The Definitive Guide To Renting Out Your Home

If you’ve recently purchased or inherited a home that you plan to put on the rental market, congratulations on your new investment! Renting out your home can be a great source of personal and financial satisfaction, but it’s also a considerable responsibility - especially when it’s your first time.

“Being a rental property owner comes with many rewards, but it also brings some stressors,” says Nishant Phadnis, General Manager of Rentals.com.

The following guide aims to help both first-time and experienced single-family home property managers get the most rewarding experience out of this considerable challenge. We’ve identified the main sources of concern for most first-time landlords experience and tapped seasoned experts for advice on minimizing hassle and attracting tenants who’ll treat your property with care and respect.

While the advice is offered with single-family homes in mind, property managers renting out apartments or units in multi-family homes can take much of it to heart, as well.

We’ll break down some specific issues you’ll need to think about as a new landlord, but in the end, says Phadnis, “It all boils down to finding and keeping good tenants.”

Contents

Step 1: Pricing Your Rental

Step 2: Creating The Listing

Step 3: Staging The Property

Step 4: Taking Great Photos

Step 5: Targeting the Right Tenant

Step 6: Sharing The Listing

Step 7: Screening Prospective Tenants

Step 8: Understanding Applicable Laws

Step 9: Writing The Lease

Step 10: Learning From Experience

Step 1: Price your rental competitively

According to Phadnis, one of the most important elements in attracting the right tenants is setting a monthly rent that’s competitive with nearby properties and will generate a healthy income stream for you. Setting competitive rent prices is a critical skill, according to Whitney Foster, an Atlanta-based property manager who has been managing and renting out homes and apartments since 1989.

When it’s time to set rent on a new property, or update a newly renovated one, Foster says Rentals.com and Rent’s (formerly RentPath) other Internet Listing Service (ILS) - these include ApartmentGuide.com and Rent.com - sites are great tools for figuring out the going rates in various neighborhoods. Rentals.com search tools make it easy to identify properties with comparable square footage and room configurations, filtered by ZIP code or school district.

As an old-school addition to online research, Foster says he also likes to check the competition out in person. “I’ll go visit other properties to see how they compare to mine.”

Once he’s gathered his comparative pricing information and is ready to set a new rent price, Foster says he tends to round down a little on his calculations. “If your price is slightly lower than what the market will bear, you can fill the property quickly. Trying to get the highest rent possible when renting out your home can mean having to wait a month or two with a vacant house.”

Step 2: Craft an irresistible property listing

Once you know what you’re charging for rent, you’re ready to get to the heart of marketing the property online: putting together a listing that will entice tenants into renting out your home.

The key to a great listing is communicating the unique advantages of your property in a way that attracts the right kind of tenant. Namely, a tenant who will be dependable and take care of your property as if it was their own.

When putting together a listing, the goal is to “try to instill a sense of what it’s like to live in the house,” says Phadnis. “Capture what makes the property a home.” You want to enable tenants to picture themselves living there comfortably, and ideally for a long time to come.

Step 3: Set up for aesthetic appeal

When staging the property for photos, open houses and walkthroughs, Foster recommends removing personal items such as family photos that mark the place as someone else’s, but he disagrees with experts who suggest emptying the space out altogether.

Leaving the house furnished in a simple, unassuming style “allows people to envision themselves living in the property,” he said, and can get them thinking how they and their family could make it their own.

Once you’ve spiffed the place up a bit, it’s time to take some photos.

Step 4: Let the pictures tell the story

An undeniable advantage of ILS websites such as Rentals.com is their support for high-resolution photos that can really show off a property well. Most Rentals.com ad packages support unlimited photos, allowing you to provide a big-picture view to prospective tenants. This also gives you the ability to zero in on any little bits of character details that make your house special.

If you can afford to have a professional photographer come in and take photos with high-quality lighting, the investment could be worth it. A strong set of shots could serve for several generations of tenants - as long as you don’t make major changes to the house.

If you’re taking pictures yourself, a quality cellphone camera can do the trick, but a camera with a zoom lens will give you much greater flexibility. And either way, a tripod can improve your results considerably. Begin with “establishing shots” and gradually draw your focus in tighter:

• Start with an exterior view of the house from the curb in bright daylight and at night with all the inside lights on.
• Consider taking shots from inside the house that also capture interesting or attractive features outside (e.g. a shot of a breakfast nook that also captures a beautiful fountain outside).
• Collect straightforward shots of each room tidied up but not extravagantly decorated.
• Take close-ups of unique molding, fixtures, banisters and the like that give your house its own unique flavor.
• Take horizontal shots unless capturing vertical sections of the property. Horizontal images correspond to the landscape nature of human vision and allow you to create the appearance of more space.

