How to Rent Out Your House By Owner: The Complete Landlord Guide

This guide is for homeowners who want to rent out a house themselves, whether you are relocating for work, keeping your first home as an investment, or holding a property you inherited. By the end you will have a step-by-step plan for the legal setup, insurance, pricing, screening, lease, move-in, rent collection, maintenance, and taxes, plus a clear test for when a property manager is worth the fee.

Step 1: Confirm the house and your finances are ready

Start with the documents that can stop you cold. Most owner-occupied mortgages require you to live in the home for at least a year after closing; after that, renting is usually allowed, but read your security instrument and tell your lender. If you are in an HOA or condo, pull the governing documents. Many associations cap the number of rentals, ban leases shorter than six or twelve months, or require tenant registration.

Then run the numbers on a realistic budget, not a best case. Here is an example for a house that rents for $2,200 a month:

A thin or negative number does not automatically mean “don’t rent,” since appreciation and principal paydown count too. It does mean you need cash in reserve. A sensible floor is three months of mortgage payments plus the cost of one major repair, kept in a separate account.

Step 2: Check local rules, licensing, and required disclosures

Landlord-tenant law is mostly state and local, so do this homework before you advertise:

• Registration or licensing. Many cities require you to register rental units or hold a rental license, and some require a safety inspection covering smoke and carbon monoxide alarms, egress windows, handrails, and electrical hazards.
• State landlord-tenant statute. This sets security deposit limits and return deadlines, notice rules for entering the home, any late-fee limits, and the eviction process. Some cities add just-cause eviction rules or rent stabilization.
• Lead paint. If the house was built before 1978, federal law requires you to give tenants the EPA lead hazard pamphlet, disclose any known lead-based paint or hazards and related reports, and attach a signed Lead Warning Statement to the lease. See the EPA’s disclosure rule summary.
• Local taxes. A few cities levy a rental or gross-receipts tax on long-term rents.

Write down every requirement with its source. Rules vary by state and city, so a one-hour consult with a local landlord-tenant attorney is cheap insurance.

Step 3: Switch to a landlord insurance policy

A homeowners policy is written for a home you live in. Once a tenant moves in, tell your insurer and move to a landlord or dwelling policy. These are commonly sold as DP-1 (basic named perils), DP-2 (broad named perils), and DP-3 (open perils, the usual choice for a single-family rental). Ask for three things:

1. Coverage for the structure at replacement cost, not actual cash value.
2. Premises liability with limits that protect your net worth, plus a quote for an umbrella policy.
3. Fair rental value (loss of rents) coverage, which replaces rent while the home is uninhabitable after a covered loss such as a fire. It does not pay when a tenant simply stops paying.

Your policy will not cover the tenant’s belongings or their own liability. Require renters insurance in the lease and ask to be listed as an interested party so the insurer notifies you if it lapses.

Step 4: Set the rent from real comparables

Pricing is where first-time landlords lose the most money, usually by overshooting and sitting vacant. Pull four to six comparable rentals within about a mile that match your bedroom and bathroom count, size, and condition, and give more weight to homes that actually rented than to stale asking prices. Every empty month costs a full month of rent, so pricing slightly under the top of the range often wins over a year. Our guide to setting the right rent price walks through adjustments and the vacancy math.

Step 5: Prepare, list, and show the house

Make the house rent-ready: deep clean, neutral paint, working appliances, new HVAC filters, tested smoke and CO alarms, and rekeyed locks. Then write a listing that describes the property, not the people you hope to attract:

• Rent, deposit, lease length, and available date
• Bedrooms, bathrooms, square footage, parking, laundry, and yard
• Utilities included, pet policy, and smoking policy
• A summary of your screening criteria (income, credit, rental history)

Skip phrases like “perfect for a single professional” or “no kids.” Discriminatory advertising is prohibited under the Fair Housing Act even for owners who are otherwise exempt. Show the home in person, confirm the identity of everyone you meet, and accept money only after a lease is signed, through a traceable payment method.

Step 6: Screen every applicant the same way

Write your criteria before the listing goes live: minimum income (many landlords look for gross income of roughly three times the rent), credit standards, rental history, and how you will evaluate eviction and criminal records. Apply them to every applicant in the order completed applications arrive, and get written authorization before you run a credit or background report.

If anything in a consumer report contributes to a denial, a higher deposit, or a co-signer requirement, the Fair Credit Reporting Act requires you to give the applicant an adverse action notice, as the FTC explains in its guidance for landlords. Our tenant screening guide covers what the notice must say, how to verify income, and the fair housing limits on criminal-history screening.

