House for Rent by Owner – A Homeowners Guide

An Income Opportunity for Homeowners – Rental Income Property

Oct 14, 2009 Dagmar Barlow

This is a step by step guide for homeowners who want to turn their home into Rental Income Property. What to consider before and after putting up the For Rent sign.

Selling a home is not the only option for homeowners who buy a new home. Some homeowners view their old home as an income opportunity and choose to keep it as rental income property. Here are a few ideas to consider before and after the for rent sign goes up.

It is important to be aware of the rental laws for the state. Have some basic knowledge of the laws and regulations as they relate to the business of rental property and Tenant/Landlord relations.
It is not recommended having rental property that is further than an hour away from the primary residence. When there are vacancies or other circumstances, living close to the property makes sense.
Have enough money in saving for emergency repairs and long vacancies. Repairs can cost as little as $100 and as much as several thousands. And having some financial padding allows the time needed to find right tenant.
The rent amount should be enough to cover the mortgage, property tax and insurance. The homes insurance will also need to be adjusted to reflect that the home is now a rental.

Getting the House Ready for Rent

The house should be empty, in good condition and freshly painted. Besides being appealing to a prospective tenant it also minimizes problems down the road regarding water damage, mold and termites.
Decide what appliances to leave in the house, if any. If appliances remain in the rental property, list them on the rental agreement.
Have the water heater checked by a plumber. If the water heater is old, have it replaced. This will be much easier to do while the house is vacant.
Have the heating and air conditioning checked. The HVAC is one of those repairs that could be costly. It is important to be proactive about service and repair before the tenant moves in.
Keep the contact numbers of all good service companies used in the past. Most reputable companies will deal with the tenant directly, provide service and take a credit card number over the phone.
Have a rental agreement. Purchase one at a local office supply store, or online. Read it, add to it, and change it if necessary. This is a contract and should be understood by both parties.
Have several copies of a rental application on hand. This can also be obtained at an office supply store or online. Read it, change it and add to it if necessary.

Advertisement for the Open House

Post the For Rent sign on the property. Put all information on sign including a phone number. Consider creating a temporary phone number. Warning, the For Rent sign also indicates that the house may be vacant. Only do this if a family member can visit the property periodically or have neighbors that will do the same.
Put an ad in the local paper with the address, number of bedrooms, bathrooms and rent amount. Prospective tenants who are looking to rent in a specific location tend to buy a local paper. They circle the appropriate ads and start their search. Having all the pertinent information listed draws interest from only the people who are genuinely interested in the amenities this property offers.
Put an ad online. This can draw a tenant from out of town looking to relocate. Uploading pictures and having much more room to give more detail regarding the property is also a plus.
In the interest of time, schedule two blocks of time on the weekend to show the house. For example, tell all of the inquiring people that the house will be open to view from 2pm-4pm on Saturday and 11am-1pm on Sunday. Have this noted on your for rent sign. If they’re interested, they will come.

Screening Tenants

As tenants come to see the house give them an application and advise them there will be a credit check.
Choose the top three or so candidates and investigate.
Do a credit check, eviction check, etc. call their employer and verify salary. Call previous landlord if possible.
If a suitable tenant is not found have another open house the following weekend. DO NOT SETTLE for someone that does not meet the criteria. Sacrificing a few weekends for the right tenant will be well worth it.
Decide on a suitable tenant give them a call and see if they are still interested. If so arrange to meet them to sign the rental agreement and to give them the keys. Make a copy of the agreement for the tenant.

It is important to treat the tenants and prospective tenants in a friendly but professional manner. Set the tone. Remember, this is a business transaction and when executed professionally it can be as profitable as any well run business.

For more information on Advertising visit How and Where to Advertise Rental Property and Advertise Rental Property on the Internet.

The copyright of the article House for Rent by Owner – A Homeowners Guide in Small/Home Business is owned by Dagmar Barlow. Permission to republish House for Rent by Owner – A Homeowners Guide in print or online must be granted by the author in writing.