Learning how to rent out your house can help you generate rental income and maximize your earning potential in the real estate field. While renting out your house can be a lucrative venture, you shouldn’t jump into it without a plan. Below, we provide a list of steps that can help you start renting your rental property successfully.
How to Rent Your House Out in 12 Steps
- Step 1 - Assess Your Situation
- Step 2 - Set Your Budget
- Step 3 - Acquire Rental Property Insurance
- Step 4 - Decide the Rent Amount
- Step 5 - Research Housing Laws
- Step 6 - Write a Lease Agreement
- Step 7 - Prepare Your Home for Viewing
- Step 8 - Document the Rental Space
- Step 9 - List Your Rental Property
- Step 10 - Screen Tenants
- Step 11 - Select a Tenant
- Step 12 - Perform Regular Inspections and Maintenance
- Frequently Asked Questions
How to Rent Your House Out in 12 Steps
Getting ready to rent out your house is a detailed process, as you have to familiarize yourself with the financial and legal requirements and find the perfect tenant. Follow these steps so you can successfully rent to a tenant:
Step 1 – Assess Your Situation
First, you’ll need to answer questions about your current situation and the property you’ll be renting.
Do you already own the property you plan to rent, or do you need to purchase it? If you want to buy a house to rent out, your timeline and costs will run significantly longer and higher than if you were to rent out a property you already own.
Are you renting out a single room, a duplex, a family unit, an apartment, or an entire house? This decision will affect your renovation budget, if applicable, and potential profitability.
Lastly, do you plan to rent out the space short-term or long-term? While both are potentially profitable, pros and cons exist for either option.
The pros and cons of short-term and long-term rentals include the following:
Pros of Short-Term Rentals
- You can use the property for yourself more easily and spontaneously.
- It will likely require fewer repairs due to less wear and tear from fewer, inconsistent occupants.
- You can change your rental rate based on seasonal, daily, or weekly demand.
Cons of Short-Term Rentals
Pros of Long-Term Rentals
- You can count on consistent income coming in during the duration of the lease.
- The tenant usually pays for utility costs, freeing you from that financial burden.
- If you find a good tenant who pays rent on time and doesn’t cause any problems, you can keep the same tenant for a long time.
- You will only have to clean the property after the tenant moves out.
Cons of Long-Term Rentals
Step 2 – Set Your Budget
If you want to buy a house and rent it out, you’ll first have to set your budget and secure a loan if necessary. Two options for mortgages on a rental property include:
- Conventional loans: Conventional loans work well for residential rental properties. However, they’re not typically secured by a government entity. This kind of loan also usually requires higher down payments, credit score requirements, and mortgage rates if you’re using it to acquire a second home for rental purposes  .
- Second mortgages: With this kind of loan, you borrow against your first home to acquire the necessary funds to finance your second home to rent out  .
Regardless of whether you already own property to rent out, set aside money for:
- Large-scale renovations (if needed)
- Maintenance and repairs
- Homeowner’s association (HOA) fees
- Marketing fees for initial and ongoing advertising
To prepare for any problems, also have an emergency fund and set aside a portion of the monthly rental income to go toward expenses.
Step 3 – Acquire Rental Property Insurance
Protect yourself and your investment by acquiring insurance with enough coverage for rental accidents and damage. Even if you’re just renting out a single room in your existing house, you’ll want to add more liability protection to your existing insurance plan.
Talk with an insurance agent and tell them the specifics of your situation and property. They will advise on what type and how much insurance you’ll need to operate with peace of mind.
Landlord insurance typically costs about 25% more than homeowners insurance  . It covers:
- Damage to the house from perils like natural disasters
- Damage to other structures on the property, like sheds
- Liability and medical protection if a tenant gets injured in the home
- Loss of rental income if damage prevents renting it out
- Any personal property you leave on the premises, like a lawn mower
Consider getting add-ons for other scenarios like burglary or vandalism to extend your protection further. You should also urge tenants to buy renters insurance to protect their personal property once they move in.
