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Your Home Won't Sell? Rent It!

Article

Homeowners who need to move but haven't sold their current house might consider renting it out rather than leave it sitting vacant.

There are some people who, for whatever reason, have two houses and one of them is currently empty. Trying to unload a house in this economy is still increasingly difficult. If you’re one of the many homeowners unwilling to sell your house at a loss while buyers wait for home prices to drop even lower, Zillow suggests you consider becoming a landlord if you’ve already moved out.

This isn’t a decision to be taken lightly, however. One of the most important things to consider is the money — specifically, how much is the mortgage and will the rent you charge cover your monthly payments and then some?

Calculate your carrying costs: your mortgage payments, taxes and insurance. Compare that number to how much income you are expecting to receive from renting out your place. Would you come out ahead? Ideally, the rent should be at least 125 percent of your mortgage payments to make it a sensible option.

But you can’t just choose any price in order to put money in your pocket. You need to look and see what comparable rents in the area are. Overpricing will result in your home sitting vacant, and vacancy is costly.

Here are other considerations before you make the leap to landlord.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice