Photo by Eric Keith / St. Joseph News-Press / Purchase this photo

David Lau decided against selling his home in a down market. Instead he is hoping to lease his property and retain his equity.

Homeowner David Lau faced two less-than-ideal choices this summer: either put his home on the market and risk a $10,000 to $15,000 equity hit, or become a landlord.

Today, there is a “For Rent” sign on the front lawn of his three-bedroom, California-style home. In a sluggish market, he’s part of a trend of homeowners-turned-landlords awaiting a rebound of home prices.

“Just about every way you look, you see ‘For Sale’ signs,” said Mr. Lau, who faces the prospect of acquiring another home soon through marriage. “I just think it’s a wiser opportunity for me to keep the house as an investment property.”

By doing so, Mr. Lau is breaking an old rule in real estate: Don’t rent out property that wasn’t intended to be an investment property.

And homeowners, seeking to protect their investments, have increasingly turned to Realtors (like Mr. Lau has) or property management companies. These middlemen will market the home and vet potential tenants through criminal and background checks.

At Donna Farrow & Company, a property management firm in St. Joseph, they’ve seen an “overabundance” of homeowners unable to sell their properties, said office manager Pam Morrise. They are currently marketing 14 unsold homes as rentals.

“They’re all wanting one year leases until the economy turns around,” Ms. Morrise said. “There is so much on the market. If your house is sitting vacant, it’s better to take some money than not make any money.”

Nationally, Allstate Insurance Co. has seen a 27 percent rise in homeowners switching to landlord products over the previous year.

While on the surface the trend of homeowners finding others to pay their mortgage may seem bad, real estate market analysts say it could be a step in the right direction. By renting, there will be fewer homes on the market, which may, in turn, start to stabilize prices.

Although, St. Joseph’s rental market may already be getting saturated.

Jon Canaday has been renting several homes and duplexes in St. Joseph for more than a decade. He says it’s taking up to a month longer to find tenants and making some concessions to lure tenants. “It’s never been as bad as this,” he said.

Mr. Lau, the soon-to-be groom, said he also is having trouble. After a month on the rental market, he says he hasn’t seen much interest.

“If it doesn’t rent or lease, then come sometime next year, it’ll be put it on the market to sell,” he said. “It’s just one of those things that you play by ear.”

Ahmad Safi can be reached

at ahmadsafi@npgco.com.