Updated: Jul 13
In this article, I'll be going over my top tips for renting out your house.
Above: Adam's 1st Rental Property
Make Sure That You're Able to Rent Out Your House
Many assume that they can rent out their house, but that's not always the case, whether due to restrictions based on your loan type, home buying program incentives, HOA/Condo restrictions, city/county restrictions, etc. For more details, go here.
Consider a Property Manager (i.e. I Use One for My Own Rental)
One of the 1st considerations in renting out your home is whether or not you should rent it out yourself or whether or not you should hire a property management company.
If you have a lot of time on your hands, don't have an above median income per hour, are willing to spend many hours educating yourself in property management prior to engaging in it, & are willing to dedicate the time needed once engaged such as regular inspections, self-management can be a viable option, especially if you're local & already in a related industry like a contractor or especially a real estate agent.
If my primary income was lower and if I didn't foresee myself growing in my primary income, I would probably manage my rental property myself & would educate myself further in property management prior to doing so.
Time is Critical to Successful Property Management
Even if you have a property manager, you'll still need to spend time on your property for successful management.
If you don't have a property manager, you should be spending a much greater amount of time on your property. Many initial landlords doing it DIY don’t take seriously enough the business and incur substantially reduced profits if not losses because of it.
It's for this reason that I use a property manager myself even though I know much more than most owners about real estate & property management. I'm certainly involved with my property, including inspections & even a bit of problem resolution, but I still pay a property manager who only does property management and no sales since they know more than me specifically about property management. Also, I don't want my property to take too much of my time, and I want to lower my risks.
Risks with Property Management
I’ve seen homes completely trashed by tenants where the seller was unable to recoup anything but a small fraction of the losses.
I’ve seen homes completely trashed by tenants where the seller was unable to recoup anything but a small fraction of the losses. There's 1 person I know who had a minister trash his rental property while they were in another country doing missions. You never know just what someone will do, even if they seem like they're very trustworthy due to a position like in ministry.
I recall a listing of mine where the property had a property manager, but where the property manager had been derelict in their duties in my opinion. The property manager passed things to another property manager who also was derelict in their duties in my opinion. The owner also was too trusting of their property manager, never visiting the property for many years. When he finally went there, what he found was horrifying. Even after the owner spent thousands on clean-up and junk hauling from the tenants, the property was in such bad shape that one of the prospective buyers who made a viable offer considered tearing the brick house down and rebuilding it.
Education Prior to Your First Rental (110+ hrs if DIY (higher if >1 property, if low $ reserves to cover mistakes, or if high value property); 21+ hrs if hiring a property manager)
If looking to manage a property yourself & planning to rely heavily on its income in the future, do intensive research (i.e. >110 hrs/property (up to 300 hrs) before renting & ideally >200 hrs/property (up to 500 hrs) within the first year of renting) into tenant/landlord law in your state as well as how to successfully market and operate rental properties (i.e. tenant screening, inspections, maintenance, etc.) prior to engaging in the business of property management.
Education hrs below assume self-management.
Marketing (30+ hrs education DIY; 5+ hrs if paying PM)
If you're using a property manager, & especially if you are not, be sure to be well-educated on marketing.
If you're using a property manager, prior to hiring, your education of yourself on marketing will help you to spot which property managers are actually doing a good job.
If you're trying to self-manage, a significant piece of educating yourself about property management prior to managing yourself should be tenant screening. I'd recommend at least 30 hrs of education on marketing prior to engaging in it.
Look to achieve the following:
Wide distribution via automated systems to 100's of websites (i.e. Zillow, Realtor.com, etc.)
Professional Photography from those who regularly do real estate (ask me for recommendations) & plenty of it without duplicate pictures (or more than 2x pictures in a <300 sq ft room except 1-3x/listing)
Matterport Virtual Tours (Rare for rentals, but they do happen) - sometimes these will be removed after a property has been rented due to limited slots by the hoster. If you need Matterport virtual tours in SE VA, I offer competitive pricing & solid quality with an option to include interior & exterior. For former clients, I offer half off of my typical already competitive pricing.
Aerial Images. If you need someone, I offer these as well, and again, for former clients, half off of my typical already competitive pricing.
Area Photos, Especially Aerials & w/ Proximity Stated in Listing &/or Photo Captions (Rare for rentals, but they do happen)
Highly Detailed Description Bursting w/ Positives
Highly Searchable, Especially with Non-Required Elements. If looking at a prospective property manager's work, see directly on MLS such as REIN in Hampton Roads. If looking on a 3rd party website, there may be data auto-populated from tax records and to compare well it's best to compare the raw data.
Readily & Securely Accessible for Showings - Quick Responses to Showing Requests & Availability to Show, Including on Nights & Weekends, Is Important
Tenant Screening (30+ hrs education DIY; 0-1 hrs if paying PM)
If you're using a property manager, I don't see a need to micromanage their tenant screening.
If you're trying to self-manage, a significant piece of educating yourself about property management prior to managing yourself should be tenant screening. I'd recommend at least 30 hrs of education on tenant screening prior to engaging in it.
