Rental rates are on the rise by more than 31% across the U.S. with 35% of all Americans living in rental properties. While you may welcome that rental income, you may not be sure how to start with your rental adventure. In order to rent your home, you should be aware of the various aspects of property management, whether you take on the responsibilities yourself or hire a full-service property management service.
In this complete guide to renting your home, you'll learn the nuts and bolts of how to rent your home, with pointers on the best way to make repairs, how to market and list your property, and how to determine a sustainable rental price point for your market. You'll also learn the best way to show your property, how to screen your tenants, how you can collect payments, and how to maintain your rental property.
Before you list or advertise your property for rent, you need to make all the needed repairs. Depending on how long the property has been sitting vacant and how well the property was maintained by the previous tenant or owner, you may have a range of repairs to do. You'll also need to make sure the rental property is clean, well-landscaped, and ready for move-in as you rent your home.
Making your property as attractive as possible to prospective tenants is helpful no matter the market conditions. Simple repairs like paint, cleaning carpets and changing out lightbulbs to match within a fixture can go a long way to standing out against the competition
Beyond the cosmetic details, it's to your benefit to ensure your rental home is up to code and safe. It's easy to check on the building codes for your states, and it's likely you have nothing to worry about. If you've just bought the property or you're just renting it out for the first time, it's worth doing your due diligence to make sure the property meets all the minimum safety standards for sanitation, ventilation, electrical, and fire.
If you're still not sure, you can contact a local contractor or building department to find out about free inspection services. If your property does not comply, you could face fines and repair costs down the road. It's better to know upfront what you're facing before you rent out the property, since potential problems could affect your rental income.
Once your rental property is ready to go, your next task is to market and list it. Look at the key features that will attract the right tenants in your area. For example, does the property have hardwood flooring? Does it come with a washer, dryer, and stove? What's the square footage? Does it have a backyard? Will you be allowing the prospective tenant to have pets? Those factors will affect your rental income, but key features will also make it easier to rent your home.
Your area's key features may differ from what you would highlight in a rental property in Florida or New York. These variables come into play as you market your rental property and list it for rent. You'll also need to consider all these features when you determine the rental price. A property management company can help you determine the best way to market and list your property so you can gain the rental income you're looking for as you rent your home.
Hopefully, there's not a lot that will or could go wrong with your rental property, but you should still know the law. Make sure you have a good understanding of state laws regarding tenants, as well as zoning laws and federal laws. As just one example, you're required to disclose lead-based paint hazards to your tenants.
The Fair Housing Act prohibits discrimination based on religion, race, color, national origin, sex, age, disability, or familial status. Just because it sounds innocuous or even truthful doesn't mean it's legal to put in your advertisement. So, if you add a line in your listing about the property being perfect for a "single renter," that could be construed as being discriminatory against families.
You should seek out and read landlord laws before you rent out your house. Know your legal obligations and responsibilities, and be prepared to fulfill them. If you have any questions, you can consult with a real estate lawyer to better understand what your rights and responsibilities are. A property management company can also help you understand your rights and responsibilities as a landlord as you rent your home to a tenant.
Even in the best-case scenarios, you could experience losses with your property. So, be prepared to get the insurance that covers at least basic liability and property protection. Your property insurance will protect you in case there's a windstorm or fire that damages the property and affects your overall rental income.
You should also consider liability coverage in case your tenant or a tenant's guest gets injured while on your property. Liability coverage could cover medical bills if your tenant falls down the stairs and you are found at fault because of a faulty railing. A property management company can help you determine the insurance coverage you need as you rent your home.
In some cases, you can determine your rental range by researching the rent in your local area. Based on the location, when the property was built, the size of your rental property (plus the lot), the number of bedrooms and bathrooms, the amenities, and the characteristics, you can get an estimate of what you could charge for rent to achieve the rental income you need.
As a next step, look at the value of the property. Then, estimate that the rent will be somewhere between 0.8% and 1.1% of the property's value. So, for a house valued at $300,000, you might start the rent at $2,400. As a landlord, you could also decide to list the property for $3,000/month or higher and then make concessions for renters who are "perfect" tenants.
Did you know that homes listed for sale on a Thursday typically sells for more (and faster) than homes listed on any other day of the week?
A property management company can help you determine the right rental pricing for your area, based on their experience, but they'll also keep in mind the rental income you're looking for as you rent your home. Use a company like Doorstead to get a free rental estimate for your property.
Depending on the property and the rental price, you may show the property empty or staged for viewing. In either case, make sure the property is clean and ready for immediate move-in. Your prospective tenants should get a good sense of what it will be like to live there. Make the house feel welcoming, with a comfortable temperature maintained throughout the house and ample lighting.
