I want to rent out my house. Where do I start?
You want to rent out your own house. You aren’t alone! Many people dive into the role of the landlord after deciding that renting out their own house is a better option than selling their property.
- You might be waiting for an improved seller’s market.
- You may be facing temporary relocation of work to another city.
- You might owe more on the home than it is worth.
- You may be seeking additional income to pay for the mortgage.
Whatever your circumstances are for renting out your own house, you may not be able to avoid every hassle, but you can successfully launch your rental journey with basic beginner’s knowledge. So, where do you start? Start with our step-by-step guide, beginning with knowing your realm of responsibility as a landlord.
The Landlord’s Realm of Responsibility
Renting your home out has its benefits, such as, the additional income that covers bills and hopefully creates a profit, as well as some tax benefits when you convert the home from your main residence to rental property. But rental property comes with a new level of responsibility.
Before you rent out your house, determine if you can or want to take on the responsibilities of being a landlord. Ask yourself:
- Who will collect rent?
- Can I afford additional property insurance?
- Who will monitor the condition of the home?
- Will I be able to stay on top of repairs and maintenance?
- Who will find a good tenant?
- Who will handle evictions?
Preparing Your House
You may love your home and believe it can be rented out “as is,” but typically we don’t see the full picture until we look at the house through the lens of a property manager or potential tenant.
You want your renters to follow good housekeeping standards, so you want the home to be impeccably clean before tenants move in. Perhaps you need to do more than spring cleaning inside your home to get to that point. You don’t have to go it alone. Hire a cleaning service to get that professional touch.
Look beyond cleanliness. Are all your appliances in good working condition? Are your heating and air conditioning units in tip-top shape? Is the home up to code with major safety points such as wiring, smoke alarms, and is there a chance that your home contains lead-based paint? Get familiar with your state and local rental property regulations.
Check out Property Codes in the State of Texas: Did you know residential structures in the state of Texas containing both sleeping areas and gas or fuel-burning appliances must have carbon monoxide alarms installed and they must be properly maintained?
Finally, take a good look at the rental market in your home’s area. What do you need to do to your home to make it appealing and rentable?
Pricing Your Rental
Comparison is crucial to putting a price tag on the monthly rent. You may already have an amount in mind but remember that you’re up against stiff competition in the rental market. Compare your home to other properties in your local community that are similar in size and amenities.
You’ll want to make a profit, of course, so consider what your costs are for the mortgage, insurance, pest prevention, building maintenance and repair, insurance, taxes, as well as utilities, yard maintenance, and trash removal fees. Also, consider your own travel expenses if you plan to manage the property yourself.
Key to pricing your rental, renters scout for the best deals when shopping for rental homes. Be prepared to highlight the most valuable and desirable aspects of your home so you can leverage competitive pricing in the rental market.
Draw up a Lease
One of the messiest parts of renting out property is the drawing up of a lease. You don’t want to be on the short end of the stick if you end up in court with a tenant. Protect your rights with a well-written lease.
You can download and print a lease but know that print-and-play leases generally do not cover all the legal ins and out. Hire a real-estate attorney to write up or review your lease and familiarize yourself with what you must include in a rental lease.
You want to attract the best potential tenants as quickly as possible, so you’ll want to use the most attractive and common means of advertising.
- Newspapers: Check with your local newspaper for online and in-print listings. Also, pick up a local “trade” newspaper. These popular in-print publications are free to the public and they offer low-cost listings.
- Craigslist.org: Craigslist is growing in popularity for those that want to list their properties with no advertising costs. Craigslist’s mobile-ready convenience is a plus in the rental market.
- Physical Signs: Yard signs are effective, but the drawback is an open advertisement of vacancy to anyone that passes by. To counterbalance this, consider including “available soon” verbiage on yard or street signs.
Advertising Tips: Create listings by starting with the best feature of your home. What differentiates your rental from the competition? List the basics: rental price, number of bedrooms and bathrooms, the neighborhood, and consider listing what is located nearby. Include the most pertinent information in the headline: $ month rent – # of beds/# of baths apartment/house/condo/duplex in XXX neighborhood. If you have room in the headline, finish with a great feature of the rental, ex: “in a country setting” or “with a skyline view.”
Screen Your Tenants
Before showing your property to prospective tenants, save yourself a headache by pre-screening over the phone. This gives you the opportunity to determine if the caller meets the basic criteria you’ve set, such as:
- Monthly income must equal approximately three times or more the monthly rent.
- Must have an acceptable credit history.
- Must be employed and must be able to provide proof of income.
- Must have good references from prior landlords for timely rental payments, good housekeeping, and property maintenance.
- Applicant must meet occupancy limits per state and local law.
Texas Occupancy Tip: Texas law generally gives a landlord the ability to set occupancy to three adults (persons over 18) for each bedroom of the dwelling. As a landlord, you may permit occupancy of only one or two adults per bedroom in your rental home. Consistency is key to avoid legal suits, so state your occupancy limits in writing on the lease application and the lease contract.
When screening prospective renters, you may follow a script that you have prepared, but make sure you know what you can and cannot legally ask a potential tenant.
Showing Your Property
Once you’ve pre-screened over the phone, begin showing the property to your tenants.
Did you know that 50% of potential tenants end up being no-call-no-show for appointments? To avoid this costly misuse of your time and travel:
- Give the property address to callers so they can drive by and then require them to get back with you to set up an appointment to see inside the home.
- Schedule the showing with several prospective tenants at once. Set a time frame when you will be available, such as 5:00 to 5:30 on Thursday, and be clear that they must show up then if they want to rent the home. Not only does this save you time, but it also creates an atmosphere of urgency which typically results in more applications.
Bring in the Professionals
Before we wrap up this discussion, we’ll repeat the words you don’t have to do this alone.
Perhaps the time it takes to be a landlord is not on your side. Or, perhaps you don’t want to deal with the hassles yourself.
Hire a property manager. If your desire is to keep your home occupied, in good repair, and you don’t have the time to manage tasks like collecting rent, a property management team with professional solutions is well-worth your investment.
Property managers are especially useful tools for people that are renting out their houses and have no prior landlord experience, as well as those that are busy working away from home, or for home-owners that do not reside near the rental property.