Rent Your House

Renting your house instead of selling it allows you to pay off your mortgage and hold onto your house while property values increase. In the long run, it can be a great investment. To rent your house, you'll need to figure out how much rent to charge, screen potential tenants, and put in the hard work and money needed to keep it safe and functional. Read on to learn more about how to rent your house.

Steps

Attending to Financial and Legal Matters

1. Figure out how much it will cost you to keep your house safe and livable. You'll need to invest a decent sum of money to get the house in shape to rent, and over the years you'll be responsible for keeping it in good repair. Spend some time thinking through the various costs you'll incur and make sure you're able to handle them before you consider renting your home.
   • Calculate the up-front costs of getting the house up to code and installing any updates you think it needs. New carpeting, paint, appliances, and so on should be factored in.
   • Calculate the costs of keeping the house in good working order when tenants move in. Calculate how much plumbing repairs, landscaping costs, and general upkeep is going to cost.
   • Think ahead to expensive problems you might encounter. At some point you might need to buy a new refrigerator or oven, replace the roof, replace carpeting, and so on.
   • Decide whether you'll be able to handle a few months of missed rent, which most landlords encounter from time to time.
2. Decide whether to hire a property manager. Being a landlord can be pretty time intensive. You'll need to screen tenants, negotiate a rent price, facilitate a lease signing, collect rent, do home repairs, and be the point person whenever problems arise. If you want to rent your house but don't want all the responsibilities, hire a property manager to take care of all the nitty gritty parts of the job for you.
   • Property managers usually charge 50% of the first month's rent when new tenants move in, and 10% of each month's rent after that, so you'll need to figure out if you can afford one.
   • You can also hire out some of the duties individually. For example, if you're comfortable screening tenants and handling leases, but you don't want to have to make plumbing repairs when the toilet breaks or mow the lawn, you can hire contractors to do these jobs for you.
3. Calculate the rent you want to charge. Factoring in the cost of your mortgage, the cost of keeping the house in shape and other foreseeable expenses, and the property manager's fee (if you're using one), figure out how much rent you'll need to charge to at least break even. Then conduct some market research to find out how much tenants will be willing to pay to rent your house. If you'll be able to make a decent profit, you're in good shape.
   • Check sites like Craigslist.org to determine what people are paying for houses of similar size in your neighborhood. The rent you charge should be in the same ballpark.
   • Call other landlords, posing as a tenant, and ask questions about their properties to compare them to your own. You'll be able to find out what sorts of features might affect how much rent you can charge.
4. Set up a system for managing your finances. Start thinking of your rental house as a small business. It's a good idea to keep rental-related finances separate from your personal finances. Use Quickbooks or another financial management system to record your expenses and keep track of payments.
   • If you don't want to invest in financial management software, set up a spreadsheet to track your expenses and payments.
   • Consider opening a bank account that you'll use for the sole purpose of managing rental finances.
5. Create a Rental Agreement. You can start by downloading a free lease agreement online or buying one from USLegalforms.com Make sure the lease you choose meets the requirements of the state where you live. Working from a standard lease is a good way to make sure your lease contains all the necessary information. From there, you can customize it to fit your needs. Have a lawyer look it over to make sure it's airtight and legal. The lease should cover these bases:
   • The full names of the tenants.
   • The address of your rental home.
   • The length of the lease, whether it's a year, month-to-month, or something in between. A year lease helps reduce turnover, while a month-to-month lease gives you greater flexibility.
   • The amount of rent you're charging, as well as the security deposit amount.
   • A description of what the penalty will be when rent is late.
   • A description of the condition of the house at the time when tenants move in.
   • Individual requirements regarding utilities, trash, smoking, pets, altering the house, and so on.
6. Follow the laws in your state. Every state has landlord/tenant laws that dictate what rights landlords and tenants each hold. The laws address safety issues in the rental, who is responsible for paying for what, what happens when tenants fail to pay rent on time, and what circumstances give you the right to evict a tenant. Look up your state's laws on the matter and make sure you're comfortable following policies that apply to you.
   • Many states tend to favor tenants over landlords when it comes to disputes. In some cases it can be very difficult to evict a tenant, even when the tenant fails to pay rent. Get familiar with the steps you'd have to take if a problematic situation were to arise.
   • Make sure you know what responsibilities you have in terms of paying for utilities, garbage, and other bills.

