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How to Rent Out Your House

Jamie Cattanach • June 14, 2024

A couple touring a home available for rent with a realtor.

Maybe you’ve recently upgraded to a larger house down the street or are off on a new adventure. Either way, renting out your house might be a worthwhile alternative to selling it.

Becoming a landlord can be an effective way to maintain your investment over the long run – and to start a passive income stream. Plus, many online tools make the process easier than ever. Here’s what you need to know about how to rent out your house.

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1. Research local landlord-tenant laws

One of the first steps to rent out your house: make sure you have all your ducks in a row, legally speaking. There are many laws governing the landlord-tenant relationship on the federal, state, and local levels. As a soon-to-be landlord, it’s your responsibility to be familiar with them all.

One major law to be aware of is the Fair Housing Act of 1968, which prohibits landlords from discriminating against tenants based on factors like race, religion, sex, and national origin.¹ A web search for “landlord-tenant laws in [your city]” can be a helpful starting point, but if you have any questions, consider working with a lawyer.

2. Set a competitive rent price

Once you’re feeling confident about your prowess and legal know-how as a potential landlord, it’s time to figure out your price point.

One of the best ways to understand the rental market in your area is to research similar rental homes. Check out rental listings in your city: What do homes of similar size, quality, and walkability rent for? This is an illuminating benchmark to help ensure you price your property at a rate that will move – but not one that cuts into your potential profit.

Setting a price that works for you

If you’re still paying a mortgage on the property, you’ll ideally want your rental price to cover the payment, but depending on market factors, that may or may not be possible.

Keep in mind, too, that rental prices tend to increase each year, so you may likely want to reassess your rate if you continue to rent your home. Rent increase laws may apply in your area, however, so be sure to keep yourself apprised of those restrictions.

3. Advertise your property with a rental listing

Next, you’ll need to get the word out about your shiny new listing. If renters don’t know your home is available, they won’t be able to lease it.

You can always go the old-school route and put a “For Rent” sign up on the front lawn with a contact phone number. But these days, many think the best way to rent a house is by advertising online, which significantly expands your potential audience.

Digital listing platforms, like Zillow and Craigslist, often allow potential tenants to filter their search results based on home size, price, pet-friendliness, and other factors. This can make it easier to match you with tenants looking for exactly what you have to offer.

4. Screen all prospective tenants

Once prospective tenants are interested in your property, one of the most important requirements to rent a house out is to conduct background checks to ensure your tenants are qualified.

Who pays for the background check?

Many landlords require would-be renters to pay for a professional background check through a verified third-party platform to look into factors like job history, credit score, and criminal convictions.² Costs vary, with more extensive background checks usually ringing in at a higher price tag.

What if a red flag shows up?

Again, keep in mind that local laws around qualifying (and disqualifying) renters vary. Depending on where you live, you may not be able to disqualify those with certain marks on their record, including criminal records.

However, there may be clauses around the age of the conviction and its intensity; i.e., a potential tenant with a three-year-old misdemeanor may have more protections than a first-degree felon newly released from prison. Again, check with your local laws, and potentially a lawyer, for full details.

5. Establish your lease renewal process

You’ve found your tenants, screened them, and are ready to get them set up as renters – but before you move forward, you should make a plan for your lease renewal process. Whether your renters decide to stay or leave, having a system regarding how and when to communicate their plans will make renting out your house much easier.

Common lease renewal policies

For instance, some landlords require tenants to notify them whether they plan to renew for another signed term between 60 and 90 days before the lease ends. Sometimes, the lease automatically goes month-to-month after the expiration date if the tenants don’t renew or move out.

Again, laws in your area will vary. Either way, get your process set up beforehand so you can write it into your rental contract.

6. Use a lawyer-approved lease agreement to protect your property

Now that you know what your lease renewal process looks like, you can add it to your lease agreement, which is the legal contract that lays out the expectations and requirements of both landlord and tenant.

This is where your knowledge of local, state, and federal landlord-tenant laws is crucial because it lays out everything in writing.

While templates are available for free online, it may be worth your time to invest in professional assistance to have this document drafted with a lawyer. They will have the most up-to-date knowledge of laws that govern your area (which are subject to change).

7. Collect rent quickly and securely

Now that your renters have moved in, you’ll want to collect your monthly rent safely and speedily. There are a variety of ways you might receive your monthly rental payments, but some are certainly quicker and more secure than others.

Paper checks, for instance, are a classic choice, but they may require a trip to the bank and then take a while to clear – and you might not know if they’ve bounced for several days. You could also choose to accept payment through an informal digital source, like Cash App or Venmo.

Why rent collection apps are worth considering

Online rent collection apps and rental platforms can simplify the equation on both sides. They can even provide your renters with automated rent reminders and, if necessary, charge late fees. These platforms may charge a fee that could cut very slightly into your payment, but it may still be worthwhile for the convenience of these systems.

8. Implement a maintenance tracking system

As a homeowner, you’re likely already well aware that homes evolve over time, often involving repairs and maintenance.

Depending on how new your home and its appliances are, getting things fixed may or may not be a major part of your job as a landlord. But if you find that issues are happening often or have multiple rental properties, using a property management tool could be a convenient way to streamline your management requests and keep them organized in one place. Otherwise, you might find yourself making a lot of phone calls to your local plumber or contractor.

9. Build a strong relationship with your tenant

Chances are you remember your own days as a renter – and how much better the situation was when you and your landlord actually got along.

Now that you’re on the other end of the equation, cultivate a strong relationship with your tenant. That way, you’ll have more confidence in their commitment to treating your property with respect and informing you if and when anything goes wrong.

10. Protect yourself with landlord insurance

When you became a homeowner, you likely learned about the importance of homeowners insurance. Now that you’re becoming a landlord, it’s time to learn about landlord insurance, too.

What is landlord insurance?

Landlord insurance is specifically designed for those who are renting out their homes. It may help reduce the risk of financial losses due to theft, fire, vandalism, and other unfortunate occurrences.

Some policies also include liability insurance, which can protect you against legal fees in the event you get sued by a tenant. Of course, specific coverages vary, so you should carefully review your policy before you enroll. Depending on local laws, you may also require your tenants to carry renters’ insurance, which protects their property and may help lower your risk level in the event of tenant negligence.³

Renting your home can unlock new financial horizons

While being a landlord comes with its own set of risks and challenges, learning how to rent out your house doesn’t have to be hard. It can also offer a unique opportunity for generating wealth – with far less work, in most cases, than a second job would take.

Still figuring out the homeownership thing or getting ready to purchase your next house? Here are some steps to help you find the best mortgage lender for your needs.

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¹ Information from the U.S. Department of Housing and Urban Development's "History of Fair Housing" as of June 2, 2024: https://www.hud.gov/program_offices/fair_housing_equal_opp/aboutfheo/history

² Information from RentSpree's "Who pays for background checks: tenant or landlord?" as of June 10, 2024: https://www.rentspree.com/blog/who-pays-for-background-check-tenant-or-landlord

³ Information from Travelers' "As a Landlord, Can I Require My Tenants to Have Renters Insurance?" as of June 2, 2024: https://www.travelers.com/resources/home/landlords/can-a-landlord-require-renters-insurance

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