9-Step Guide to Renting Out Your Home
Summary of steps covered below:
Determine the rent
Prepare the property
Creating the listing
List the property for rent
Show the property
Applications and screening
Signing the lease and collecting rent
Move in
Congrats your property is rented
Many clients we work with are new investors moving from one home to another. They need to rent out their current residence to qualify for a loan on the next one. To save costs, many want to try self-management. If this sounds like you, we offer a detailed step-by-step guide to help you rent out your home on your own. While our focus is mainly on long-term rentals, we've also included additional information about midterm, short-term rentals, and renting by the room.
Determining the Rent
The first step in renting out your property is to estimate its rental value. Rental rates are variable and not fixed, changing based on supply and demand. There's no one-size-fits-all "perfect" rent amount; instead, it's influenced by factors like available homes in your area. While rental rates might change a bit each month, significant shifts are rare. If you set the rent too high, lack of applications will signal it's too much, prompting a reduction. On the flip side, a too-low rent can lead to an overwhelming number of applicants.
But how do you effectively ascertain the rent? If you're new to landlording, gauging the market might prove challenging. Fortunately, several approaches can aid you in this endeavor.
Compare Similar Properties: Utilize platforms like Facebook Marketplace, Zillow, Redfin, Rentometer, and Craigslist to examine rental prices of comparable homes. Ensure the properties you evaluate are comparable in size, location, and condition. Rentometer provides valuable historical rental data for your locale, aiding you in forming a preliminary rent estimate. Additionally, Zillow offers insights into application rates, inquiries, and listing duration for each rental.
Consult Local Property Managers: Property managers, generally well-versed in rental rates, can provide valuable input. Conduct online searches for property managers in your region, engage in conversations about your property, and glean information regarding comparable rentals and potential rent.
Seek Advice from Fellow Landlords: Engaging with local landlords can yield valuable insights into rental pricing strategies.
Preparing the Property for Rent
Rental properties vary in their readiness for occupancy. While it's important to provide a safe and clean living space for tenants, extensive upgrades might not always be financially prudent. While a more luxurious home generally commands higher rent, the cost-benefit analysis of upgrade cost to increased possible rent should guide your decision-making process. Here's a checklist for preparing your property for rent:
Thorough Cleaning: Commence by conducting a comprehensive deep clean encompassing floors, walls, windows, appliances, and surfaces. A pristine property creates a positive impression and entices potential tenants.
Repairs and Maintenance: Rectify any necessary repairs and maintenance tasks. Address leaks, replace damaged fixtures, mend structural impairments, and ensure utility functionality.
Safety Inspection: Perform a safety assessment to identify potential hazards. Install smoke and carbon monoxide detectors, enhance door and window security, and address safety concerns.
Fresh Paint: Consider a fresh coat of neutral-toned paint to enliven the space and amplify its allure.
Landscaping: If applicable, maintain the yard or outdoor area to enhance curb appeal.
Flooring Care: For carpeted spaces, consider professional cleaning. For other types of flooring, ensure cleanliness and upkeep.
Professional Cleaning: If needed, enlist professional cleaners to ensure an impeccable presentation.
Documentation of the property's condition is crucial at this stage, encompassing before and after tenant occupation.
Crafting a Compelling Rental Listing
Constructing an enticing yet accurate rental listing is pivotal. Overselling or misrepresenting the property can lead to discontent and disappointment among prospective tenants. Here are key elements to include in your listing:
Detailed Description: Present a comprehensive portrayal of the property, encompassing bedroom and bathroom count, square footage, amenities, and notable features. Highlight nearby attractions, schools, transportation, and shopping centers.
High-Quality Photos: Integrate well-lit, clear images from various angles to showcase the property's finest aspects. While professional photographs are ideal, clear self-taken photos suffice.
Optional Floor Plan: If available, a floor plan can enhance tenants' understanding of the property's layout.
Rental Terms: Clearly articulate monthly rent, security deposit, lease duration, start date, and additional fees (e.g., application fee, pet deposit).
Utilities and Amenities: Indicate which utilities are included in the rent (e.g., water, electricity, internet) and list any amenities available to tenants (e.g., pool, gym, parking space).
Pet Policy: Elaborate on your pet policy, outlining any restrictions, deposits, and limitations.
Contact Information: Provide your contact information (phone number and/or email) so potential tenants can reach out for inquiries or to schedule a viewing.
Optional Virtual Tour: If possible, supply a virtual tour link for remote exploration.
Listing the Property for Rent
With your listing ready, it's time to market. More visibility leads to more applicants, so consider advertising on the top three sites below at minimum.