Monitoring (10+ hrs education; 2.5+ hrs if paying PM)
A lot of monitoring is the diligence to do it regularly and to do it well. If you're across the country and self-managing, it's a good idea to have in any lease agreement a requirement to video the home with the tenant on a recurring basis, i.e. 1 week after they move in, 1 month after, 3 months after, 6 months after, & once every following 6 months. Be sure to know what kind of phone they'd be using for it would be, as some are much better than others, and be sure to have policies of getting the lights on prior to the walk-through tours. Also, your risks go up if you don't come to the property in person. For instance, when I went to my property, I found that the house smelled like marijuana, which I wouldn't have picked up had I just looked on video.
If you're trying to self-manage, a significant piece of educating yourself about property management prior to managing yourself should be tenant screening. I'd recommend at least 10 hrs of education on tenant monitoring prior to engaging in it.
Abide by the Contract (5+ hrs education; 2.5+ hrs if paying PM), Including Providing a Property Inspection Report to the Tenant Within the Timeline in the Contract
If you pick a contract, or if you use a property manager, be sure that things are done by the book according to the contract and according to the law. If you aren't using a property manager, the contract should be specific to your state due to state laws varying.
Whether doing it DIY or using a property manager, ensure that you have a thorough property condition report itemizing the defects of the home. In the PCR that GRP uses, the REIN lease agreement provides the property manager/landlord up to 5 days after occupancy of the premises. The tenant has up to 5 days following receipt of the report to object to it (i.e. adding things to it). See REIN Lease section 8C of Page 7
Make sure that the tenant has personal insurance, per REIN Lease section 8Q of Page 9.
Bigger pockets has lease forms for purchase by state.
Rocket Lawyers has some free lease agreement options (i.e. VA)
Be sure to keep diligent records of communication between yourself and the tenant, as well as any receipts. Be sure to have pictures &/or video throughout the home before and after each tenant leaves.
Abiding by the Law (30+ hrs education DIY; 5+ hrs if paying PM)
If you're trying to self-manage, a significant piece of educating yourself about property management prior to managing yourself should be abiding by the law. I'd recommend at least 30 hrs of education on abiding by the law prior to engaging in it.
Be sure to know about landlord/tenant law, fair housing law, and what does and does not apply to those who are self-managing under certain circumstances. Landlords who are just managing 1 property don't have to abide by certain restrictions that property managers do in some respects.
For instance, in VA, per the section of the law on security deposits;
1. "No landlord may demand or receive a security deposit, however denominated, in an amount or value in excess of two months' periodic rent."
2. "The security deposit and any deductions, damages, and charges shall be itemized by the landlord in a written notice given to the tenant, together with any amount due to the tenant, within 45 days after the termination date of the tenancy or the date the tenant vacates the dwelling unit, whichever occurs last."
2. "Upon request by the landlord to a tenant to vacate, or within five days after receipt of notice by the landlord of the tenant's intent to vacate, the landlord shall provide written notice to the tenant of the tenant's right to be present at the landlord's inspection of the dwelling unit for the purpose of determining the amount of security deposit to be returned. If the tenant desires to be present when the landlord makes the inspection, he shall, in writing, so advise the landlord, who in turn shall notify the tenant of the date and time of the inspection, which must be made within 72 hours of delivery of possession. Following the move-out inspection, the landlord shall provide the tenant with a written security deposit disposition statement, including an itemized list of damages."
3. "The landlord shall notify the tenant in writing of any deductions provided by this section to be made from the tenant's security deposit during the course of the tenancy. Such notification shall be made within 30 days of the date of the determination of the deduction and shall itemize the reasons in the same manner as provided in subsection F...In the event that damages to the premises exceed the amount of the security deposit and require the services of a third-party contractor, the landlord shall give written notice to the tenant advising him of that fact within the 45-day period required by subsection A. If notice is given as prescribed in this subsection, the landlord shall have an additional 15-day period to provide an itemization of the damages and the cost of repair."
Be Willing to Evict & Educated On It (10+ hrs education DIY; 5+ hrs if paying PM)
I don't recommend that anyone engage in being a landlord or hiring things out to a property manager unless you are willing to evict. If you are a Christian, I’d recommend that prospective landlords or current landlords read the book “Boundaries” by Henry Cloud.
If you're trying to self-manage, a significant piece of educating yourself about property management prior to managing yourself should be evictions. I'd recommend at least 10 hrs of education on evictions prior to engaging in self-management.
Get Landlord Insurance, Require Tenant to Have Insurance, & Consider Rent Guarantee Insurance
Be sure that you shift from your standard insurance to landlord insurance if you purchase initially as an owner occupant. Depending on the landlord insurance that you have, landlord insurance can help at times with damage to the property by the tenant. Some insurance companies are much better than others when it comes to this issue, and a single company may have different package options so that you can be better protected.
Require that your tenant carries their own insurance. If they can't afford to cover damages, the right tenant insurance can at times help.
Consider also rent guarantee insurance if you have low $ reserves & a mortgage to pay especially, which helps if the tenant doesn't pay.
Some landlords even offer that a tenant can have damage insurance in lieu of a security deposit, but I typically wouldn't recommend it.