How to rent out your house: A guide

Has the local housing market cooled, making it nearly impossible to sell your home? Or maybe your job wants you to relocate temporarily, but you plan to return once the project is done. In either case, renting out your home is an option worth exploring. Not only does leasing your home offer a more flexible living situation, but it can also help you cover your mortgage and potentially even generate some extra income.

But just like managing any rental — even if it’s your own home — it requires planning and preparation. So, to help you maximize your earnings, here’s a step-by-step guide on how to rent out your house.

How to rent out a house: 10 important steps

Turning your home into a rental is a big undertaking, no matter your level of experience. And this isn’t just any investment property — it’s your home, your safe place. That’s why it’s important to make sure the entire process is handled with care. So, before listing your home, take a look at our step-by-step breakdown of the process and what to expect.

1. Understand landlord-tenant laws

When it comes to renting out a property, there are rules and regulations landlords and tenants must follow. Every state and local municipality usually has its own set of landlord-tenant laws, as well as building and safety codes. Therefore, it’s important to take some time to get familiar with them before you hit the ground running.

Typically, rental laws cover things like how much you can require for a security deposit, the terms you must include in your lease, and what happens if a tenant can no longer make their rent payments. Building and safety codes, on the other hand, ensure properties are healthy and safe to live in.

Additionally, you’ll need to understand the terms of loan you have and if there are any homeowners association (HOA) rules that apply property rentals. For example, if you have a VA loan, you generally need to live in the property for at least 12 months before renting it out (unless you’re deployed). Or perhaps your community has an HOA. In this case, make sure to review any restrictions around renting out your home, like bans on short-term rentals or limits on how many homes in the community can be leased at once.

By staying on top of these regulations, you can protect yourself legally, maintain a safe property, and build trust with your tenants.

2. Get landlord insurance

Similar to homeowners insurance, landlord insurance covers you and your home from life’s “what ifs,” but it’s designed specifically for property rentals. Most standard homeowners policies don’t cover damage or liability once tenants move in, so you’ll likely need a landlord policy to make sure your home is adequately protected.

Depending on your insurance company, you may have the option to add an endorsement to increase your coverage if you only plan to do an occasional short-term rental. However, if you plan to use your home for regular or long-term rentals, you'll usually need a separate landlord insurance policy.

Remember, without the right coverage in place, you’re financially responsible for any issues that arise.

Landlord insurance typically combines several types of coverage, including:

• Property damage coverage: If your rental is damaged by a covered event such as fire, storm, vandalism, or theft while you have tenants living there, this type of coverage helps pay for repairs (up to policy limits).
• Liability coverage: Covers expenses if a guest gets hurt on your property or your tenant accidentally damages another person’s property. It can also help cover your legal and court costs if someone sues you as a result of a covered issue (up to policy limits).
• Loss of income coverage: Reimburses you for lost rent if a covered event, such as a fire, makes your property temporarily uninhabitable until repairs are completed (up to policy limits).

A landlord insurance policy provides a layer of financial protection from unexpected events and peace of mind knowing your rental is covered even when you’re not there.

3. Determine your rental price

Pricing your rental goes beyond simple math—it’s about striking the right balance between profit and demand. According to Apartments.com’s recent renter survey, 82% of renters said price is one of the top three factors they consider when choosing a rental. When you get the price right, you can reduce vacancies and maintain a steady flow of income.

To find this balance, start by looking at local rental market trends and calculating all of your monthly costs.

• Review neighborhood comps: Check out similar rentals in your neighborhood, especially those with the same number of bedrooms, bathrooms, and features. This will give you a feel for what tenants are paying in the area.
• Calculate your monthly expenses: Add up your monthly expenses, including your mortgage, property taxes, insurance, marketing, and ongoing maintenance. From there, you can see what the market allows and aim to charge an amount slightly above your total operating expenses.

For example, let's say your monthly costs total $1,500. If you add about 10%, that brings your rent to $1,650, giving you roughly $150 in monthly income.

Depending on your location, property condition, and market demand, you may be able to adjust the rent higher. But remember, at the very least, always make sure your expenses are covered.

4. Find a property manager

Managing day-to-day rental responsibilities can be extremely time-consuming and taxing. So, if you don't want to take on the responsibilities, hiring a property manager can be a good move.

