There are many reasons you may wish to rent out your property. For example, you may have inherited a house but have no plans to live in it. Perhaps you’re moving into a larger home, but wish to rent your current house for supplemental, passive income. On the other hand, you may have invested in a great rental property but feel unsure where to begin in finding and maintaining great tenants. For many, renting out their house can be a great way to earn extra income.
Whatever your reasons, knowing how to rent your house before jumping in headfirst is essential. From preparing your home for renters, to familiarizing yourself with rental laws, there’s much to learn before transitioning from homeowner to landlord.
Here’s a complete guide to renting out your house, including tips to maximize rental income while minimizing the work you’ll have to do.
If you’re reading this article, you’re probably already familiar with the main benefits of renting your property. You’ll unlock a steady stream of passive income and help you build property equity over time. Additionally, renting allows you to retain ownership of the property and potentially benefit from any appreciation in its value.
Before taking on the responsibility of becoming a landlord, there are some important factors to weigh to guarantee a successful and rewarding experience. Here are a few things you may want to consider when beginning this journey:
One of the primary considerations is your financial preparedness. Evaluate your current financial situation, taking into account existing mortgage commitments and other financial obligations. Calculate the potential rental income your property could generate and compare it against anticipated expenses and expected property taxes.
Make sure that you have a clear understanding of your budget, factoring in maintenance costs, repairs, property management fees if applicable, and any unforeseen expenditures.
Consider local rental market dynamics before deciding to rent out your house. It's wise to research the demand and supply of rental properties in your area, taking note of prevailing rental rates and market trends while compiling an analysis of your competitors.
It’s important to understand the demographics of potential tenants and any seasonal variations in demand. Aligning your approach with the local rental market ensures that you strategically set competitive rental prices, tailor your property to appeal to the target demographic, and make informed decisions for a successful and lucrative landlord experience.
Becoming a landlord requires a significant investment of time and effort. Consider the level of commitment you can dedicate to property management. Landlords are responsible for addressing tenant concerns, handling maintenance issues, and staying on top of legal and regulatory requirements.
Assess your availability and willingness to be actively involved in managing the property or whether you prefer to enlist professional property management services to alleviate some of the responsibilities.
Any way you slice it, renting your house takes a lot of time, learning, and patience. This guide will make sure you know what each step entails to help you avoid costly trial and error along the way.
To make renting your property less of a headache and ensure you’re getting the most value possible while avoiding costly mistakes, we recommend partnering with a property manager for a few or all of the steps below. Here are a few ways they can help:
We’ll share more on how property management companies work in a later section. For now, let’s jump into the steps to rent your house.
There are a few critical things to do before renting out your house. First, ensure your home is up to code and safe. Both state and local governments have a set of building codes in place that set minimum safety standards for housing conditions and are mandatory for landlords to abide by. Depending on your property's location, these codes may cover maintenance, sanitation, electrical, and fire safety. Research your local and state regulations and make necessary updates.
After this, the easiest way to guarantee your house is up to code is to schedule an inspection with your local building department. Some departments offer a free inspection service, while others may charge a small fee. Plus, many cities these days offer online scheduling for inspections. Ensuring your property is rental-ready and up to code can save you thousands of compliance fines. Make sure you have a professional walk through the house and give you their seal of approval.
When determining how to rent your house, you must conduct market research and choose how to set your rental prices. First, evaluate different neighborhoods in your area. Next, identify how your neighborhood compares. For example, is your house near a good elementary school? Is it close to supermarkets and parks? Or is it further away from these kinds of amenities? These are factors to consider when setting your monthly rent.
Still wondering, “How much can I rent my house for?” You can look at rental websites and compare how other property owners are listing their rental properties.
Many landlords charge tenants a percentage of their home’s market value. In this case, rents typically land between 0.8% and 1.1% of the home’s overall value. For example, if a home is worth $180,000, the rent would be between $1,440 and $1,800 monthly. If your home is exceptionally well situated in a neighborhood, or if you’ve recently completed landscaping and made cosmetic changes, you can consider charging rent on the higher end of that range.
However, property values can sometimes rise faster than rent prices. If you notice that other property owners in your area aren’t setting their rent prices this way, you can set your rent price by comparing your house with other local properties and determining a fair price that way. You may also use our rental calculator here.
Gone are the days when renting your house meant all you had to do was to put a sign in your yard. Today, you’ll likely have to find residents by posting your property on rental websites. Many websites offer free listing services, though you may find paid postings. Facebook Marketplace, Rentals.com, and Zillow are all good options.
You can list your property on various websites to ensure you get a good cross-section of applicants. Advertising and marketing can be challenging for the new landlord. Keep reading for more specific rental advertising and marketing tips.
