You have probably heard horror stories about costly evictions, wrecked rentals, and "tenants from hell" from other landlords, and you may have a dozen reasons why you shouldn't rent out your house. Plus, you might not even know how to rent your home, but you still feel the need to make it into a rental property. Maybe you:

• Tried selling—but the investment property market is weak

• Have been temporarily transferred out of the area for work

• Owe more than your house is worth but can cover the mortgage with rental income

• Realized the incredible wealth-building opportunities that a rental property can provide for your financial future.

Yes, the negative tales garner the most media attention and attention. But here's the reality: millions of landlords rent out their homes to nice renters every day. You can reduce the inconveniences and turn your home into a profitable venture with appropriate planning and preparation.

Should you rent your house out?

The first question to consider is whether you should rent or sell your home. Suppose you're not interested in going through the trouble of leasing your home; Ash Creek is willing to give you an all-cash offer for your home hassle-free. Contact us!

But if you are set on renting your house out, here are a few reasons why it's a great alternative too:

1. While a need in life, your primary residence is rarely considered an asset or investment. You can make money with an asset. You pay for a liability. You turn a liability into an asset by renting out your home.

2. You can keep your home while the rental money helps you pay off your mortgage. Rental property values will (ideally) rise over time, increasing your wealth. You will have more monthly cash flow if you rent out your residence for more than your monthly expenses. That's the objective for all potential landlords.

3. It's free to get started in the world of investing. Taking the first step towards a tried-and-true technique of creating wealth could be renting your home. Many real estate investors start out renting out their properties while moving to bigger or better houses. Because you may end up owning many homes "free and clear" by the time you are ready to retire, producing monthly rental income or a lump sum if you sell, this may assist fund your retirement.

4. Keep the possibility of returning to that place in mind. This is especially useful if you've had to relocate abruptly due to a brief work relocation.

Finding rental tenants

Marketing is essential when it comes to attracting renters to rent your home. You'll want to reach out to as many potential tenants as possible so you'll have the most options.

• Craigslist: This is one of the most extensive and straightforward sources of information on the internet for finding tenants. Isn't that the most crucial part? Craigslist is free—unless you are in a few select cities.

• Yard Signs: A simple "For Rent" sign in the yard is one of the oldest but most effective ways to sell your property. However, the most significant disadvantage of a sign is that it gives everyone driving by immediate notice of a vacant residence.

Pre-screening rental applicants

Be sure you have pre-screened them first when you get a call or a message from a potential rental tenant. Setting rental requirements and discussing those criteria over the phone is the simplest method to achieve this.

• Gross monthly income must equal approximately three times or more the monthly rent.

• Favorable credit score

• Employment—with acceptable proof (i.e., pay stubs) of the required monthly income

• Good references from all previous landlords

• Agree to the total number of occupants allowed (e.g., two per bedroom per state law).

You can read this list to a potential rental tenant over the phone and ask if they match these requirements. You shouldn't rent the house to them if they don't, or you shouldn't waste your time screening them further or even scheduling a viewing.

Should you use a property manager?

Should you manage the property yourself or enlist the help of a property manager? Property management will typically charge about 10% of the monthly rent plus 50% of the first month's rent when a new tenant moves in.

In exchange for this fee, a property manager will typically:

• Advertise for finding new tenants

• Process rental applications

• Sign the rental lease

• Collect the monthly rent

• Keep track of the financials

• Schedule maintenance repairs

• Issue legal notices

• Enforce rental policies

• Understand and navigate landlord-tenant laws

• File evictions.

How much should you charge for rent?

You can't select what rent you want to charge on your own; the market makes that decision. Your task is to conduct research to calculate the fair market rent for your home. In most cases, your home will rent for around the same amount as comparable rental properties in the same location, size, and condition, assuming the same conditions. Begin by looking for similar properties on Craigslist and Zillow to see if there are any.

Also, consider:

• Driving around and looking for "For Rent" signs

• Calling property management companies

• Asking other local landlords

• Browsing local newspapers.

What about the security deposit?