A good property manager takes care of many of the cumbersome tasks that go hand in hand with being a landlord, such as collecting rent payments, managing maintenance and repair requests, and serving as the primary point of contact for tenants.

Keep in mind, though, most property managers charge a fee, which is usually a percentage of your rental income. On average, property managers charge between 8% to 12%.

5. Write a lease agreement

Simply put, a lease agreement is a contract between you and your tenant that clearly defines the terms and conditions of renting your property. It should be tailored to your specific rental and explain the rules your tenants are expected to follow.

Before drafting your lease, think through where you stand on rental terms, such as:

• Security deposit requirements
• Length of the lease
• How to make rent payments
• What happens if a tenant needs to break the lease
• Eviction steps
• Pet policies
• Parking guidelines
• Maintenance requests

Your rental agreement should clearly outline all of your rental policies so tenants understand the expectations before moving in. Also, make sure your lease complies with all tenant laws. If you’re unsure where to start or how to create a contract, there are lease templates available online, or consider hiring an attorney. Working with a legal professional can help ensure your agreement is detailed, clear, and protects everyone’s best interests.

6. Decide how to collect rent

Making money from renting out your home is more than just a side hustle, it’s essentially your own small business operation. And just like any business, staying organized and keeping detailed records of payments isn’t just a recommendation, it’s a necessity so you know where your business stands at all times.

One of the best ways to create a paper trail is by requiring your tenants to pay rent using a traceable method, such as cashier’s checks, bank drafts, certified checks, or an online payment platform like:

• DoorLoop
• Avail
• AppFolio
• Rentec Direct
• Zelle
• Venmo
• PayPal

Setting up a consistent payment process helps you avoid legal disputes, streamlines tax reporting, and keeps your financial documents organized.

Taking it one step further, it’s a good idea to provide rent receipts for your tenants. In some states, like New York, landlords are actually required to provide rent receipts when tenants pay with cash or money orders. Even if this isn’t required where you live, issuing receipts can make tracking payments much easier.

That way, if a rent payment ever comes into question, you’ll have a clear paper trail to verify the payment history. If you decide to use receipts, make sure each one includes details like your tenant’s name, rental address, phone number, payment date, and amount.

7. Advertise your rental

Now that your home is ready to go, it’s time to start generating some income by finding the right renters. Just like homebuyers browse listings to find the perfect fit, you can create a rental listing that highlights what makes your home special.

Here’s what to include:

• The basics: Start with the essential details of the property like number of bedrooms and bathrooms, monthly rent, lease terms, and other key details like whether pets are allowed.
• Standout features: Share the features and amenities of your home that really make it special. Maybe it’s a fenced-in backyard perfect for summer nights, local restaurants within walking distance, or new smart home upgrades you’ve recently added.
• Attention-grabbing photos: And don’t forget to include high-quality photos that showcase both the inside and outside of your home.  

Many rental websites, like Rent.com, Zumper, and Redfin, let you post your listing for free. Using these sites can help you expand your visibility online so that more people see your property.

Here are a few other ways you can promote your home for rent:

• Tap into your network: Use word of mouth to reach out to your family, friends, or co-workers who might be looking for a place to live or know someone who needs a place to rent right now.
• Signage: Put a “For Rent” sign in your yard so you can capture the attention of locals passing by.
• Use social media: Create short, engaging video and photo content, like virtual tours, and add location tags and hashtags to help local renters easily find your property. You can share posts on sites like TikTok, Instagram Reels, and YouTube Shorts.

8. Screen tenants

Screening tenants carefully may seem cumbersome, but it’s an important step in ensuring you find responsible renters who make payments on time, follow lease terms, and take care of your property.

That said, before signing a lease, it’s a good idea to review your potential tenant’s background. Depending on the type of screening you choose, background checks typically include:

• Credit history
• References
• Employment and income
• Criminal history
• Rental and eviction history

To save time, you can use a screening service like SmartMove by TransUnion®, E-Renter, or RentSpree. Even though there’s usually a small fee, it can save you money in the long run by helping you avoid problematic tenants who could cause stress or financial issues down the road.

