Are you thinking about renting your house for the first time? Maybe you may decide, downsizing, or still decide whether to sell your home and whether to rent it. Whatever your reason, learning how to rent a house can feel like a big job, but it doesn’t have to be overwhelming.
From setting the right rent pricing, to creating a solid lease agreement and protecting your property, we’ll explain the key steps in this Redfin article. Whether you’re listing a condo to rent in Phoenix or a condominium to rent in Dallas, here’s what you need to know before handing over your keys:
1. Start with the Financial Game Plan
Take a closer look at your budget before renting your home. Can you cover mortgages, property taxes, landlord insurance, unexpected repairs and still make a profit? Adds recurring costs such as maintenance, updates, and possible availability. Next, compare it with your local rental fee and make sure it’s worth it. If numbers don’t work, rentals may not be the best move right now.
“The best advice I can give is to do the numbers and get a sense of the potential benefits,” says Dave Meyer, Head of Real Estate Investment at BiggerPockets, a real estate investment platform that provides education, support and networking. Many people assume that the cash element of it is the only thing to consider, but as a real estate investor, you should try your overall financial gains before you decide which is better for you. ”
Pro tips from biggerPockets: Be sure to explain ongoing costs such as repairs, regular maintenance, potential vacancy, and costs of cleaning or updating units between tenants. These costs can be commonly overlooked by first-time landlords.
2. Determine who manages the properties
As a property owner, whether you or a professional real estate manager, you need to determine who will handle ongoing maintenance and emergency repairs. If you live in town or simply prefer a handoff approach, hiring a local real estate manager will make your tenants available immediately when problems arise. No matter who is in charge, create a clear plan for regular maintenance scheduling, how to notify your tenants of notifications, and a process to deal with emergency repair requests.
3. Check your rental property insurance
You probably already have home insurance and additional flood or fire insurance, depending on where you live. However, you can also consider getting landlord insurance (also known as rental property insurance). This insurance typically covers property damage, liability coverage, loss of rental income, and personal property protection. Rental property insurance does not cover tenants’ belongings, so we also recommend that you require your tenant to take out rental insurance.
4. Set competitive rent
One of the biggest questions you may have when learning how to rent a house is, “How much is the rent?” We will investigate comparable property in your area and make your own costs a factor. Rental fees also need to cover the costs, but they are competitive enough to attract tenants. Don’t forget – some cities have rent control laws, so check local regulations before setting prices.
“Connecting with other real estate managers will give you valuable insight into typical rental rates in your area and help you set a competitive price. You can also ask friends and family who rent what they’re paying and what they expect from that price.” – Dave Meyer from BiggerPockets
5. Learn the laws of local landlords and tenants
Before renting your home, make sure you are familiar with all applicable local and state rental laws. Landlord and tenant laws determine everything from whether you enter your property, how much security deposits you can collect before you raise rent, to how much notifications you need to give. Remember that there is a tenant’s right that cannot be infringed.
They also need to follow the Fair Housing Act. This means that you cannot reject a tenant application based on race, color, age, gender, religion, national origin, family status, or physical or mental disability. Local and state laws may also protect other groups. If you are unsure of these laws, you can consult with your attorney or the Department of Housing and Urban Development (HUD).
6. Draft lease agreements to rent a house
There are many basic lease agreements that can be used as templates. However, you also need to consider what additional policies to include. Think about it:
Do you allow pets? Do you charge a pet deposit or monthly fee? Does your community have HOAs? Who will pay the HOA fee? What is your policy of breaking slow rents and leases early?
There are many landlord resources to help you decide what to include. Please remember that the lease agreement is a legally binding document agreed by the parties. Make sure that both you and your tenant sign it and always keep a copy in a file.
7. Selling a house to rent
Renting your home is just as important as if you were selling your home. Great photos, catchy list descriptions, and a list of popular rental platforms are important. Emphasise what makes your home special: fenced gardens, updated kitchens, laundry units, or proximity to public transport.
Listing your home for renting your home online is a great way to reach a large audience of potential tenants. This allows them to schedule time to view your property, look at photos and see your property. In many cases, you can also accept rental applications on the same platform as renting your home.
