Yes, if you just rent to anyone, you can have alot of headaches, but not everyone is like that. There are many, many good people out there who will take care of the property. My suggestion is to not rent, but rent-to-own. Offer the property for sale with seller-financing. This is a very sought after market.
Have the renter put a large deposit down from one to five thousand. Make it non-refundable, but that it would go to the purchase of the house as long as all the terms you set down are followed. Otherwise, they move and you keep the deposit.
You will also get to have a monthly income for the property. (A portion of the rent will go towards the purchase of the house-the rest is free and clear to you.)
Make the contract specify they will paid insurance and taxes. They will also pay utilities, repairs, upkeep, hoa fees, whatever a normal homeowner would pay.
So many good people out there got underwater, lost their homes, ruined their credit and can no longer qualify for a standard mortgage. They are desperate to own another home, have the funds and job to afford it, but no one will give them another chance. Some are new buyers with no credit yet and they won't qualify. Everyone suffered in this economy. This is a way to help your parents and another family. It's a win-win for both. This way they get exactly what the property would be worth (in 5, 10, whatever years) or the amount you feel is appropriate.
My daughter has ok credit, great job history, large down payment, but because of the stricter loan guidelines a bank would not qualify her. She went this route. And while she is paying more for it than it is valued at now, in return she owns a home. (She is ecstatic, by the way.)
She searched on Craigslist and Trulia and Zillow and just about anywhere for the areas she wanted and the key words "seller financing" or "owner financing" for months before she found the right property.
Investors are snatching up properties priced low, turning around and selling them to people that they finance. In return they get someone to take care of the property and if the renter would default they keep the money and re-sell to someone else making more of a profit. There is way less risk doing it this way, rather than just renting to anyone. This way the renter is invested in the property and want it to look nice-because they are buying it. Also, they are selling a lot of properties in the same crappy condition as they bought them, because the new renters will fix it up for the chance to own. So, even if they had did damage-the next renter would be the one paying to fix it for them.
Just make sure you get a contract to cover yourself and do your due diligence when interviewing potential renters. If you ever need advice on this, feel free to contact me.
The next 12 months might suck even more value from your parents. Then they must waitto recover even more losses. If we hit bottom in 12 months, then we face 10% inflation - - - and their home goes up 20% in value - - - how mnay years will it really take to rebound in true dollars? If they lose another 10-20% over hte next 12 months, how long just to get back (again, in real dollars) to where they are today?
Look closely at the numbers, lean on a good Realtor . . .