Don's answer is really great! I wish to add that lenders will typically discount rental income by 25% for operating expenses & repairs on properties < 4 units. Prospective landlords should consider comparing fair market rent vs. your mortgage payments before making their decision to rent.

I can't tell you how many landlords don't declare rental income because doing so would put their cash flow below water. This approach wreakes havoc on their debt to income ratios when they seek to refinance or buy another property with full doc loans.

The traditional solution has been stated income loans to offset undocumented rental income but Illinois has put new restrictions on the availability of these products allegedly to reduce foreclosure rates? It will be interesting to see how this new legislation impacts the number of rentals in foreclosure!

Some sellers are willing to rent their properties instead of selling. Although J.R. is correct that most "want out," some have few options. People who've bought another house, anticipating they could sell their old one...and now it's sitting empty. Or people who've been transferred; they're willing to rent in their new locale if only they can get rid of the monthly burden of their old property. Or estate sales and inherited properties. The house is sitting vacant and doesn't typically show well. The heirs often would rather have someone in the house, taking care of it, and providing some cash flow, versus having the house just sitting vacant.

Trying to rent a house that's for sale isn't generally the most efficient way to go about it (MLS and CraigsList searches for rentals will have a higher success rate), but if you see a house for sale that you'd like to rent, instead, make an offer. That technique (finding a house for sale and asking whether the owner will be willing to rent) is also one of the techniques for finding lease-options.

The rent is not going to be based on a percent of the selling price. It'll be based on a combination of three factors: The first, counting for 60%-70% of the rental price, will be what comparable rentals are in the area. Price it too high, and it won't get rented. For instance, if you're interested in renting a property and all the other rents are $2,000, but one property--let's say priced at 1% of the sales price--is on the market for $3,500. Why would you rent the $3,500 property? You wouldn't. So rents for comparable properties is the major determinant.

The second factor, which really is reflected in the first factor, is what the net cost to the renter is. Many renters don't consciously think about it, but enough do that it, too, influences rental prices. And that is: What's my net out-of-pocket cost? If you own a home, you've got mortgage interest and taxes to pay. On the other hand, they're tax deductible. So a renter may be "breaking even" if the equivalent mortgage payment would be $3,000 but he/she can rent for $2,000. In some areas of the country, the relationship between sales price (and thus monthly mortgage) and rentals has gotten skewed. But, overall, that has an influence, too.

Third, addressing your specific question, sellers hope to cover their PITI through rent. That often is unrealistic for recent purchases, but if you offered to rent a property from a seller for what his monthly out-of-pocket cost of purchasing is, you'll get a large number of takers. And if someone bought a property 8-10 or more years ago, it's very possible, even in some of the more active markets, that the seller would be able to cash flow the property by renting it for the PITI payment.

So, what would sellers be willing to rent their properties for? (1) comparable rents, (2) net cost to renter, and (3) covering PITI are factors to look at. Percent of selling price is irrelevant.

Hope that helps.

Hello Jackie,

There are owners prepared to rent thier homes as an alternative to selling. Not a good way to go for a seller as you never know what condition the home will be in after the lease is up so not many are prepared to go this route. Ultimately they want to sell.
If they're open to a lease, it will often be entered in the MLS and marketed either for sale or rent at the same time. A good agent should be able to search and identify those homes for rent that meet your needs. Otherwise, trying to convince a seller to become a landlord will be difficult and if they agree, you may not like the rent they ask which could be as much as their carrying cost to make it worthwhile.

Best of luck, Ken.

Jackie,

No.

If you are looking for a rental your best bet is to scour craigslist.

Good luck with your search.

Tom McCarey
The Real Estate Lounge Chicago with @properties chicago

Unless sellers specifically say they would be open to a rental, I have found that most of them want to get OUT. Most either need the money for another purchase or need the money to pay off a mortgage. I have had a couple of customers who called on sales and wanted me to inquire about renting or renting with an option and I got no takes. I would suggest looking for a rental who would be interested in selling rather than a seller who might want to rent.