Step 4 – Decide the Rent Amount
Charging the appropriate amount of rent is essential. It helps you
- Cover your mortgage and other home expenses
- Fill your rental with the right tenants
- Receive timely rent payments
- Maximize profits
To determine the right amount to charge for rent, first research what other properties in your area are going for. Try to find properties that are as similar to yours as possible for an accurate comparison.
You may also have heard of the 2% rule, which tells landlords that monthly rent should amount to one or two percent of your property’s total value. You can quickly estimate this as a starting guideline. However, do not adhere hard and fast to this rule if nearby comparable rental houses typically charge a different amount.
Most importantly, ensure the profitability of your rental investment. Factor in all your expenses and leave a little bit of wiggle room for unexpected costs so you can still make a profit. Also, consider seasonality and changing demand, especially if you’re accepting short-term renters.
Step 5 – Research Housing Laws
Various laws govern the tenant and landlord relationship on local, state, and federal levels. Rules for renting out a house cover topics like housing safety and discrimination to ensure fairness and avoid danger throughout the rental process. The Fair Housing Act is a federal law applicable to all landlords  , and it protects people looking to rent a home from discrimination based on various factors:
- Familial status
- Sex (gender identity and sexual orientation)
- National origin
Most areas also have an implied warranty of habitability, requiring a landlord to keep their property habitable or livable. If a property is deemed unsafe or unliveable according to the area’s specific building codes, a renter may legally stop paying rent until the situation is fixed.
Other topics you should research in your state laws include:
- Required licenses to be a landlord
- Building codes for renter health and safety
- Rent control
- Required rent payment grace periods
- Security deposit requirements
- Questions you can’t legally ask a rental applicant
- Required disclosures
- Notice of entry laws
- Rental property repair laws
- Eviction laws
Step 6 – Write a Lease Agreement
Lease agreements cover all the necessary terms for both you and your tenants to follow for successful rental relationships. A lease agreement template can serve as a starting point for writing a contract that limits your liability and covers all your bases.
Outline all the specific expectations you have so you and the renter can start on the same page. Answer questions like:
- How much will the monthly rent cost? How much are late fees, if any, and when are they charged?
- Can the tenant break the lease early?
- Which utilities are the tenant responsible for acquiring and paying? Which, if any, will you cover?
- Can the tenant make modifications to the home?
- Can the tenant have pets? If so, is there a pet deposit or any pet fees?
- What is the process for requesting a repair from you?
- Is the tenant responsible for outside yard maintenance?
- What does the tenant need to do to get their security deposit back after moving out?
Step 7 – Prepare Your Home for Viewing
At the outset, consider upgrading certain elements, such as fixtures, lighting, and flooring, to increase the property’s value. Even small changes can take your rental listing from seeming a little outdated or dingy to appearing higher-quality and polished.
Conduct a deep cleaning of the full unit prior to showing it for the first time, and continue to spot clean before each showing.
Lastly, stage the unit with nice appliances and decorations before you post it as available. Renters want nice, easy-to-use appliances that they can verify are in working condition prior to moving in. Newer appliances, stylish furniture, and updated decor will not only appeal better to potential renters viewing the space in person but will also make your space show better in online photos.
Step 8 – Document the Rental Space
You will want to gather all relevant information about your space before renting it. Make sure you know the square footage of the property and each room before listing so you can answer potential tenants’ questions about the space.
List and take pictures of any existing damage so you know what was there before renters arrived. You should also ask your renters to document any pre-existing damage in a walkthrough shortly before or after moving in.
After the rental period is over, you may need to keep the tenant’s security deposit, depending on if there’s new damage present. Having thorough documentation of prior damage and clear photos from before renting the space out to compare against will make this process much easier.
