Sometimes, even tenants with the best of intentions must vacate a property before their lease is up. When this is the case, there are a couple of things that could happen. One is that you must market the unit or property for lease again, in hopes of finding another tenant quickly. Another is that the former tenant(s) sublet the home to someone else. In this case, the rent is usually paid to your original tenant by the third party – and in some instances, the payee (i.e., your former tenant) could end up earning a profit.

So, how exactly does subletting work – and should you allow it with your rental properties?

Subletting “assigns” the original lease to a third party. This individual (or individuals) was not a part of the original lease agreement, though. So, there can be some definite pros and cons to this endeavor for you as the property owner.

For instance, on the positive side, the property will continue to generate revenue for you. So, there is no need to locate and screen potential new tenants. One the downside, though, the new tenant may not have much of an incentive to keep your property in good condition.

It is likely that the lease agreement you currently use contains a sublease clause whereby this act is either forbidden, or allowed – and if it states the latter, there will also be various terms under which the subletting may or may not take place.

For example, it will typically require your knowledge and permission before the subletting is allowed to take place. It may also state that the original tenant is not allowed to charge more in rent than you are charging them.

If you want to get out of the tenant-finding business altogether, but still wish to earn passive rental income, hiring a property manager could be the answer. That way, you can delegate a long list of time-consuming tasks to someone else like should you allow tenants to sublet your property.

Should You Allow Tenants to Sublet Your Property?