9. Perform a move-in inspection

Before your new tenant moves in, make sure you and your renter agree on the condition of the home. Usually referred to as a rental property inspection, this process ensures both you and your tenant are on the same page about the property’s condition, so if anything is damaged during the lease, the tenant can be held responsible. For example, are all the appliances working? Is there a dent in the fridge or a scratch on the hardwood floor?

Take time to walk through the property with your renter and make a detailed list of any damage or wear and tear you see. Document any issues you find with photos and/or videos so you have a clear record of what you discover.

During your inspection, make sure to take note of things like:

• ·      Appliance and system conditions like heating and cooling  
• ·      Door and window condition and damage
• ·      Stains or marks on the flooring and carpet
• ·      Pest infestations
• ·      Safety hazards
• ·      Plumbing issues like leaks
• ·      Damage to the exterior of the home

If you want to make sure your property is well-maintained throughout your tenant’s lease, you can also schedule regular inspections to check in. Just make sure you give your tenants at least 24 – 48 hours’ notice before you stop by.

10. Sign the lease agreement and collect the security deposit

After all the inspections are out of the way, it’s time to sign the lease agreement, collect the tenant’s security deposit, confirm a move-in date, and hand over a set of keys to your new tenants. 

This is also a good time to encourage your tenant to buy renters insurance. Like homeowners insurance, renters insurance helps cover tenants from damage, theft, or liability claims. But it also benefits you as the landlord by reducing the chance of disputes or financial loss, such as if your tenant accidentally starts a kitchen fire or floods the unit and damages the property next door. Without it, you could be responsible for the third-party property damages.

As the landlord, you can require tenants to carry coverage as part of the lease agreement even though it’s not always mandatory. Similarly, your mortgage lender may require you to carry landlord insurance to protect your own property.

Pros and cons of renting out your house

As rewarding as renting out your home can be, it also comes with risks. By understanding both, you can decide if this is the right move for you.

Pros

• Extra income: One of the biggest benefits of renting out your home is the opportunity to generate extra income every month. Additionally, if you own multiple properties, that extra income can add up.
• Flexibility: Since you own the property, you have the freedom to live in it whenever it’s not rented out. Many landlords choose to stay in their rental between tenants or during the off-season. This way, if you need to move for work or want to explore different cities before putting your house on the market, you won’t feel rushed or pressured to sell your home. 
• Tax deductions: When you make money from renting out your home, it’s usually considered a type of business under IRS rules. Therefore, as a business owner, you may be able to deduct common expenses such as mortgage interest, rental property depreciation, home insurance, property taxes, and repair costs related to leasing out your space. If you’re unsure which deductions you qualify for, talk to a tax professional who can guide you.

Cons

• Time-consuming: From finding responsible tenants to keeping up with property maintenance, being a landlord can take up a big portion of your time. This is especially true if you’re also managing the property yourself.
• Maintenance costs: Like any property, paying for maintenance and repairs is just part of owning real estate. Whether you or your tenants live in the home, things are bound to break or need a tune-up, and these costs can add up quickly — especially if you need to hire contractors or professionals for repairs.
• Unreliable tenants: Creating a thorough screening process before signing a lease agreement with a tenant can help you avoid problems. Without it, you could face issues like property damage or missed rent payments.

The bottom line: Know how to rent out your house properly

Whether you're looking for a way to make extra money while you’re traveling or need to move for work but aren’t ready to sell your home, renting it out can be a good option. But while it offers many different benefits, becoming a landlord also requires extra time, added responsibilities, and additional costs. So, before you start creating your rental listing, make sure you understand the ins and outs of renting out your home. Doing so can help you make the most of your rental experience.

If your mind is on something completely different, like buying a new home or a second property to rent out, start an application for a home loan today.

Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

Rocket Mortgage, LLC, Rocket Homes Real Estate LLC, Rocket Card, LLC, RockLoans Marketplace LLC (doing business as Rocket Loans), and Rocket Money, Inc., are separate operating subsidiaries of Rocket Limited Partnership. Redfin Corporation is an affiliated business of Rocket Limited Partnership. Each company is a separate legal entity operated and managed through its own management and governance structure. Rocket Limited Partnership is an indirect, wholly owned subsidiary of Rocket Companies, Inc. (NYSE: RKT).

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