If you’re thinking of using this tactic to wait out the market and get a higher sale price, here’s what you need to know.

When Nancy and Steve Juetten couldn’t sell their home in Bellevue, Wash. after moving into a new one, they rented it out, becoming what Steve Juetten calls “accidental landlords.”

The National Association of Realtors reported in June that while home sales are improving slightly, thanks to tax credits of $8,000 for first-time buyers, there is still an 11-month supply of existing homes just sitting there.

“Many of these clients are faced with a choice of selling the house at a loss, or letting the house go back to the lender through foreclosure, or renting it out and waiting for the market to recover,” says Michael Nelson, president of Atlanta-based Excalibur Home Management.

Even Treasury Secretary Timothy Geithner was forced to become an accidental landlord when his family relocated to the Washington, D.C. area. His five-bedroom home in Larchmont, N.Y. was listed in February for $1.635 million. Despite a price drop to $1.575 million, there were still no takers. So in May it was taken off the market and rented for $7,500 a month.

The advantage of renting out a home that isn’t selling is that it lets owners recoup at least part, and in some cases all, of their monthly mortgage cost.

“Carrying two mortgages wasn’t in our game plan,” says Steve Juetten, 55. They were able to find a French family relocating to the area who signed a year’s lease. The $2,500 monthly rental payment covered the mortgage plus about $100 extra a month.

Many homeowners may not be so lucky. “I’ve seen rents decline from $3,100 to $2,200 to $1,500 with each new lease,” says Yvette Studdard, a real estate and mortgage broker in Roswell, Ga.

If You Rent Out Your Home

The Juettens were fortunate that they found reliable renters, but the transition from owner to landlord can sometimes be rocky. If you’re thinking of renting out your home, consider the following advice:

• Price the property right. To establish the best rental price, factor in your carrying costs and check comparable rentals in your area.
• In addition to talking to local real estate agents, check websites like Craigslist or Rentometer.
• Don’t forget to account for periods of vacancy, says Glenn Kelman, CEO of Redfin, an online brokerage for residential real estate. “One-half of the money you get from the rental will go toward vacancy and repairs,” he says.
• Screen tenants carefully. The Landlord Protection Agency offers a helpful document for $4.99, called the Tenant Finder Pre-Screening Telephone Worksheet.

“There are professional tenants who know how to work the system. They will give you a deposit, and then live rent-free for months while you evict them,” warns Danielle Babb, author of The Accidental Landlord: How to Rent Your Home When It Doesn’t Make Sense to Sell It.

• Check the tenant’s financial situation and ability to cover the monthly rental. This piece of advice goes both ways: If you’re the tenant, check out the seller’s financial stability. “Ask the seller if he or she is going to be able to pay for the place while you are living there,” says Kelman. If the seller is foreclosed on, you may be evicted.
• Don’t overlook the tax consequences. Talk to your accountant about deductions, depreciation and how to declare the rental income. Keep careful records.

To qualify for the IRS capital gains exclusion of $250,000 ($500,000 per couple) on the sale of a personal residence, you must have lived in the home for two of the past five years.

“Legally there’s a three-year window,” says Excalibur’s Nelson, “but practically we recommend that owners waiting for the market to improve rent their homes for only two years. That gives them 12 months to get the property fixed up, on the market, sold and closed before the end of the third year.”

• Learn the local laws. What are the tenant’s rights to privacy? When and how often can you inspect the property? Make sure you check the laws in your state.
• Have the right insurance. Get landlord insurance and consider an umbrella policy if you have a lot of assets. And require your tenants to get renters insurance, says Babb.

• Hire a handyman or do the repairs yourself. Some tenants invent repairs and then create a fake receipt that they deduct from the rent, warns Babb.

The Lease/Purchase Option

Some frustrated homeowners are moving toward a sale using a lease/purchase agreement. This is a legal contract that obligates the tenant to purchase the property for an agreed-on price at the end of the lease period.

A nonrefundable deposit is applied to the down payment, and a small portion of the rent may be applied to closing costs.

Previously, sellers wouldn’t agree to a lease/purchase agreement with a set price because the home’s value might go up by the end of the lease, says Redfin’s Kelman. “Now the homeowner just wants somebody else paying his mortgage.”

Keep these points in mind if you decide to offer this option:

• A mutual agreement. Make sure you have an agreement of sale as well as a lease. “You’re really negotiating two deals at the same time,” says Janice Leis, a real estate broker with clients in Pennsylvania, Florida and New Jersey. “I recommend that a real estate attorney draw up both documents. They should go hand in hand and refer to each other.”
• Deadlines. Have a clear start and stop date. Keep in mind that until the closing, you are responsible for insurance, taxes and maintenance.
• Financial clarity. Inquire about the long-term financial condition of your potential tenants. Ask why they’re not buying the house now. “Chances are if the tenant can’t buy the house now, he or she will not be able to do so later,” warns Leis, “and you’ve effectively taken your house off the market.”

Yvette Studdard has been involved in a lease/purchase, and she knows all too well that this can happen. Her first buyers defaulted on the deal when the husband lost his job. Still, she says, a lease/purchase option often means the tenants have the mentality of a property owner. They have pride of ownership, she says, which means you may be that much closer to a sale.

Cathie Gandel writes on business and finance. She lives in New York.