How To Rent Out A House: A Guide
Victoria Araj7-minute read
April 13, 2023
Whether you’re looking to make some extra income or you’re just 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 discuss what you should consider before you decide to rent out your property to tenants.
How To Rent Out Your House
Before you list your house on the rental market, follow these steps to ensure you’re fully prepared to tackle this kind of real estate investment.
1. Understand Local Landlord-Tenant Laws
Landlord-tenant laws can vary by state on things like security deposits, eviction, rental applications and more issues related to the lease agreement. Before you start this rental process, reach out to your local housing authority to figure out what these laws are in your specific state to make sure you are following and addressing them properly. You should also familiarize yourself with the Fair Housing Act and equal opportunity housing laws which 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 potential tenants. This could be anything from broken windows and doors to implementing extra security measures, so renters feel safe when living in the home. It’s recommended to keep curb appeal in mind as well when assessing your 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 from a natural disaster. This type of insurance can also protect you if someone gets hurt on your rental property.
While landlord insurance provides a lot of great coverage, it does come with a higher price tag. If you are willing to pay for landlord insurance, it could be worth it in the long run – especially if you plan on having multiple rental properties.
4. Determine Your Rent Price
Another crucial step when preparing your home for rent is to come up with a rent price for possible tenants. Whatever price you choose should at least be higher than your personal expenses in order to make a solid profit when renting out your house. When setting the price, take the time to do your research and explore other comparable rental properties in your local area to make sure your price falls in line with those homes while also staying competitive.
5. Find A Property Manager
One aspect that shouldn’t be overlooked is the property management of the rental property. 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 have a more hands-off role in this rental property, then it might be worth your while to research and hire a property management company or an individual who can take care of your property for you 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.
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6. Write A Lease Agreement
If you don’t know what should be included in a lease agreement, do some thorough research before compiling your own. The lease agreement should be catered to your specific rental property and outline any rules you need renters to follow.
While putting this lease agreement together, make sure you know your stance on things like:
- Security deposits
- Lease length
- Paying rent
- Breaking leases
Everything should be explained in detail, so tenants feel like they know and understand what they are reading in this agreement.
7. Decide How You’re Going To Collect Rent
Another essential step in this rental process is deciding how you’re going to collect rent from your tenants each month. The easier you make it to pay rent, the easier it’s going to be for your tenants to pay you. 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 which in turn could lead to late monthly rent payments. Talk to your tenants and find a way to collect rent that is easy for everyone involved.
8. Create A Rental Listing
Once you have all your ducks in a row, it’s time to advertise your rental property in order to attract tenants. There are several ways to get your property out there for people to see. One easy way is by word of mouth. Reach out to any family, friends and coworkers who you think might be looking for a place to live or know someone who is looking to rent right now. Another way to get the word out is to use online rental property listing services or use similar listing services 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 (number of bedrooms and bathrooms, rent price, age and condition of the property, etc.) as well as high-quality photos that show every part of the house that is available to rent.
9. Find Qualified Tenants
After you’ve received interest from potential tenants, your next step should be to vet them in order to make sure they are qualified and will be exceptional tenants for your rental property. This includes checking credit scores, performing background checks, reviewing references from their previous landlords and verifying the potential tenant’s income. This vetting process should be done thoroughly to see if your potential tenant has a history of reliability and responsibility.
10. Perform All Necessary Inspections
There are a couple of inspections that will need to be performed throughout the rental process. One of the necessary inspections is a move-in inspection with both the landlord and the tenant to record the current state of the house, that way the landlord can have a record of the condition of the home before the tenant started living in it.
As a landlord, you may want to perform routine and drive-by inspections from time to time just to make sure tenants are respecting the property and ensuring nothing on the property needs to be fixed. Be sure that you provide your tenants proper prior notice according to your local and state laws before doing such inspections. The only other necessary inspection is a move-out inspection which is intended to check the current state of the home in order to decide if the tenant will be getting their full security deposit back.
11. Maintain A Good Relationship With Tenants
Having a good relationship with your tenants can really make a difference when renting out your house. Mutual respect with your tenants will most likely help encourage them to pay you rent on time and respect your property. Maintaining a friendly relationship is always a great rule of thumb, especially when you’re trying to foster a safe and comfortable living environment for your renters.
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The Pros And Cons Of Renting Out Your House
As with anything involving real estate, 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 make this decision.
- Extra income: The main advantage of renting out your house is of course the additional income that can be made – especially if you have multiple successful 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: This means you can live in it when the property isn’t rented out to tenants. It’s common for rental property owners to live and enjoy the house with their family during certain times of the year when it is vacant.
- Tax deductions: Expenses like mortgage interest, rental property depreciation, insurance, various maintenance costs and wear-and-tear can all be deducted on your yearly taxes.
- Time commitment: Being a landlord can be a huge time commitment especially if you’re acting as the property manager as well. Having to be “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 severely damaging your property.
The Bottom Line
As you decide whether you should rent out your house or not, consider the pros and cons, your financial situation and if you’re ready for the added responsibilities that come with being a landlord (and maybe property manager as well). 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 and especially if you start renting out multiple properties over time.
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