How To Rent Out Your House: A Guide

Whether you’re looking to make some extra income or you’re interested in owning more rental property, renting out your house could be a first step in the right direction. While this may seem like an enticing side gig, renting your house and becoming a landlord comes with a lot of additional responsibilities. It’s essential to understand every aspect of this process before you start buying rental property and generating rental income.

Let’s go over 12 steps to consider when renting out your house to tenants. Then, we’ll get into the pros and cons to help you decide if renting and managing properties is right for you.

How To Rent Out A House: 12 Steps

Before you list your house on the rental market, follow these steps to ensure you’re fully prepared to tackle this type of real estate investment.

1. Understand Local Landlord-Tenant Laws

Landlord-tenant laws can vary by state on factors like security deposits, eviction notices, rental applications and other components of a lease agreement. Before you start the home rental process, reach out to your local housing authority to figure out what the landlord-tenant laws are in your state to make sure you’re following and addressing them properly.

You should also familiarize yourself with the Fair Housing Act and equal opportunity housing laws. These regulations protect people from any form of discrimination during the renting or home buying process.

2. Examine Your Rental Property

Before you start looking into the logistics of renting out your house, take a look in and around your property for anything that could be problematic for new tenants. This could mean replacing windows and doors, fixing a broken dishwasher or implementing extra security measures on the property.

Landlords may also want to keep curb appeal and landscaping in mind when assessing their rental property. When people are touring the home beforehand, curb appeal can leave a positive impression that could help sway potential tenants to move forward with a lease agreement.

This is also a great time to make sure your rental property is following all building codes. These codes ensure houses are safe and livable for the tenants residing in them.

3. Look Into Landlord Insurance

Landlord insurance can protect you if your rental home is damaged, whether that be from the tenant or a natural disaster. This type of insurance can also protect you if someone gets hurt on your rental property.

While a landlord insurance policy provides a lot of great coverage, it does come with a higher price tag. If you’re willing to pay for landlord insurance, it could be worth it in the long run – especially if you plan on buying and managing multiple rental properties.

4. Determine Your Rental Price

Another crucial step when preparing your home for rent is to set a fair rental price for potential tenants. Whatever price you choose should at least be higher than your personal expenses in order to make a solid profit when renting out the property.

When determining the price, take the time to do your research and explore other comparable rental properties in your local area. You’ll want to make sure the price you choose falls in line with comparable homes while also staying competitive with the rental market. It might be a good idea to consult a real estate agent who’s familiar with the local housing market when determining a rental price.

5. Find A Property Manager

Whether you’re managing one or multiple rental properties, hiring a property manager might be something to consider. While you can be your own property manager, take into account what this role means. You’ll have to be on call if things go wrong in the house at any time of day or night.

If you’re willing to take these calls and feel experienced enough to fix any and all problems, then being your own property manager may be a good idea. If you’re looking to take a more hands-off approach, then it might be worthwhile to research and hire a property management company or property manager who can take care of the rental home when issues arise.

Hiring an individual or company will come at a higher cost, which is another factor to consider when choosing who is going to manage your rental property.

6. Write A Lease Agreement

A lease agreement is a contract between the landlord and the tenant that outlines the terms associated with renting the property. The lease agreement should cater to your specific rental property and define any rules you need renters to follow.

While putting the lease agreement together, make sure you know your stance on rental terms like:

• Security deposits
  
  
• Lease length
  
  
• Paying rent
  
  
• Breaking leases
  
  
• Evictions
  
  
• Pets
  
  
• Parking
  
  
• Maintenance

All of the rental policies should be explained in detail so tenants understand the rules for renting out your house.

7. Decide How You’re Going To Collect Rent

Another essential step in the rental process is deciding how you’re going to collect rent from your tenants each month. The easier it is for tenants to make their rent payments, the more streamlined the process will be.

While having tenants mail or drop off paper checks may seem easier for you as the landlord, it can be harder for tenants to find the time to do this. Talk to your tenants and find a way to collect monthly rent that’s easy for everyone involved.

