You are considering buying or building a new home. You cannot afford the mortgage payments without selling your present home. The market conditions do not allow you to sell your present home without suffering a huge loss. Have you considered renting your present home and using the rent to make the mortgage payments?
Creative Financing Can Salvage Your Dream
This kind of creative financing can work. You can have the best of both worlds. If done properly, the rent on your old home will make the mortgage payments on an existing mortgage. If you are fortunate enough to have a low or no mortgage balance on your present home, the rent may make the mortgage payments on your new home. You could always upgrade your old home with the help of Red Deer home renovations personnel, which would allow you to charge even more for rent. As a fringe benefit, you have become a landlord.
Check on Local Regulations
First, government authorities must be contacted to be sure renting the house does not violate zoning regulations. It is important to have accurate knowledge of the local rental real estate conditions. The realistic rent must be high enough to cover mortgage payments, maintenance and other expenses. Allowance must be made for an occasional vacancy. If the rent is realistic and renters are properly screened, vacancies can be minimized.
Do You Have a Landlord’s Personality?
Be sure you have the temperament necessary for a good landlord. If you are a worrier, turn the property over to a property management company. If you live in another town, do the same. Long-distance management does not work well. If you have the right temperament and expertise, you can keep all the profit for yourself. Running a rental business also means being able to evict bad renters.
A Lease or No Lease?
If you have a good renter, a long-term lease is wonderful. With a problem renter, a lease makes it much harder to evict a renter. You will probably need to go to court, and you will need an indisputable reason for the eviction. Eviction may be easier when renting by the month. If the rent is reasonable, renters who are treated fairly usually stay a long time.
Screening Renters is Critical
There are many things you want to do before renting out your house to a prospective tenant. Start with interviewing the whole family. Check credit references and former landlords. If possible, inspect the prospective renter’s present home. If possible, obtain a security deposit equal to three month’s rent. This will help to cover damages and back rent.
If you are able to keep a good relationship going with renters who are able to pay on time then you’ll definitely have the revenue available to build that dream home of yours with the help of Red Deer custom home builders. And just think… in the future you may choose to rent out your custom home as well. Once you turn your first house into a rental property you have started yourself on the path to continual revenue.