Rent is one of the most stressful costs that many of us have to deal with on a day-to-day basis. There is a whole slew of problems that emerge when we begin to discuss apartments: What if you need to move locations but are stuck to a lease? What if you’re on vacation and can’t afford to spend money on rent if you’re not actually living there? Overall, what if you are simply stressed and need a way to make the load more bearable?
Before taking out a loan and believing that is the only option, consider subletting. Subletting or renting out your apartment can be a great way to earn extra passive income. Subletting, in particular, can be a lifesaver for tenants who need to vacate their apartment on short notice or for people looking for short-term housing.
Subletting can be a confusing concept, though. How is it different from renting or leasing a property to an individual or group of people?
If you are thinking about subletting an apartment, you should first know exactly how it differs from renting and whether or not it is the best option for your situation.
First thing’s first: What is subletting and how does it differ from renting?
Renting a property to an individual or group is an arrangement in which a tenant signs a contract with the owner of a property. This contract states the rental time period, monthly rent, rules, penalties, payment dates, and other factors.
When you rent a property to someone, they are contractually obligated to abide by the agreed-upon terms, protecting you in case your tenant breaks the contract. It’s similar to big credit card companies: You are contractually obligated to pay the agreed-upon terms of the card and the bank has its own protections set up in case you break the contract. This is how banks are able to offer stellar rewards like free hotel stays, without incurring too much risk upon themselves.
The primary difference between this and subletting is whose name is on the apartment lease. Subletting is when a person rents an apartment from someone who is already renting that apartment.
In this situation, the subtenant’s name is not on the lease, so they do not have to abide by the rules established in the contract.
Subletting is often an emergency solution for both the subletter and sublessee.
For example, say you signed a one year lease for your apartment. However, after a few months, you receive a job offer in another city and have to leave immediately. In some cases, your landlord might allow you to break your lease (often for a fee). Most of the time, though, this won’t be an option.
Rather than passing up on your job offer, your only other option might be to sublet your apartment to somebody for the remainder of your lease.
Subletting might also be an option if you find that you are no longer able to afford your rent due to unforeseen circumstances.
Other individuals might choose to sublet a property as an easy way to earn passive income. For example, if you are able to nab an apartment in a high demand area and you have another place to stay, you might be able to sublet your apartment for more than you are currently paying.
For sublessees, subletting an apartment is often a great short-term solution when moving to a new city. As renting an apartment from a different location can be difficult, renting an apartment for just a few months can give you the opportunity to look for apartments in a new area without having to commit to a long-term lease.
You Don’t Have to Break Your Lease: Even if your landlord is willing to let you break your lease, it almost definitely won’t be for free. You might be required to pay off the remainder of your lease or a hefty fee, or cover for the period in between when you leave and when a new tenant is found. Subletting can help you avoid these costs.
Supplemental Income: Subletting an apartment in a high demand, expensive area can be a great way to earn extra income. That extra income can go towards many ends, including toward retirement savings, investments, and general rewards if spent through a rewards credit card.
You Don’t Have to Pay for an Empty Property: If your landlord doesn’t let you out of your lease, but you still have to vacate the property, you surely don’t want to be paying for an apartment you aren’t using. Even if you aren’t able to sublet your apartment for the price you’re currently paying, you can at least make back some of the money.
Liability: Probably the biggest drawback is that you are liable for any damages done by your subtenant. Similarly, if they stop paying rent, you are responsible. Your name is on the lease, so you are still completely responsible for the property.
Having to Act as a Landlord: Your subtenant will report to you for any issues with the apartment, making you the middleman between your subtenant and landlord.
Lease Violation: Subletting may violate your lease agreement. You could be evicted if your landlord finds out that you are subletting the property.
Whether or not you should sublet your apartment depends almost entirely on your unique circumstances.
If you need to move immediately, but still have several months left on your lease and aren’t able to break the lease, then subletting may be your best option. This can save you from having to pay thousands of dollars for an apartment you aren’t using.
However, if you are able to break your lease, or if subletting violates your lease agreement, then it probably isn’t a good idea. Instead, see if there is a way that you can have someone take over your lease.
Subletting can be a lifesaving solution if you need to move out on short notice, but keep in mind that there are several disadvantages which might make it a poor option in certain situations.