Want To Rent Your Home So You Can Pay Your Mortgage?!

Real Estate Agent

If you own your home, but temporarily can’t afford the payments, and can’t a find cheaper place to live, you’re likely worried about losing your home.

The good news is that only about 5% of Americans were delinquent on their mortgage payments in 2013, compared to 30% in mid-2012. But that still represents millions of homeowners who can’t cover their mortgage obligation, can’t refinance.  That leaves few options for behind-on-their payments homeowners.

But you can flip the script by renting your own home, and earn cash while you still retain the title to your own home !!!

Is it doable? Sure. Is it easy? Not entirely.  But if you know what you’re doing, plan ahead, and make the right decisions on who lives in your house (and for how much), a “rent your home” scenario can work out fine, for you and your tenant.

High Demand

For starters, there’s likely more demand for renting your home than you might think.

According to recent data from the MacArthur Foundation, 77% of Americans still believe the U.S. is in an economic crisis, and 61% say that renters can be just as happy as homeowners, as it pertains to the American Dream.
Another 57% of U.S. consumers say “buying has become less appealing,” and 54% say that “renting has become more appealing” than it was before.

Where to Begin

Do you really need to rent your home? – The reasons for renting your home aren’t all that many, but they are important:

  • You need to sell your home, but for some reason you can’t.
  • You are moving away, but only temporarily (for a new job, for example) but plan on moving back to the area in a year or two.
  • You’re an empty nester who wants to downsize, but want to save your family home for your children someday.

Alternatively, you could sell the property to an investor and the renter could stay in the home for the length of the rental agreement with an opportunity to contract with the investor at the end of the rental period.


Land an ideal tenant
It’s likely that the most important step is toattract a great tenant to your home, one who pays rent on time, keeps the property clean, and doesn’t attract trouble to your home (i.e. parties, drugs, unruly pets, and overcrowding.)

Start spreading the net by asking friends, family, or co-workers for leads to a reliable tenant.

Run an ad
Put an ad in your local paper(s) and Craigslist. Specify what you’re looking for (e.g. no pets, no smoker, no more than three tenants, for example.) Include your monthly rental fee, and list if you’re paying for services like utilities, water and trash removal. Also, let the applicants know you’ll be running a credit check – that should save you the time of dealing with renters with bad credit histories.

Run a credit check
You can either hire a reputable rental agency to run a credit check for you (they’ll charge you the equivalent of one month’s rent for helping you rent your home) or you can run the credit check yourself.

Make sure to check references
Don’t sign on the bottom line until you have talked to previous landlords and employers. Validate employment dates and confirm that the tenant has a history of steady, on-time payments.

Set reasonable, but firm, lease terms
Always work with a lease, and know that lease laws change from state to state.

When creating your rental agreement, make sure to include the following items:

  • Lease term: A month-to-month lease works best if you want to eventually sell your property. If selling is not your goal, aim for a year-long lease.
  • Security deposit: First and last month’s rent is advised.
  • Rental due date: First of the month is advised to ensure you can make your mortgage payment.
  • Repair responsibilities: Spell out who will pay for repairs, such as appliances, plumbing, light fixtures, etc.
  • Landscaping: Determine who will pay for routine property maintenance, such as trash hauling or lawn care.
  • List of tenants: The names of each tenant living in your home.
  • “Good conduct” clause: A list of behavior requirements, including noise levels, neighborly conduct and smoking.
  • Pet policies: Maybe you’re OK with cats but don’t want barking dogs. Or maybe you want to keep all animals out of your home. The choice is yours, but be sure you’re clear so there’s no room for tenants to misinterpret your requirements.
  • Eviction terms: List the reasons for which you’d evict the tenant, such as not paying the rent or damaging the property.

Now What?

While your home is occupied, you can build a savings program to catch up on your mortgage payments with the extra rental income you have coming in, and start on an aggressive debt-reduction plan. If you're renting out your home because you need the cash, now is the time to stop using your credit card, create a tight budget, and take on part-time work, if needed. Consider sharing a living space with a roommate or family member (family-shared housing is one of the biggest trends coming out of the Great Recession.) Alternatively, you could rent a small apartment or condo, depending on your budget. If you're retired or telecommute for your job (another big trend over the past half-decade), consider moving to a less-expensive city or town, or to a state like Florida or Texas that has no state taxes.

The Bottom Line

Renting your own home can work out fine if you choose the right tenant. You’ll keep your home, have someone else pay for it (or at least most of the home), and you can leverage the lease to move back in when you like.


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Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA

More people should have taken in roommates or moved in with family/friends and rented out their house a few years ago...they could still have their credit and an appreciating real estate investment

Jul 16, 2014 03:45 AM #1
Connor Dowd
Middletown, RI
2013 Newport Realtor of the Year

great point !

Jul 16, 2014 04:51 AM #2
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Connor Dowd

2013 Newport Realtor of the Year
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