Resist urges to get too artsy or use steep angles, fish-eye lenses or other gimmicks to make rooms look grander than they are. Exaggeration and hype will backfire on you. Let the property be itself, without airs or apologies, and trust that there are renters out there who’ll love it.

Step 5: Know your ideal tenant and target them

A Rentals.com survey found that most seekers of single-family rental (SFR) properties are married or in domestic partnerships (62 percent), have children (61 percent) and have pets (54 percent).

“Keep that in mind as you craft your listing, and play up the features of your property that are likely to appeal to couples and families,” Phadnis says.

Of course, there are other demographics that may find your rental home attractive. College kids, if you’re willing to rent to them, can make great single-family home residents because they like to rent with multiple roommates to offset living expenses.

Regardless of who you are renting out your home to, it’s important to highlight what’s most likely to resonate with your ideal tenant. Here are some potential features to consider when renting out your home:

• Schools. Each Rentals.com listing automatically displays GreatSchools.org ratings for schools closest to each property. If nearby schools get high marks, consider highlighting them in your property description and noting if any are within walking distance.
• Parks or playgrounds. If there are parks or playgrounds nearby, mention them and how long it takes to walk or bike to them. If you pique any rental seekers’ curiosity, they can use the map embedded in the Rentals.com listing to explore via Google Street View.
• Pet Friendliness. If you plan to allow pets on the property, make sure you include this in the listing. Call out relevant details that will be of interest to pet owners (e.g., nearby pet-friendly parks, fenced-in yard, doggy door, etc.).
• Neighborhood highlights. Call out nearby landmarks, much-loved hangouts, or transportation conveniences like a train or subway stop and include a picture. Don't forget to call out the distance from your property.
• Other important amenities
  • Garage. All ILS listings will duly note whether or not a garage comes with the property, but if yours has room to stash bikes, sports equipment and toys, talk that up, and include picture(s) to prove it.
  • Yard and garden. If flowerbed(s) or a vegetable plot already exist, include a photo (ideally taken during the growing season). If the yard has room and you're willing to let the tenant create new beds, make that clear, too.
  • Storage space. Highlight non-garage storage, as well: a shed, walkout basement, or even a crawl space where family gear, lawn equipment and the like can be stashed securely will likely appeal to young families. Again, take at least one picture to highlight this.

Step 6: Share your listing

“Once you have a great listing, use the proper media to share across the entire universe,” Phadnis recommends.

Sharing across ILS networks covers a lot of the heavy lifting, but you can also share links to your Facebook and Instagram accounts. Try using Facebook Marketplace to limit the post geographically (and to reach potential tenants you aren’t friends with on Facebook). Consider paper copies of your listing to leave out front for drive-by prospects. If you are in a NextDoor neighborhood group, feel free to share there, too.

Once you’ve posted one and shared it across multiple ILS sites and social media, you’ll likely be moving on to the next phase of the rental process: choosing the best tenant from among the applicants who are interested in renting out your home.

Step 7: Screen potential tenants

Once you’ve identified potential tenants, it’s important to screen them carefully,” Foster says. Rentals.com offers landlords free online applications and tenant screening reports to make sure future tenants are qualified. Landlords have access to any of the following at no cost to them: online rental applications, full credit report and score, criminal background check, eviction check and identity verification. To get started, click here.

When viewing completed credit reports from applicants, look for indications of account defaults, car repossessions and foreclosures. A few late or missed payments over the span of five or more years probably aren’t cause for worry unless they’ve all piled up recently. And because bankruptcies can stay on credit reports for up to 10 years, one that’s five or more years old doesn’t have to be a deal-breaker, as long as employment and other financial indicators look OK. Upon receiving the completed criminal background check, think twice about applicants with recent convictions or incarceration related to financial malfeasance or substance abuse, or a history of sexual offenses.

Step 8: Play by the rules

You have the right as a landlord to thoroughly vet any potential tenants before you accept them, but keep in mind that your screening process must comply with federal and local housing laws when renting out your home. Relevant requirements include the following:

Fair Housing Act

This federal law prohibits discrimination against housing applicants on the basis of race, color, religion, national origin, disability, sex, age or familial status (e.g., women who are pregnant, families with small children or teenagers, etc.).

As a landlord, you can legally reject applications from persons in these groups (known as “protected classes”), but only on the same basis that you would reject someone who’s not in a protected class. The same goes for dealing with tenant disputes, evictions and other matters. The bottom line is you must treat protected classes the same as everyone else.