Getting Your House Ready to Rent

1. Make sure your house is up to code. Before you rent your house, go through it room by room and determine what needs to be fixed. Make a list of essential repairs that need to be made in order for the house to be safe and functional. Making sure the house is up to code before tenants move in will be a good way to start your landlord/tenant relationship.
   • Make sure the plumbing is working properly. The toilets should all flush without a problem, the showers and sinks shouldn't be backed up, and so on.
   • Check to see if the electrical outlets and light switches are working properly. Replace light bulbs that need replacing.
   • Make sure any staircases are safe to walk up and down. If there's a broken step, you'll need to fix it. Install a banister if you don't already have one next to steep stairways.
   • Fix broken doorknobs and other odds and ends so that the house is functional.
   • If you're offering use of large appliances like a washer and dryer, refrigerator, or dishwasher, make sure they're in working order.
   • The roof, gutters, and other outside features should also be in good repair.
2. Install upgrades that will pay off in the end. You'll be able to charge more rent if you provide some newer features that make the house more comfortable and durable. Look around to assess what upgrades might make a big difference at a low cost to you. Your house might already be in tip top shape, in which case you don't need to worry about installing upgrades.
   • How does the flooring and carpeting look? It might be worthwhile to get a sturdy new flooring or carpeting that can stand up to years of rotating tenants.
   • Assess the kitchen and decide whether to install new countertops or cabinets.
   • You might want to renovate the bathrooms if it has been awhile since they've been updated.
   • Decide whether the walls and ceilings could use a coat of fresh paint.
   • A little landscaping around the house's exterior also increases the value of the rental.
3. Don't spend money on expensive fixtures or features. While you want to make sure the house is comfortable and nice looking, it's not necessary to go all out with fancy light fixtures, cabinetry, new appliances, and so on. Rental houses tend to endure a lot of wear and tear, so it's not a good use of your money to install expensive items.
   • If you do decide to install new fixtures, choose sturdy, mid-range items instead of high-priced items made from expensive materials.
   • You might be able to get a good deal on fancy items at a salvage store. If you want to add interesting details like stained glass windows or a claw-foot tub to your home, look for used items instead of buying them new.
4. Empty and clean your house. Before you begin showing the house, empty it out of all of your possessions (unless you're renting your house furnished). Clean it from top to bottom so that it looks presentable when people come to view it. Even if your house has older features, cleaning everything thoroughly will help it seem like a comfortable place to live.
   • Have the carpets deep-cleaned and wax the floors.
   • The bathrooms and kitchen should be sparkling. Get rid of mold spots, dust in the corners, etc.
   • Wash the windows both inside and out.
   • Sweep away leaves and other debris outside. Mow the lawn and trim the bushes.

