Taking a Tenant to Cover Rising Mortgage Costs
With the rising costs of mortgage payments there are many homeowner that are seeking ways to increase their income to cover these increasing costs of the monthly mortgage payment. The answer to the financial problems could literally be within the walls of your home.
A solution that many homeowners have stumbled upon is to rent a portion of their home to a tenant to cover the high costs of the mortgage. The tenant can cover up to fifty percent of the costs of the mortgage and therefore free up the finances of the homeowner to complete renovations, repay debt or repay the mortgage in a timely manner.
There are many ways that this can be completed. For example, renting a room within your home could yield between $400.00 and $500.00 per month. Do you have a finished basement available with a separate entrance? This type of dwelling could rent for up to $1,200 per month. As an alternative, for those homeowners facing severe financial distress, the upper portion of the home could be rented to potential tenants and you could move to the downstairs dwelling. Main floor residences can yield up to $2,500.00 depending on the type of home and the area that the home is located in.
There are many advantages to renting a portion of your home to potential tenants:
- The extra income can be used to complete renovations which can increase the equity within the home. Experts recommend that most money put into the home can increase the value by double the amount of the investment.
- Are you facing high levels of debt? Using your asset, your home, to create an income can reduce the amount of hours that you must work to repay the debt.
- You can decide the regulations for the space which is to be rented. You can interview tenants to find the right fit to ensure that personalities do not clash.
Where should you advertise your rental? Advertising your rental in a specific area could truly narrow down the demographics of the potential tenant. For example, do you live in the vicinity of a college university or school? Students are often seeking short to long term rentals in these types of areas.
This type of rental is considered to be an owner-occupied rental and is popular with potential tenants as they know the landlord will be readily available in case any issues come up about the rental of the property.
How long do you intend to make use of the extra rental income? Many homeowners use a tenant as a way to cover costs during the transition to a new home. Owning a home often costs more than renting and therefore these higher costs can create a hard to acquire to transition when it comes to owning your first home.
After you have decided to rent the property it is important to set guidelines for the tenants. Be sure to enable these rules which may include the changes that they are allowed to make within the interior of the property and any rules regarding behavior within the rental.