Fair Credit Reporting Act (FCRA)

Credit and criminal background checks are subject to federal regulation known as the Fair Credit Reporting Act (FCRA). Its many provisions include the following requirements:

• You must notify applicants in writing and get their written permission before running a credit check or background check on them.
• If you decide to reject an applicant based on the findings of a credit report or background check, you must notify the applicant of your intent in writing, furnish them a copy of the report, and give them a reasonable amount of time (a week suffices) to respond with a correction or explanation of the report’s findings.
• After that period of time, upon consideration of any response you get from the applicant, you may notify them in writing of your final decision.

Follow these steps carefully to avoid exposing yourself to legal liability. Professional background-check companies may be able to help guide you through these steps, as can your lawyer.

“Fair chance” laws

This isn’t a federal law, but a growing number of states and cities have enacted these measures to prevent discrimination against persons with prison records. Specifics vary by jurisdiction, but most of these laws forbid asking about past criminal convictions or incarceration on housing applications.

If a background check turns up a criminal history, it’s fair game to discuss it then and, if appropriate, to use it as grounds for turning down an application. Consult your legal advisor to see whether any fair chance laws apply to you, and how they might affect your tenant-screening process.

Step 9: Master the lease

When you’ve completed the screening process and identified your new tenant, it’s time to sign a lease. Its provisions should be as straightforward as you can make them, yet comprehensive enough to address foreseeable issues between you and the tenants. They must also comply with fair housing laws that apply in the community where the rental home is located.

The heart of every lease is the rental terms:

• Price. How much the monthly rent will be.
• Security deposit. Foster recommends erring on the high side when setting a security deposit. It should be at least one month’s rent (and you should not give the tenant the option of using it to pay their last month’s rent, because “that doesn’t protect you” in case you discover unsuspected damage after the tenants vacate). If you allow pets, you should specify an additional deposit. “Even small, gentle dogs and cats can do significant damage,” he warns.
• Duration. How long the lease will be in force (and what happens when the lease is up). Twelve-month leases are common and a good starting point. At the end of that year, will you require a renewal or let the tenant go month-to-month? The best answer may depend in part on what’s customary in your rental market.
• Due date. When payment is due each month. This is a little more complicated than it may sound. You should be clear about how you’ll accept payment (fund transfers via electronic services such as RentPay? Paper checks? Cash in an envelope?) and how you’ll determine if a payment arrived on time. Is an electronic transfer OK up to 11:59 p.m. on the due date? Does a paper check need to be postmarked on or before the due date? Will you accept in-person drop-offs at your home or office?

Beyond these nuts and bolts, the lease should anticipate potential sources of friction between the landlord and tenant, ultimately spelling out how they will be resolved.

• How you’ll handle late payments. Will there be a surcharge for late payments? What will happen if rent is a week late? One a month? What triggers action to remove a tenant for failing to pay rent? (This isn’t entirely your decision; local housing regulations likely dictate a timeline and procedure for removing problem tenants; the lease can refer to the appropriate process.)
• Running expenses. In addition, you should specify whether you or the tenant will pay any running expenses associated with the property (and which, if any, are mandatory and which are optional). These might include:
  • Utilities
  • Repairs to accidental property damage
  • Services such as trash removal and snow plowing
  • Homeowners association fee
• Pet Policy. Spell out that the tenant is responsible for any damage caused by their pet, including scratching, chewing and staining of floors or carpets. You may also want to include a requirement about picking up pet waste in the yard, especially if it’s fenced in and a pet can have free run.

Have your lawyer review the lease to make sure you haven’t missed anything (or inadvertently contradicted any housing laws), and give the tenant a copy to review (and run by their lawyer, if they care to). Once it’s time to sign, each of you should sign and keep a copy for future reference. There’s no need to notarize a lease, but you should keep your copy in a secure place.

Step 10: Reflect on experience and adapt

Attracting and identifying the right new tenant when renting out your home may be a challenging and time-consuming experience, but it’s a necessary first step on your new journey as a landlord. You should expect to learn as you go.

For first-time renters, focus on getting the best tenant possible based on your needs and expectations. A good tenant can make up for rookie mistakes in other areas such as the lease terms, rent price and any applicable house rules.

You may do a few things differently the next time you list the property, but if you follow the steps for renting out your home outlined here and use Rentals.com’s tools to reflect the house’s true appeal, there’s a good chance you’ll find a tenant who’ll feel right at home.

The information contained in this article does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional financial or legal advice as they may deem it necessary.