Step 9 – List Your Rental Property
Use rental sites to get as many eyes on your rental property as possible. Make sure you’re listing only on relevant websites for your particular unit. For example, post on sites like AirBnB or VRBO for short-term rentals and sites like Zillow or Realtor.com for long-term rentals.
Use high-quality photos and clear descriptions so people understand the space they’re renting. Make sure to show your property in its best light with staged furniture and decor, optimal lighting, and good angles. However, never try to mislead potential renters. They’ll find out about any attempted deception as soon as they visit the property, and you’ll lose trust and receive bad reviews.
Step 10 – Screen Tenants
Screening tenants ensures you’re renting out to the right people who will pay rent on time and not cause intentional damage to the unit. With a rental application, you will be able to collect the appropriate information to help you determine whether a renter will be a good fit. This information includes:
- Rental history (records of other places they’ve lived and paid rent)
- Employment records and proof of income
- Authorization for a criminal background check
- Authorization for a credit check
- References you can contact to learn about the tenant
Using a rental application can help you collect pertinent information and find the right prospective tenants for your home.
Step 11 – Select a Tenant
Carefully evaluate all the information gathered from the rental applications and your overall impression of the applicants to select a tenant. Choose a tenant that you think will be likely to pay rent on time and cause the least overall issues.
Once you’ve selected your tenant, send them the lease agreement you created earlier. Have them carefully review the agreement, and make yourself available to answer any questions they might have. After both you and the tenant sign the agreement, it becomes legally binding.
Inform your new tenant of possible move-in dates and keep in contact with them leading up to move-in day. Great communication throughout this process can start off the tenant-landlord relationship on a positive note.
Step 12 – Perform Regular Inspections and Maintenance
Ensuring your property remains safe and habitable is a key part of your duties as a landlord. Inspections are usually done seasonally, quarterly, or yearly. The details of when and how often inspections will occur should be covered in the lease agreement and follow all relevant laws for your area.
You may choose to do all repairs and maintenance yourself, or you may hire a property management company to do these tasks for you.
In summary, the process to rent out property includes:
- Acquiring or assessing your rental space
- Budgeting for all expenses
- Acquiring the proper landlord insurance
- Setting a fair yet profitable amount for rent
- Familiarizing yourself with all relevant housing and rental laws
- Writing a rental lease agreement
- Cleaning and staging the property for showings
- Documenting any pre-existing damage
- Listing the unit on rental sites
- Screening tenants through rental applications
- Choosing a tenant
- Performing ongoing maintenance and repairs via a property manager
By completing all of these steps, you can provide a high-quality rental unit, attract and choose a good tenant, and maximize profitability.
Frequently Asked Questions
How long does it take to rent out a house?
The amount of time it takes to rent out a house depends on various factors, including:
- Safety/condition of the property
- Recent renovations
- Flexibility of the lease terms
In a favorable situation, a listing may last about 30 to 60 days on the rental market. Sometimes, it may take much longer to rent out a house.
Is there a maximum I can charge for rent?
Yes, if rent control exists in your area. Check your state and local laws for area-specific information.
Even in areas without rent control, the market rate can affect the amount you charge. People will only pay as much as what the other homes of similar size and quality are going for in the area.
What are some red flags I should look for when I’m screening tenants for my rental home?
When screening potential candidates, you should look out for:
- Bad credit
- Not enough taxable income to cover rent consistently
- Criminal history
- Many convictions or violent convictions
- Prior evictions
- Negative feedback from references
- Only listing friends or family members as references
- Inability to provide the full security deposit before moving in
- Failure to pay taxes
- Frequent job changes
How profitable is it to own a rental home?
Potential profitability in the rental business varies greatly depending on the specific property, its location, and how attractive it is to renters. Ensuring the profitability of your rental property starts with a thorough evaluation of the property itself, any necessary renovations or foreseen future repairs, and how much similar properties in the area are rented out for.
As long as you properly estimate and budget for all expenses and set rent above that amount, your investment should be lucrative. Consulting with an accountant or local real estate experts ahead of time can help.