler. “A quick visit will tell you if they’re smoking in your house, or if they have three dogs.”
With the right tenants mailing rent checks on time, homeowners can benefit from having someone else pay off their mortgages until the market recovers. “The rental market is hot right now,” says Waxler. “It’s a good alternative for owners who have to move, and who don’t want to play war with their wallets.”