Step 7: Sign a lease written for your state

Use a lease drafted for your state rather than a generic national form. It should cover the rent amount, due date, grace period and late fee (within state limits), the deposit and how it is returned, utilities, maintenance duties, entry notice, permitted occupants, pets, subletting, and renewal or termination terms. Attach the required addenda, including lead paint for pre-1978 homes and any state-mandated disclosures, and have every adult occupant sign.

Step 8: Do a documented move-in inspection

A thorough move-in inspection is what lets you deduct for damage later without a fight. Do it with the tenant on move-in day:

1. Walk every room with a written checklist covering walls, floors, windows, doors, fixtures, and appliances.
2. Take date-stamped photos and one continuous video, including inside appliances and under sinks.
3. Record meter readings and the number of keys, remotes, and garage openers handed over.
4. Test smoke and CO alarms in front of the tenant and note the result.
5. Both of you sign and date the checklist, and the tenant gets a copy.
6. Give the tenant a few days to add anything you missed, in writing.

Use the same checklist at move-out so the comparison is apples to apples. Some states require a move-in condition form or set rules for where deposits are held, so check yours.

Step 9: Collect rent and keep clean records

Choose one electronic payment method that leaves a record, set a fixed due date, and state any grace period and late fee in the lease. Some states cap late fees or mandate a grace period. Keep a ledger for each tenant and a separate bank account for rent and expenses, which simplifies taxes and keeps deposits out of your personal funds (some states require a separate account).

When rent is late, follow a fixed sequence: a reminder after the grace period, then the formal written notice your state statute requires, then escalation. Never change the locks, remove belongings, or shut off utilities to force a tenant out. These “self-help” evictions are illegal in most states and expose you to damages.

Step 10: Plan maintenance before it becomes urgent

In almost every state you must keep the home habitable: safe electrical, plumbing, heat, hot water, and a weathertight structure. Put response standards in writing (for example, emergencies the same day and routine repairs within a week), keep a short list of licensed plumbers, electricians, and HVAC technicians, and walk the property twice a year to check filters, alarms, gutters, the water heater, and under-sink plumbing. Give the notice your state requires before entering.

Rental taxes: Schedule E basics

Most individual landlords report rental income and expenses on Schedule E (Form 1040). The core rules from IRS Publication 527:

• Income includes rent, advance rent (taxable in the year received, whatever period it covers), and any part of a security deposit you keep. A deposit you intend to return is not income when collected.
• Deductible expenses include mortgage interest, property tax, insurance, repairs, management fees, advertising, legal and accounting fees, travel to the property, and utilities you pay.
• Depreciation spreads the building’s cost over 27.5 years; land is never depreciated. When you convert a former home, the depreciable basis is the lower of your adjusted basis or the fair market value on the conversion date.
• Losses: if you actively participate, you can generally deduct up to $25,000 of rental losses against other income, phasing out between $100,000 and $150,000 of modified adjusted gross income, according to IRS Publication 925.

Example: your converted home has a depreciable basis of $320,000, of which $70,000 is land. The $250,000 building portion divided by 27.5 is about $9,091 of depreciation per full year. When you sell, depreciation you claimed (or were entitled to claim) is taxed, and years of renting can shrink your home-sale exclusion, so meet with a tax professional before your first return.

When to hire a property manager

Self-managing makes sense when you live within an hour, have flexible time, and own one or two units. A manager earns the fee when you live far away, own several properties, or dread tenant calls. Typical pricing for a single-family home looks like this (confirm locally):

On $2,200 rent, a 10% fee is $220 a month, or $2,640 a year before leasing fees, more than the entire cash flow in the Step 1 example. Before you sign, read the management agreement for the termination clause, who holds the security deposit and where, the dollar threshold for repairs without your approval, and confirm the manager holds whatever license your state requires.

Next steps

• Model cash flow, reserves, and returns with the rental property calculator.
• Draft your lease with the lease agreement essentials checklist.
• Set your written screening criteria using the tenant screening guide.
• Build a free owner plan for your rental at Get Started.

Frequently asked questions

Sources

1. IRS Publication 527, Residential Rental Property
2. IRS Topic No. 414, Rental Income and Expenses
3. IRS Publication 925, Passive Activity and At-Risk Rules
4. IRS Publication 946, How To Depreciate Property
5. EPA: Lead-Based Paint Disclosure Rule (Section 1018 of Title X)
6. FTC: Using Consumer Reports — What Landlords Need to Know