What would be some conditions if I were to ever rent out an old house of mine?

Maybe this isn’t exactly relevant in the market NOW, but last year my 8th grade teacher showed us a video on renting houses. It said that it was a good idea (if you had the money and opportunity) to buy a house/condo/apartment/whatever, live in it for a while, save up, buy another (financially permitting), and rent out your old one. The movie only talked about the subject briefly, but I figured that if you could find someone good to rent out that old house/condo/apartment/whatever to (meaning they maintained a good up-keep and didn’t trash it), then you could charge them enough for the mortgage of that house, maintenance for it, and a little extra for you to slowly save up with. If you could give some advice on this subject I would greatly appreciate it. =]

Its rare that you can charge as much for rent as what the mortgage payment would be at first. But after many years of the housing market going up, there are many people who rent for more than their monthly mortgage payment.

Here are a few things to consider:

1. You must qualify for the mortgage without considering the income from rent. Meaning if you want to have 2 houses, one to live in and one to rent, you have to have to qualify for both payments together. Usually you have to cover the difference between the mortgage and the rent for a few years before you start turning a profit.

2. You have to tell your mortgage company what your intentions are. Rates and terms are different for investment properties than they are for owner occupied homes.

3. You need to tell your homeowners insurance company that you’re renting it out. A typical standard policy is only for owner occupied homes, and you need to make sure your policy gives you full protection even when you are renting.

4. Remember that there are lots of hidden expenses. If your renters stiff you on the rent, you still have to pay your mortgage while you evict them and search for new tenants. Even with good tenants, there’s usually a month or two where you have no renters between one of them moving out and getting a new tenant to move in. Plus, you have to be ready to make repairs instantly. If something like a hot water heater or furnace breaks, you have a very limited amount of time to get it fixed or else your tenants can move out without penalites for breaking their lease. All of those repairs are your responsibility.

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