What's the first thing homeowners should do once they realize they want to rent their home?
After they have figured out an appropriate monthly rent, begin advertising and getting their applicant screening process down. I use The Landlord Protection Agency's (LPA) screening process and worksheet.
How can a homeowner attract prospective renters?
Advertise in free areas to start and make sure that the price is right. An overpriced home will quickly be eliminated by potential renters. Consider using craigslist or homes-for-rent websites, or put flyers in the local grocery store. You can even have a "for rent" open house as you'd do to sell—be sure a lease sign is in the front yard. If you still don't get a renter, consider using an agent to get it into the MLS or using an MLS-only service online which gets the lease into the system for agents to find.
What should you look for—or try to avoid—in a potential tenant?
Look for tenants with a good rental history. Phone past landlords! Ask the previous landlord every question in the tenant screening list on the LPA's site to verify that what they are telling you is valid and correct. I look for small things. Do they take care of their car? If not, they may not take care of my house, either. Look for a stable job, stable income, not being behind on bills. You can have them consent to a credit check and run it on the LPA's site, too.
Will homeowners need to get additional insurance if they rent out their property?
They should convert their policy to a landlord policy. Generally about $5,000 of "stuff" inside the home owned by the landlord—like appliances—is covered. Some people need umbrella policies if they have a lot of other assets at risk in a slip-and fall-situation, fire, etc. They must demand and put it in writing that their tenant gets tenant insurance—renters insurance—to cover their own goods inside the home. And if you're in a flood area, you still have to have flood insurance.
What are the tax consequences of renting property? How is the income taxed?
Each person should consult an accountant because the consequences vary drastically state by state.
WetDrefrems of AL @ Aug 13, 2009 12:23:16 PM
john Harrison of NC @ Oct 23, 2008 21:59:18 PM
DLB of CA @ Oct 13, 2008 00:40:10 AM