A security deposit is a payment made by a renter to ensure that the terms of their lease are followed. However, keep in mind that this is a deposit, not a cost. This money should be kept separate from the rental tenant's check and returned to them when they move out, less any damages that need to be fixed.

Many states limit the amount you can charge, so double-check to see any local restrictions.

Rental application process

Even if you aren't interested, always send an application to each prospective tenant interested in your rental house. You don't want to come across as discriminating, after all. The actual rental application should include a variety of information—at a minimum:

• Names of all potential renters

• Date of birth

• Social security number

• Phone number

• Alternate phone number

• Previous addresses (last five years)

• Current employer (name, hire date, income, contact info)

• Past employers (name, hire date, income, contact info)

• Emergency contact information

• Release of information statement

• Signature for all rental tenants.

An application fee is always—always—required. This should cover the cost of the background check. However, before you spend money on the parts of the screening process that cost money, read the rental application to make sure prospects fulfill your basic requirements.

Conducting background and credit checks

You can do a background or credit check on a rental renter using various tenant screening sources. Many property management apps also come with built-in screening features.

Before digging into the screening data, you must first pick what kind of background or credit score you will allow. The strength of your real estate market and your location are both critical factors. Observe the following:

• Felonies

• Prior evictions filed

• Prior evictions carried out

• Bankruptcy

• Judgments

• Other criminal or bad financial histories.

Verifying income and checking credit history

A "release of information" signature should be included on your rental application, allowing you to double-check their claims. Begin with their occupation. Their current employer's name and phone number should be included on the rental application, so contact the manager, owner, or human resources manager.

Then, the crucial questions to ask are:

• How much do the renters currently earn?

• How long have the renters worked there?

• Is this job considered temporary?

Then, contact their former landlords for at least the last five years. Take a look at the renters' background checks and credit checks to see if any other addresses emerge, suggesting that they "forgot" to identify a landlord from whom they rented.

When talking with previous landlords, consider asking the following questions:

• How long did the rental tenant rent from you?

• What was their monthly rent?

• Did the rental tenant give proper notice when vacating?

• Was the rental tenant refunded their security deposit?

• Would you rent to this rental tenant again?

Accepting or denying a rental applicant

Always process rental applications on a first-come, first-served basis to avoid discrimination allegations. Each rental application should be processed until you discover that the applicant is ineligible.

To avoid discrimination accusations, it is critical that you carefully document your reasons for dismissing a rental applicant when you do so. Always provide written notice to the rental renter.

Rental lease agreements

Most landlords choose a one-year lease to keep their tenants in the rental home as long as possible, minimizing turnover. While rental agreements generally vary in length and content, most leases contain the following information:

• Names of rental tenants

• Address of the rental property

• Lease agreement term length

• Monthly rent amount

• Security deposit amount

• Late fee definition, penalties, and fees

• Landlord-tenant laws

• A move-in condition report

• Rental policies

• Provisions for or against pets, utilities, smoking, and more

Signing the lease agreement

Prepare the lease agreement ahead of time by using Post-It Notes or a highlighter to indicate any spots that require a signature or initials. Nothing will be forgotten or missed this way. Step-by-step through each lease provision with the rental tenant when you meet with them and ask them to sign as you go. This may take time, but it will help you protect yourself in the months ahead if the tenant says, "I didn't know that."

Inspecting the property before move-in

A month's rent and security deposit have been paid, and the lease agreement has been signed by this time. Before turning over the keys to the tenant, it's now time to complete the move-in condition report. This is merely a piece of paper that the renter signs, describing the rental property's condition at the time of possession.

Allow the tenant to inspect the rental property and wander around it for a while. Encourage them to make a list of the rooms they've checked. Before giving over the keys, consider taking photos or a video of the property. When the rental renter moves out, this will be further evidence.

The paperwork may be done, but your journey is just beginning. As a landlord, it is your responsibility to ensure monthly rent is paid on time, late fees are charged when needed, repairs are performed when required, and bookkeeping is kept up to date.

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Source: BiggerPockets Daily Podcast: How to Rent Your House: The Definitive Step-by-Step Guide