8. Create A Rental Listing

Another important step in renting out your house is advertising to prospective tenants. One way to get the news out about your rental property is by word of mouth. Reach out to any family, friends and co-workers who are looking for a place to live or know someone who’s looking to rent right now. You could also use online rental property listing services or post your rental listing on social media.

When creating your online listing, be sure to include all of the necessary information potential tenants would want to know about the property. This can include the number of bedrooms and bathrooms, rent price, age and condition of the property, amenities and other features. You’ll also want to provide high-quality photos that show every part of the house that’s for rent.

9. Find And Screen Tenants

After you’ve received interest from prospective tenants, you’ll want to screen them to make sure they’re qualified to rent out your house. The tenant screening may include a credit check and verifying their credit scores, performing background checks, reviewing references from previous landlords and verifying the potential tenant’s employment and income.

This screening process should be done thoroughly to see if your potential renter has a history of reliability and responsibility.

10. Perform All Necessary Inspections

There are a couple of inspections you might need to get throughout the rental process. One of the necessary inspections is a move-in inspection, where both the landlord and the tenant go over the current state of the house. That way, the landlord can have a record of the condition of the home before the tenant starts living in it.

It’s common for some landlords to perform routine inspections of the property to ensure it’s in good condition. Be sure to provide your tenants with proper notice before performing any inspections according to your state and local laws.

Another inspection you or the property manager may want to perform is a move-out inspection. This inspection is intended to check the state of the home when the tenant moves out. A move-out inspection can help the landlord decide whether the tenant gets their full security deposit back.

11. Sign The Lease Agreement And Collect The Security Deposit

Once all the necessary inspections are completed, it’s time to sign the lease agreement and collect the tenant’s security deposit. You’ll give your tenants keys to the rental property and discuss their move-in date. The move-in date is outlined in the rental agreement and is usually on the first of the month, or whenever rent is scheduled to be paid.

At this stage, you might also encourage your tenants to take out renters insurance. Similar to homeowners insurance, renters insurance ensures that the tenants are protected from various damages and claims.

12. Maintain A Good Relationship With Your Tenants

Having a good relationship with your tenants can really make a difference when renting out your house. Mutual respect with your tenants can help encourage them to pay rent on time and respect your property. Maintaining a friendly, communicative relationship is always a great rule of thumb, especially when you’re trying to foster a safe and comfortable living environment for your renters.

Pros And Cons Of Renting Out Your House

The decision to rent out your house should be made with careful consideration. We’ve compiled some of the advantages and disadvantages to keep in mind before you start renting out your house.

Pros

• Extra income: The biggest advantage of renting out your house is the opportunity to make additional income – especially if you have multiple investment properties. The money you make from real estate can be substantial as long as you’re actively renting them out and making a solid profit.
  
  
• The property is yours: Because you own the property, you have the option to live in it when the property isn’t rented out to tenants. It’s common for rental property owners to live in and enjoy the house with their family during certain times of the year when it’s vacant.
  
  
• Tax deductions: Owning rental properties comes with several tax benefits. Expenses like mortgage interest, rental property depreciation, homeowners insurance, property taxes, various maintenance costs and wear and tear can all be deducted on your annual tax return.

Cons

• Time commitment: Being a landlord can be a huge time commitment, especially if you’re acting as the property Being “on call” for your tenants can take a lot of time out of your day.
  
  
• Maintenance costs: As with any home, there will always be maintenance costs. These repairs can get pricey depending on the problem and if contractors or other hired professionals are needed to fix the issue.
  
  
• Problematic tenants: It’s no surprise that having tenants living in your rental property can be quite a gamble if you don’t know them very well. They could end up disturbing other tenants or even damaging your property.

The Bottom Line

As you decide whether you should rent out your house, consider the pros and cons, your financial situation and if you’re ready for the added responsibilities that come with being a landlord. While there are several steps involved in renting out your house, it can be worth it if you end up profiting a large amount of money – especially if you start renting out multiple properties over time.

Ready to buy a house and start your real estate investing journey? Start the mortgage process today.