After successful advertising, marketing, and maybe even a few in-person showings, you’ll have a stack of applications to sort through. Screening tenants can be a time consuming and difficult process. Sifting through applications and meeting prospective tenants can become a full time job.
Common courtesy and the Federal Fair Housing Act dictate that you must treat all prospective tenants equally. But, some factors will make some applicants more promising than others.
As a safety precaution, you should also require (or at least encourage) all renters to have insurance. You should detail this information in your lease. Renters insurance covers personal property theft or damage for your residents. Additionally, renters insurance includes liability insurance, so if they have visitors over and someone gets hurt, your tenant will be covered in case they get sued for damages.
Most importantly, your tenant’s insurance will pay for their temporary relocation if your home becomes uninhabitable due to a natural disaster or other catastrophes. While you can focus on repairing your house, your resident will have somewhere to live and won’t have to break their lease with you. Ultimately, this saves you the headache of finding a new tenant, and you won’t lose money as your property sits empty while being repaired.
Additionally, consider securing landlord insurance. Landlord insurance provides a safety net by offering coverage beyond what standard homeowners' insurance typically includes. It protects against potential financial losses resulting from rental property-related risks.
Purchasing this specialized insurance safeguards your investment and mitigates various risks, including property damage, liability claims, and potential loss of rental income. Landlord insurance typically covers structural damage, legal fees, and even certain medical expenses in case of tenant injuries on the property.
A lease, or rental agreement, sets up expectations for your tenants and informs them of property rules. Make your lease highly detailed to avoid any misunderstandings or conflicts in the future. Your lease can either be a fixed-term lease (a lease with a set end date) or a month-to-month lease, which automatically renews until either the tenant or landlord decides to end the rental agreement.
Many online resources exist to help you draft a lease, or you can hire a real estate attorney to help you through the process. However, every lease should include some basic information, including:
Your lease should also detail any special permissions and services. For example, you must describe whether you plan to allow tenants to keep pets on the property. If you plan to allow pets, you must include a section on pet deposits and rent.
Once the lease is signed and tenants are moved in, a landlord’s work has only just begun. Next, it’s time to manage and maintain your real estate investment. Landlords should expect to conduct regular inspections, repairs, and upgrades to ensure the property remains in good condition and retains its value.
Establishing a system for handling tenant requests and promptly addressing any issues is also essential. Consider hiring a property manager to help on the maintenance front, especially if you have another full-time job.
While you now know how to rent your house, it may be overwhelming to think of managing everything mentioned so far. While executing the leasing process, upkeep, and managing a rental house yourself is possible, many landlords partner with a local property manager.
While new landlords need to learn the particulars of managing a rental property from scratch, a property manager will already have the expertise and experience to turn your private residence into a profitable rental property quickly. They know the local market, what to list your rental for and where to list it, and how to find quality tenants.
In addition, a property manager can handle your responsibilities as much or as little as you’d like. This means you call the shots regarding how passive or active of a landlord you want to be.
Want to find and vet tenants but don’t want to deal with maintenance? A property manager can fill in the gaps. Prefer to leave the whole tenant screening and contract creation process to an expert? A property management company has you covered.
If making your rental property a genuinely passive income stream sounds appealing, hiring a professional property manager can be an excellent option. Doing so will also make following the tips below a lot easier.
It may sound obvious, but there are a few things to do before renting out your house. First, you’ll need to take some time to spruce it up a bit and make sure it’s ready for new residents.
Not only does this step in the preparation process ensure that your house is up to code, but it will also help you attract renters. Plus, when your house looks refreshed and updated, you can raise the rent and turn a higher profit.
Many new landlords start their real estate journey by Googling “how to rent your home,” which can lead to instant information overload. Because these days, there’s no shortage of options for digital real estate tools.
However, technology is just one step in the right direction in finding tenants. You can also utilize tried-and-true digital marketing tactics to advertise your property, attract potential renters, and secure great tenants, such as:
Property owners and managers should always use a quality screening service or method to screen potential rental tenants. However, if you don’t have a screening method you’re comfortable with, read on to learn key steps in the process.
Regular maintenance constitutes a significant portion of a landlord’s responsibilities during a lease. Required maintenance varies slightly from state to state, so ensure you’re current on local laws.
In general, a landlord is responsible for anticipating tenants’ needs relating to property use. This includes regular, scheduled maintenance as well as repairs when emergencies arise.
To stay on top of regular maintenance every six months, take the time to complete this checklist for every property or unit:
By locating minor problems through regular maintenance and inspection, you ensure you won’t have to fix big (aka more expensive) problems later.
Deciding to rent your property can be exciting and overwhelming. But, with these tips in mind, you should be ready to kick-start your career as a rental property owner in no time.
And if you’re interested in hiring a property management company to assist in renting and managing your house, you can get started here.