Facebook Marketplace
Zillow
Apartments.com
Your personal Facebook page
Facebook rental groups in your area
Yard signage
Craigslist
Redfin
Trulia
Furnishedfinder.com (for short and midterm rentals)
Airbnb (for short and midterm rentals)
Roomies.com (for room-by-room rentals)
In case these platforms prove insufficient or ineffective for your area, a simple online search will reveal additional alternatives. Tools like RentRedi.com can broaden your rental's reach by listing it on multiple platforms simultaneously.
Conducting Property Showings
This step is occasionally interchangeable with application processing; however, many tenants prefer viewing the property beforehand. Creating a video tour is a wise move, as numerous tenants request virtual tours. Instead of repeated in-person showings, share the same video with all potential tenants. While most prefer in-person visits, you can organize individual or group showings. For individual appointments, ensure you follow up on the day to prevent last-minute cancellations. Group showings streamline the process and offer the convenience of simultaneous or sequential visits.
Taking Applications and Screening Tenants
Tenant screening is paramount to ensure a suitable occupant capable of timely rent payments and property care. Income verification, background checks, and reference evaluations are crucial. Rental platforms like Zillow, RentRedi, and Apartments.com facilitate tenant applications and screening, often at no cost. State-specific tenant screening criteria vary, and the following provides an example from Oregon property managers:
Monthly income equal to or exceeding three times the rent.
Government-issued photo ID.
No evictions within the last five years.
Absence of criminal history involving drugs, violence, or sexual offenses.
Favorable rental history with no overdue amounts.
Verifiable 24-month rental history.
If considering unqualified applicants, co-signers can supplement their application, commonly seen among students with limited rental history.
Signing the Lease, Collecting Deposits and Rent
Once an application is accepted, the lease-signing process begins. Simultaneously, collect a security deposit and initial month's rent. Platforms like RentRedi, Zillow, and Apartments.com allow you to collect rent online, and you can also obtain lease agreements from sites like the Oregon Rental Housing Association, Zillow, Biggerpockets.com, or Multifamilynw.org. These platforms facilitate application, screening, and rent collection in a single step. While the standard security deposit equals one month's rent, the amount can vary without a fixed standard.
Conducting a Move-In Inspection and Handing Over Keys
When your tenant moves in, provide them with the property keys. Make sure you have spare keys on hand because tenants often misplace them or emergencies might arise. During this time, walk through the property with the tenant and have them note any existing damages. This information will be useful when the tenant moves out, helping to address any damages they might have caused during their stay.
Your Property is Now Occupied
Congratulations, your property is now occupied and you are collecting rent. Once your property is occupied it is a good idea to complete an annual inspection to make sure your property is continually being taken care of.
Additional Considerations
Insurance - When you are moving out of a property you will want to contact your insurance agent and transfer your insurance policy from an owner occupied policy to a landlord policy. The cost of this is comparable to the insurance policy of an owner occupied home. It is also best practice to require renters insurance from your tenants. This is a minimal cost to your tenants, typically less than $10 per month and will protect you and them.
Utilities - If your tenants are paying utilities make sure you remove them from your name and provide tenants with the information to transfer them over to theirs. Decide if you will be paying for landscaping of the property or if that will be the tenants responsibility.
Repairs and maintenance - This is a common expense that many landlords forget about. Toilets leak and things break over time. Make sure you are budgeting a reasonable amount of the rent you are collecting for these items depending on the age, size, and condition of the home. We find this is typically between $50 to $300 per month
Tenants - The tenants are your customers. Make your rental an enjoyable experience for them and they are much more likely to make being a landlord an enjoyable experience for you.
Short term rentals, midterm rentals, and rent by the room - This article focuses on long term rentals but there are many other options for renting out a property. Midterm rentals are furnished homes that are rented out for shorter periods of time and typically a higher amount of rent per month. Rent by the room can be furnished or not and can be a great strategy to treat rooms for rent like individual properties. The content of this article will mostly apply to these strategies. Short term rentals are a whole nother story needing an article of their own.
Disclosures
The information presented in this article is for general informational purposes only and should not be considered legal or financial advice. The content is provided on an as-is basis, and while we strive to ensure its accuracy and relevance, we cannot guarantee that it is complete, current, or error-free. Readers are strongly advised to consult with qualified legal and financial professionals regarding their specific circumstances. Laws and regulations vary by jurisdiction and can change over time, so it is essential to seek professional guidance to address individual needs and concerns. The authors and publishers of this article disclaim any liability for actions taken based on the information provided herein. Readers are responsible for their own decisions and should conduct thorough research and seek professional advice when necessary. Always verify information from credible and reliable sources before making any legal or financial decisions.