Are you interested in investing in real estate? If so, you’re not alone. Millions of Americans share this interest, including 55 percent of Millennials.

Purchasing and renting out a home is a great way to earn passive income. But, in order to actually see the numbers in your bank account increase, you need to make sure you’re renting out your house in the right way. 

Never rented out a house before? Want to make sure you’re doing everything correctly? Keep reading. 

Explained below is everything you need to know about how to rent out a house and actually make a profit.

Benefits of Renting Out a House

Some people are eager to start renting out their house. Other people, though, are still on the fence about real estate investment and renting out a home.

If you fall into the latter camp, consider these benefits before you decide against renting out your house:

• Increase your monthly income
• Qualify for tax deductions
• Enjoy the security that comes from additional revenue
• Benefit from increasing property values

Some people are also hesitant to rent out their home because they don’t want to do the work associated with being a landlord.

The good news, though, is that you can hire a property management company like JWB Property Management to do the heavy lifting for you while still enjoying a steady stream of revenue.

How to Rent Out a House and Make a Profit

Are you starting to come around to the idea of renting out your house? Are you unsure of how to do it correctly? These tips will help you learn and stay sane through the process:

Prepare Your Home

First things first, make sure your home is ready to be rented out. This is especially important if you’re in a down market. Tenants will be choosier and have higher expectations for their homes.

In order to prepare your home, start by making sure it’s thoroughly cleaned. Check that all the appliances are working properly, too. 

This is also a good time to take note of the features that will make your home appealing to renters. Do you have new appliances? Vaulted ceilings? Central air? Talk these features up when you’re advertising your home.

Look for Opportunities for Additional Income

When you’re fixing up your home, you can also look for opportunities to fix it up and increase your rental income. 

Some examples of such opportunities include:

• Installing solar panels and selling back excess energy
• Charging an additional amount for an unused shed or garage
• Installing energy-efficient appliances that will provide tenants with lower utility bills

Dig deep and look for these kinds of opportunities. Don’t focus solely on the house.

Find the Right Tenants

Be very particular when it comes to choosing tenants for your house. Don’t just accept the first renters who answer your ad.

Perform a full background check and pay special attention to the following pieces of information:

• Their credit report
• Their criminal history
• Their references (employers, previous landlords, etc.)

Be sure to reach out to their references. Many landlords skip this step, but it can provide a lot of important information about the people who will be living in your home.

Understand Landlord-Tenant Laws

Every state has very specific landlord-tenant laws to ensure that renters are treated fairly. Federal laws also exist to protect tenants and make sure they are not discriminated against.

Don’t just gloss over these laws. There are lots of fair-housing traps out there, and you need to do your best to avoid them.

Consider hiring a lawyer to walk you through these laws and help you understand and comply with them.

Set a Realistic Rental Price

Setting a rental price for your house can be tricky. Do some research to find out what landlords are charging for other, similar houses in your area.

Make sure the rent is comparable to the other houses on the market. Be sure to include plenty of details about the property in the listing, too. This will help potential tenants understand why you’re asking for a specific price.

Have a Written Lease

A written lease is a must, even if you’re renting your house out to a friend or family member.

The following are some specific details you ought to include in the lease:

• The lease term
• The required security deposit
• The rental due date and specific late penalties
• The tenant’s maintenance responsibilities
• Rules of behavior
• Pet policies and pet deposits
• Eviction terms
• Homeowner’s association requirements

Be sure to work with a lawyer when drawing up your lease. Don’t just use a blank template from the Internet.

Invest in Insurance

Property insurance is essential for anyone renting out their home. Keep in mind, too, that property insurance for renting out a home is different from the property insurance for a primary residence. 

As a landlord, you will need to pay for both rental home insurance. This covers the structure of the home, legal costs, loss of rental income in the event that repairs are needed, and medical expenses.

Work With a Property Management Company

Finally, consider hiring a property management company to help you handle the process of renting out your home. A property management company can help you find tenants, handle maintenance requirements, and make sure tenant needs are met.

For a percentage of the monthly rental income, a property management company allows you to essentially be a completely hands-off landlord.

Do You Want to be a Successful Real Estate Investor?

You now know how to rent out a house and make a profit. From preparing the home to hiring a property management company, you’ve got all the basics covered.

Now, it’s time to go out there and put these tips into practice!

Do you want to purchase and rent out more homes? Are you interested in learning more about how to become a successful real estate investor? 

If so, check out this article. It will teach you about eight habits all successful real estate investors need to cultivate.