This is sadly the situation many people face today. The home they invested in 2-3
or even 5-6 years ago is not worth what they owe on it in today's buyers market.
I can't sell my home without bringing money to the closing.
BRIGHT IDEA # 67 "I think I will just rent it out. That should solve my short term
cash flow problem."
WAIT - STOP - CHECK THE FINE PRINT
Many mortgages today have clauses that do not allow renting your home.
You must be the occupant living there. Landlords also pay a higher property
tax than homeowners do in Michigan.
Your insurance company may not honor a claim ( let's not even think about a house fire)
if they discover you are not occupying your home but have a renter living there.
The policies for rental homes are different and usually more expensive than
homeowners insurance coverage for the home you live in.
The Questions To Ask Yourself:
- Do you want to be a landlord??
- Can you collect the rent if they don't pay?
- Can you afford to evict them ?
- Can you afford to pay for the repairs ?
Having gone through these scenarios personally, let me advise you it is not fun to
force somone and all their possessions on to the street. As a landlord in Michigan
you end up paying for everything, even getting their stuff out of your house. It isn't
likely you can take them to court and get your money back.
If they had any money they would have payed the rent.
Also the mortgage payment must be made every month, regardless of whether the
renter is paying or not. Can you afford to carry the mortgage for 3-4 months while
you get the non-paying renter out, do repairs, and get another renter in?
Renting may sound like a great option. Sometimes it is, if you get someone who takes
care of the property and respects it. It can also be a financial nightmare. A careless renter
can do a tremendous amount of damage in a short period of time. Case in point: We
had a renter who left their new puppy in the house alone all day. Puppy proceeded to eat
the woodwork and the carpet. In case you were wondering, they did not have permission
to have a dog on the premises. The deposit they had put down did not begin to cover
the cost of repairing these damages.
Are you financially prepared to handle all these contingencies?
Then you might consider facing the financial situation you are in today and cut your
losses where they are. It is a bitter pill to swallow but in a year or two, with a careless renter,
your losses might be even greater.
http://www.flickr.com/photos/dcup84/2086124767/
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The authors of the this blog write about Grand Rapids Real Estate,
the Greater Grand Rapids MI area, and what it is like to live in
West Michigan. We believe: Grand Rapids is a Great Place to Live!
Westbrook Realty Grand Rapids MI Real Estate
Contact Terry 616-292-7263
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