Necessity has long been the mother of invention, and that is why some homeowners are currently taking on the role of landlord. As the nation is still being negatively impacted by the economic slump, there has been a shift in the traditional American Dream as renting is making a comeback and many consumers are opting to rent the roof over their heads. While this behavior is preventing a full recovery of the housing market, some individuals are becoming landlords to find a way to pay off mortgage debt and still hold the title to their homes.

According to MPF Research (apartment sector statistics), the number of renter occupied housing units in 2010 nearly doubled over 2009 numbers. Renter occupancy rates increased by 215,000 in the 64 largest U.S. markets during the first half of the year. The large foreclosure rate is fueling the trend as those who went into default, still needed a place to live, and renting was the winning option.

Expenses Associated With Being a Landlord

This need is providing a perfect opportunity for distressed homeowners to create a new revenue stream for themselves in the form of renting out rooms and even entire properties to qualified tenants. Being a landlord is a full time job as at any time a tenant can call with an unexpected emergency such as a busted pipe, leaking roof or lack of heat. Aside from the additional responsibility, landlords need to do the math to make sure the scenario makes fiduciary sense as there are additional expenses associated with being a landlord. Some additional expenses associated with being a landlord include:

• Maintenance: While you may be happy living in a home with an old coat of paint, renters expect more and demand that housing units are fresh, pretty and turnkey ready. Working appliances, flooring, painting and attractive landscaping will help lure potential tenants to your property and to do it right, may cost around $1,000.
• Taxes: One of the most enticing points of homeownership are the tax breaks associated with owning a property, but the incentives are reserved for people using their home as a primary residence. When a property converts to a rental, landlords will need to forfeit the homestead exemption tax break they have been getting. Renting out a home can also negatively impact capital gains tax exemptions when selling a home down the line.
• Insurance: Homeowner's insurance needs are expensive enough, but once a home is reclassified as a rental property, landlords typically pay 25 percent more for the same level of coverage.
• Paperwork: The relationship between landlord and tenant is a legal one and paperwork is crucial to documenting the relationship. Landlords need to prepare to foot the bill for these expenses.

Landlord Tips

Being a landlord involves more than collecting a check and giving the keys to a tenant. There are legal (and moral) obligations that must be met:

• Learn the Laws: For their own protection, landlords need to know all the legal implications about renting a property before committing to the process.
• Get It In Writing: A contract specifying what rent does and does not cover, when rent is due and any penalties that may be assessed, need to be discussed and signed before handing over the keys.
• Picture Perfect: Landlords should make sure to photograph the property prior to a tenant moving in. If at all possible, have the tenant sign the photos as a way to indicate agreement upon the initial condition of the home.
• Safety First: Properties must have the proper safety precautions like working locks and smoke detectors
• Clean Living Space: Living space needs to be up to code and free of any hidden dangers such as frayed electrical wires, lead paint and tainted water.
• Respect Boundaries: Even if you decide to rent out a room in your home, the person living in the space now has a temporary claim on the space, meaning you just cannot come and go in their living accommodations as you please.
• Deposit Security Deposits: Tenants are generally required to provide extra money in the form of security deposits. This money is not to be tapped into until a tenant moves out and funds are legally required to repair any damage they have left behind. Until that time, the money should be safely stored in an account as determined by local law.

Other Options Aside From Renting

If you are a homeowner struggling with your monthly payments and are looking for a way to keep your home, being a landlord is only one option. Currently, mortgage rates are at historic lows and refinancing can potentially reduce mortgage payments by hundreds of dollars a month and even tens of thousands of dollars over the lifetime of a loan.

Another option may involve arranging mortgage forbearance with your lender. Mortgage forbearance can provide financially struggling homeowners short-term assistance as the process is a temporary renegotiation of mortgage terms that will prevent the lender from immediately exercising their legal rights to foreclose on a property. If you are a struggling homeowner looking to find a lender willing to work with you, Mortgage Marvel has the technology to directly connect you with the source.