When you show the house, keep track of red flags from your potential tenants as they view the property. For example, listen for casual conversations where they're asking about pets in a "no pets" advertised property, they're asking about subletting, or they ask what the penalty is for late or missed rental payments.
Showing the home is a good opportunity for you to meet prospective tenants and gauge which ones appear to be interested and even a good option. A property management company can help you show your property to the right tenants to achieve your desired rental income.
For more tips on getting your property ready and up to speed for showing, check out this Home Selling (and Buying) Checklist from Hireahelper.com.
Pre-screening is easier than ever before, with 58% of tenants preferring to apply for rental properties online. While the online application process makes the process quick and easy, you need a way to reliably screen applicants. Most landlords use credit history, work history, or even a background check to determine whether a tenant is a "safe" risk. In most cases, you'll request:
The Fair Housing Act and the Fair Credit Reporting Act require you to get permission before you run a credit check. You're also required to disclose which credit agency you used (Equifax, Experian, or TransUnion) and whether the report affected your decision to reject their application. You can use a variety of online services (Experian Connect, Lease Runner, RentPrep, and SmartMove) to screen potential tenants. A property management company can also help you screen potential tenants.
A rental lease can be a simple, uncomplicated one-or-two sheet document, which lists the property address, the name and details of the renters, and the rights and responsibilities they must agree to. Of course, your rental lease could also be a 40-page document listing all the do's and don'ts involved in renting and remaining compliant with your rules for the property rental.
Your agreement can be as comprehensive or simplistic as you want it to be, and there are thousands of great templates you can choose from as you write it up. Even if you're not at this stage right now, you should at least consider some of the possible clauses you'll include related to maintenance of the property, pet ownership, changes to the property (paint, drilling holes, constructions, built-in features, etc.), parking information, or even visitors.
As you determine what to include in your rental lease, make sure you follow state and federal laws. Also, make sure you include the basics about the property itself, the tenants, the security deposit, responsibilities for utilities, and the cost of the rent. You can also include the penalties for late rent and any circumstances that might lead to the immediate termination of the lease.
In California, there is a standard lease document that’s used by many landlords. You can review templates for possible use for your own rental property. You need to ensure that you include certain clauses in your lease agreement, but you also need to make sure you comply with landlord-tenant laws.
Remember, your rental lease is a legal document. If you leave huge loopholes, you may later regret the fact that you have no right to request recompense later. Even if you already have insurance in place, you can also include the requirement for renter's insurance as part of the rental agreement. A property management company can help you write up a rental lease with all the key features and considerations you should include.
Collecting rent may be the last thing you want to think about, but it's an essential consideration as you rent your home. You have a few different options to recover your rental income:
For a variety of reasons, you may prefer online payment options to minimize how the process will affect your rental income. If there are other reasons the online options no longer work, you can discuss alternative methods with your tenants. Your goal is to process the rental payment as quickly as possible with the least amount of hassle and frustration for you and your tenant. A property management company can help you determine the best way to collect rent. In fact, they may even handle this aspect for you, which minimizes the hassle as you rent your home.
The requirements for conducting repairs and maintenance may vary depending on where you live and where the property is located. You are not required to repair damages that were caused by the tenant, their guests, and pets. In some cases, the cause of the damages may be somewhat murky or contentious.
Regardless, you are required to ensure that your rental property complies with state and local building codes. That's part of why it's important to have a good understanding of the current compliance when you rent the property. It's your responsibility to ensure the property has hot-and-cold running water, functional plumbing, a heater for cold weather, fire exits and smoke detectors for safety, and deadbolts.
The tenant must give you a reasonable amount of time to complete the repair, which may be 30 days, but could be a shorter period of time in cases of emergencies. If you don't complete the repairs in a reasonable amount of time, your tenant can hire someone to complete the repairs or make the repairs themselves and deduct the cost of repairs from the rent.
Landlord laws and compliance requirements often vary by state and local area, so you should research how those laws and restrictions might affect your particular rental property. Consult with a real estate attorney if you ever have questions about your legal rights and responsibilities when you rent your property. A property management company can help you determine the best way to conduct repairs and maintenance. In many cases, they already have a maintenance and repair team to resolve any issues right away as you rent your home.
If you decide you do not want to handle the whole rental process all by yourself, you may consider a property manager. The fee structure is typically ~5-12%, but a property manager may also save you time and money by streamlining the entire process.
A property manager may also offer services to support eviction, damage protection, or even a rental guarantee if you work with Doorstead. Property management fees are also tax-deductible, so you can get the help you need at the best possible pricing.
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