Renting as a Solution to Falling Home Prices

The forecasts all seem to agree; America’s real estate is headed for another drop.  If you’re trying to sell your home, this doesn’t come as good news.  If you need to move, having a home that you can’t sell without taking a huge loss is a big deal!  If you could wait out the market, you would, but the market isn’t looking cheerful.  So what do you do?  One way to alleviate your financial / location issues is to rent out your home.

Scenario 1:

 You can’t afford to keep up your home’s mortgage payments.  You go into foreclosure and you’re out on the street.  However, you still need a home to live in, so what do you do?  You find some place to rent.  So far, you’ve got a huge black mark on your credit rating and you’re still spending money every month on rent.

Scenario 2:

You can’t afford to keep up on your home’s mortgage payments.  You check out the average rental fee for a home like yours.  You move out, clean the place until you can eat off the floors and offer the place up for rent.  Maybe you suck up some of the mortgage and / or maintenance cost, but the income from your tenant takes a big chunk out of the money that you have to spend each month to keep your head afloat.  You keep your credit rating and you’re still spending money every month on rent.

Scenario 3: 

You can’t afford to keep up on your home’s mortgage payments.  You start looking at the average cost for a room rental fee and start putting ads in the paper for a reasonable amount for the rooms you have.   One or two people renting your extra rooms means that you can knock off a big chunk off your mortgage.  You get to live in your home and keep your home.  The main drawback is the issue of strangers sharing your personal space.

Renting out your home does come with a number of issues that not everyone wants to deal with.  First of all, renters can damage a place or refuse to pay rent or move out with no notice.  Second, if you’re renting out your home, you can lose some of the tax breaks associated with living in your own house.  Third, you may not be too keen on sharing your living space with other people.  There is also the issue of maintenance and repair.  Some things you can put off for another day if you live by yourself or with your family.  However, renters demand timely attention to leaky toilets and roofs that don’t keep the rain out!

Renting can be one solution to meeting your monthly mortgage.  However, Scenarios 2 and 3 require that you be ready to deal with the unique challenges of being a landlord.  If you are desperate to save your home and finances, renting might be the way to go.

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