Subleasing: 4 Pros and Cons For Landlords
What is subleasing? In a nutshell, subleasing a property means that a tenant is renting out their rented space. Subleases can occur in a small apartment or a larger single-family home. In all subleasing situations, there are distinct pros and cons. Owning a rental property is one of the best real estate investments, and landlords should always protect their investment. Keep reading to find out what the advantages and disadvantages of subleasing are for landlords.
Pro: The Original Tenant Remains Financially Responsible
A responsible tenant can do a fine job of subletting, and with additional financial resources, they’re more likely to be on time with their rent every month. Additionally, the original tenant will remain financially responsible for the rent. Any lapses in payment will affect their credit, so they’re heavily incentivized to find an equally responsible subleasing tenant.
Con: Individuals Leasing Under Tenants May Not Be Trustworthy
Not all subleasers are dependable; sometimes, they sublet because they can’t make ends meet, which can be an issue. Although the original tenant is financially responsible, that doesn’t remove all risk for landlords.
Pro: Increased Tenant Occupancy Can Mean Increased Rent
If you’ve got a home with four bedrooms rented to one family for $2,000 a month ($500 per bedroom), and they decide to live in only one bedroom, subleasing out the other three, it makes sense to increase rent to account for additional wear on the property.
This is a win-win. If they want to sublet, tenants can reduce their monthly expenses, and the landlord can increase their monthly income.
Con: Some Tenants Can’t Afford Increased Rent
If someone is subletting because they have trouble making ends meet, increasing the monthly costs won’t have mutually beneficial results. It’s essential to have open communication between tenants and landlords before subleasing.
Pro: Increased Property Maintenance Potential
With responsible tenants subletting the property, you’ll have an easier time maintaining the property. For example, a landlord might allow subletting because tenants and sublet tenants need to take a more steady hand in property maintenance.
Con: Increased Potential For Property Damage
On the flip side, having more tenants in a single property increases the risk of accidents and damage. If a landlord wants to use a home for vacations and rental income, subletting may not be as desirable.
Pro: Better Relationships With Aligned Businesses
Free moves and rebates can make it easier for landlords to attract optimal renters. Rebates and free moves are often available, and for renters who are subleasing, there are many good reasons to work with UMoveFree. Moving companies can reduce the challenges of property management for landlords in subleasing situations.
Con: Subletting Can Impact Property Values
Research shows that high rental rates flatten neighborhood property values. Similarly, excessive subletting will only exacerbate the issue.
Think of a house meant for a family of five that suddenly hosts 20 people. Parking becomes difficult, there are higher utility costs, and the neighborhood won’t be as appealing to prospective buyers.
Determining If Subletting Is Right For Your Property
There are many factors to consider here. Simply expressed: if you put the work in, subletting can be advantageous for everyone. Weigh the pros and cons of your property, neighborhood, finances, and available tenants. If they’re trustworthy and things look good, let them sublet. Tenants with a history of late payments or who have damaged the property are not ideal for subletting.