8. Screen potential tenants and view properties
There are several ways you can screen potential tenants before offering a lease agreement. Future tenants will want to tour their property. You can also screen your tenants through the application process.
The tenant will submit an application. This could include an application fee of between $30 and $150, which is usually available. This could indicate that the applicant is seriously considering your property. Ask your Social Security Number to perform a credit check. You can see the gaps in your credit history when you request a credit check from one of the three major credit agencies (Equifax, Experian, Transunion). Seek or Ask a Past Address: You can find additional information about your future tenant by talking to references such as your employer or past real estate manager. Did they pay rent on time? Are they consistently employed? Check if you are employed. Seeking whether tenants have consistent employment and are able to make monthly payments will help them see if they can show they will pay their rent on time.
There are many reasons why you can’t refuse a tenant application, so make sure you follow fair housing guidelines. If your tenant is not suitable for your property, find something you can include in your rental application.
9. Sign the lease agreement
Once you find your ideal tenant, the next step is to offer a lease agreement you will sign. As mentioned above, a lease agreement is a legally binding document that both you and your tenant must comply with. include:
Responsibility for maintenance of rental amount and late fees lease period
10. Collect security deposits
As part of the lease agreement, you must collect a security deposit. This amount usually equals a month’s rent, but can be higher or lower depending on the situation. You may use your security deposit to cover damage to your property, unpaid utilities, or any other violations of your rental, tax, or lease agreement.
Keep it in a different account and prepare to return the deduction once the tenant moves. If you are unsure about the deposit and claim amount, you can talk to an attorney.
11. Change locks before tenants move
This is often overlooked, but it is very important. Change the lock and garage code before the new tenant moves. Who knows who still has a copy of the old key.
12. Set up a occupancy inspection
Before the tenants enter, they will do a walkthrough together to document the status of the property. Use the checklist to take photos and have both parties sign off. This will protect both you in the event of damage and reduce security deposit disputes when travel time comes.
13. Collect monthly rental payments
The final step is to start collecting monthly rental payments. You can choose to have your tenant pay the rent for last month in advance, but this is up to you. Whether they were check officials or collecting rent through an online payment system, they officially rented the house.
The final step is to start collecting monthly rental payments. You can choose to have your tenant pay the rent for last month in advance, but this is up to you. Whether they were check officials or collecting rent through an online payment system, they officially rented the house.
14. Know when and how to kick your tenants out
No one wants to drive a tenant out, but sometimes that’s the only option. If you are learning how to rent a house, it is important to know what situations could lead to eviction. Some of the most common reasons are:
Tenants are involved in illegal activities against your property Safety risks for you, your neighbors, or other tenants have consistently broken the terms of the lease where they pay rent late or stopped paying it altogether, and they have caused serious damage to the home.
Before moving forward, double check your lease to ensure there was a violation. Most lease agreements outline the eviction process step by step. Also make sure you’re speeding up state landowners and tenants laws. It’s wise to talk to a local lawyer, so stay on the right side of the law and avoid costly mistakes.
Learning how to rent a house requires a plan, but it pays off
Learning how to rent a house doesn’t just mean giving the keys. That means preparing financially and finding the right tenant according to legal requirements. He spent time creating solid plans, drafting strong leases and protecting his property, and achieving long-term success as a first-time landlord. Whether you rent a house temporarily or invest in the long term, these steps will help you do it with confidence and legality.
FAQ on how to rent a house
What is the first step to renting a house?
The first step is to create a financial plan to ensure that your rental is profitable. Consider mortgage payments, property taxes, insurance, maintenance, and potential vacancies.
Do I need special insurance to rent my house?
yes. Consider landlord insurance that provides coverage for liability, property damage, and loss of rental income. Please also require your tenant to take out tenant insurance.
How can I legally screen my tenants?
Use consistent screening criteria for all applicants. Perform credit and background checks, confirm employment, and call references. Always follow the Fair Housing Act to avoid discrimination.
Can I still rent a house if I have a mortgage?
yes. However, please check your mortgage agreement for rental restrictions. Some lenders or HOAs may require notice or approval.
How much rent do I need to charge?
We will investigate similar characteristics of your area to determine competitive rental rates. Consider your costs and check the rental laws in your city.