Choosing Tenants

1. Put up an ad for your house. Write a description of your house that you'll use to advertise that it's for rent. You can post the ad on Craigslist.org, the classifieds section in your local newspaper, and other places where people might be looking for houses to rent. You can also put a "For Rent" sign in the window or yard of your property. You can even use innovative services like Register Signs that allow you to syndicate your property to several popular rental websites plus allow people to text your property sign and give instant information to their mobile phone. Your ad should include the following information:
   • The number of bedrooms and bathrooms, and a quick description of any enticing features.
   • A description of the neighborhood and nearby amenities.
   • A note on whether or not pets are allowed.
   • The price of rent.
   • The date the house is available to rent.
   • Contact information.
   • Make sure you have several pictures of each room, this helps your listing stand out and bring better informed renters to your showing.
   • Any other information you want to include about your rental.
2. Interview tenants. You'll probably receive loads of emails and phone calls in response to your ad. You can set up an "open house" date and have them all come by at once, or meet with the potential tenants individually. Everyone has a different strategy for interviewing and choosing tenants. Here are a few ideas you might want to consider to help you narrow down the pool of candidates:
   • Have them fill out a rental application. At minimum, it should ask for their names, addresses, income, employer name and contact information, and three references. You can automatically eliminate people whose gross monthly income is less than about 3 times the monthly rent, as well as those who are unemployed.
   • It's illegal to treat people differently based on factors like race and sex. Have a screening policy based on income, credit and meeting other general requirements, and apply it equally to all people.
   • Don't trust your gut and accept someone before conducting credit and reference checks. Many people make great first impressions but have trouble paying their rent.
3. Conduct credit and reference checks. Narrow your list down to a few top candidates and ask for a processing fee of $25 - $35 to run a credit check to see whether they meet your requirements. Call all of the references your top candidates listed, and ask careful questions regarding their treatment of property and ability to pay rent on time. Finally, choose the person to whom you want to rent your home.
   • You can conduct a more thorough background check and find out whether the person has a criminal record, etc.
   • Figure out what you think should disqualify people. For example, if someone was previously evicted, you might not want to rent to them.
4. Get a security deposit. The security deposit is often handed to the landlord upon a verbal agreement to rent the property. It usually amounts to one month's rent, or sometimes the first and last month's rent. When the tenant moves out, it can either be used to pay the last month's rent or be returned upon inspection of the home. Have the new tenant write you a check and make sure it clears before proceeding.
5. Sign a lease together. Set up a time to meet the tenant and sign the lease together. Have two copies of the lease printed out for you both to sign. Go over the provisions in the lease so you can make sure you each understand what is required of you. When both parties are satisfied, sign the lease, and keep one copy each.
   • You should meet at the rental property to sign the lease, rather than at a different location, so you can give the tenant keys to the house and he or she can make sure they work properly.
   • If you wish, have the tenant initial next to particulars you want to stress, like your "no smoking" policy, to make sure this doesn't become an issue later.

Fulfilling Your Role as a Landlord

1. Collect rent. Tell the tenant how you want to receive rent - by mail, in person, or via another method. Each month, accept the rent and deposit it in you account promptly. If necessary, enforce the penalty you laid out for late rent payments.
2. Be available to make repairs. Tell the tenant to text, email or call if something comes up and they need help dealing with it. If it's an emergency situation, be prepared to go to the house and deal with it right away. Otherwise, set up an appointment to come over when it's convenient for both you and the tenant.
   • Plumbing issues and other issues that could become dangerous if they aren't addressed right away fall into the "emergency situation" category.
   • Remember that you can call a contractor to handle situations outside your realm of expertise.
3. Keep up your end of the bargain. If the lease states that you're in charge of lawn maintenance, shoveling snow, and scheduling trash pickups, make sure you take care of your duties in a timely fashion. Keeping up good rapport with your tenants is beneficial to all involved.
4. Respect your tenants' privacy. You own the house, but they're considering it home now. Respect that, and don't enter the house without calling first and letting them know you're coming. Never go through your tenants' private possessions.
5. Know how to handle an eviction if it comes to that. The laws regarding when you can evict a tenant vary from state to state. In any case, it's a good idea to get a lawyer involved so you use the correct process and obey the law to a T. Tenant/landlord conflicts can end up being extremely costly, so it's important to do everything you can to choose good tenants in the first place.

Sample Rental Documents

These documents will give you a good idea of the information tenants should provide when renting from you. Doc:Rental Application,Lease,Property Inspection Checklist

Tips

• Landlords have rights to protect themselves from unscrupulous renters. Know the fair housing laws for your state.
• A good book to help when you want to check into this endeavor would be "Property Management for Dummies." You may run across others if you do your research on the subject.
• There are many attorneys that can advise on rental law and the preparation of lease agreements.

Warnings

• Check out applicant references to protect yourself.
• Make sure you figure your monetary needs correctly. Once the contract is signed, you will be unable to increase the rent, even if you are spending more on the house than you receive.
• There are legal rules and regulations of which you need to be aware in order to protect yourself as a landowner. The book mentioned in the tips section will also help here.

Related Articles

• Evict a Commercial Tenant in California

Sources and Citations

See also

• Check a Background for a Tenant
• Evict a Tenant in Texas
• Turn Your Home or Condo Into a Vacation Rental
• Evict a Residential Tenant in Ohio
• Be Aware of Hidden Costs for a First Time Renter
• Find a House to Rent That Allows Pets
• Be a Good Apartment Neighbor
• Prorate Rent
• Rent a Room in Your House
• Rent an Apartment

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