How Do You Rent Out Your House? A Step-by-Step Guide

Nine steps, and the first three happen before anyone sees the house

1. Check what your mortgage, your insurer and your city allow.
2. Work out what the house should rent for.
3. Get it ready, including the federal lead rule if it was built before 1978.
4. Advertise and screen, inside the Fair Housing lines.
5. Sign a lease, and keep a record of it you can query.
6. Take the deposit under your own state's rule.
7. Document the condition on the day the tenant moves in.
8. Record the money from the first payment.
9. Report the income, and keep what proves it.

The order matters more than the effort. Most people renting out a home for the first time start at step 4, find out at step 1 that their lender, insurer or city had something to say, then fix it under time pressure with a tenant already chosen.

Step 1: Check what your mortgage, your insurer and your city allow

Three permissions, and none of them are yours to assume.

• Your lender. Fannie Mae calls a principal residence one "the borrower occupies as their primary residence" and an investment property one "owned but not occupied by the borrower," and prices them apart: "An LLPA applies to all mortgage loans secured by an investment property." Your own note and its riders decide what you owe. Read them, and call the servicer if they are unclear.
• Your insurer. A policy for a house you live in is not a policy for a house someone else lives in. The NAIC points landlords to a landlord policy, covering "your home, structures on the property, property contents (such as appliances and furniture), lost rental income due to damage, legal fees and liability claims." Tell your insurer before the tenant moves in, not after a claim.
• Your city. Registration is local and easy to miss. In Seattle, "All rental property owners in Seattle must register their properties with the City," and inspectors check registered properties "at least once every 5 - 10 years." Your city may require nothing at all, or exactly that. Ask before you list.

Step 2: Work out what the house should rent for

Price it against comparable homes near you that are being rented right now. Not what you paid, not what the mortgage costs, and not a national average. Similar size, similar street, listed in the last month or so.

Then take off the parts that are easy to forget: the weeks between tenants, repairs, and the make-ready at every turnover. If you end up renting out more than one place, the free rent roll template is the one-page view of what each unit is meant to bring in.

Step 3: Get it ready, and handle the pre-1978 lead rule

If the house was built before 1978, federal law applies wherever you are. The EPA's disclosure rule covers "most pre-1978 private housing" and requires you to give the tenant the "Protect Your Family From Lead In Your Home" pamphlet, disclose "any known information about the presence of lead-based paint and lead-based paint hazards," hand over "all available records and reports on the presence of lead-based paint," attach a Lead Warning Statement to the lease, and "keep a signed copy of the disclosures for three years after the sale is completed or the lease begins." Narrow exemptions exist, including leases of 100 days or less and housing already certified lead free.

The rest of the make-ready is local: smoke and carbon monoxide alarms, egress and habitability standards are set by state and city code, so work from yours rather than a checklist written for somewhere else.

Step 4: Advertise and screen, inside the Fair Housing lines

The federal Fair Housing Act, 42 U.S.C. 3601 et seq., makes it "unlawful to discriminate in housing on the basis of" race or color, religion, sex, national origin, familial status or disability. That governs your ad wording, your questions and your decision. States and cities add protected classes on top of the federal list, so check your own before you write the ad.

UnitDocs does not screen tenants, so arrange that with a screening company. What comes back is a consumer report and the FCRA follows it. Turn an applicant down, or ask them for a larger deposit, because of what the report said, and the FTC requires you to give them "the name, address, and phone number of the CRA that supplied the report," tell them the CRA "did not make the decision to take the unfavorable action," and tell them their "right to dispute the accuracy or completeness of any information the CRA furnished, and to get a free report from the CRA if the person asks for it within 60 days."

The reference you can chase yourself is the previous landlord. The free rent verification form is the single page to send them.

Step 5: Sign the lease, then keep a record you can query

The signed lease is the contract. What you use day to day is the handful of fields inside it: who is renting, how much, from when, until when. What belongs in a lease record covers why you keep both, and why the expired ones stay. Leave the end date open for month to month or set it for a fixed term; that one field drives your renewal reminders and your vacancy planning, so get it right at signing rather than reconstruct it later.

Step 6: Take the deposit under your own state's rule

Deposit law is the sharpest reason "how to rent out my house" has no single answer.

• California caps it. Civil Code section 1950.5 says "a landlord shall not demand or receive security, however denominated, in an amount or value in excess of an amount equal to one month's rent," with two months allowed for a natural person, or an LLC whose members are all natural persons, who "owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent." The itemized statement and any refund are due "no later than 21 calendar days after the tenant has vacated the premises."
• Texas sets no maximum, and allows longer to return it. Property Code section 92.103 says the landlord "shall refund a security deposit to the tenant on or before the 30th day after the date the tenant surrenders the premises," and the Texas State Law Library notes you are not obliged to until the tenant gives a forwarding address in writing.

Two states, one capped and one not, with deadlines nine days apart. Find your own rule before you name a deposit in the listing.

Step 7: Document the condition on move-in day

Walk the house with the tenant on the day they get the keys, write down the condition of every room, photograph it, and both sign the sheet. That record is what settles the argument at the end, because normal wear and tear is not chargeable to the deposit and the only thing separating it from damage is evidence of how the place looked before. Do the same walk at move-out on the same form: the free move-out checklist is the sheet both walks go on.

Step 8: Record the money from the first payment

Start the payment record with the first rent you receive, not the first time there is a dispute. The free rent ledger template keeps the running balance of what was owed against what arrived, which is the gap every payment argument is actually about.

Issue a receipt for each payment, especially cash. The free rent receipt generator fills in the fields and downloads a PDF with no signup, so the tenant has proof the day the money lands. UnitDocs does not collect rent; it keeps the record of the rent you collected.

Step 9: Report the income, and keep what proves it

Rent is taxable income. The IRS puts it plainly: "Cash or the fair market value of property or services you receive for the use of real estate or personal property is taxable to you as rental income," and "You can generally use Schedule E (Form 1040), Supplemental Income and Loss to report income and expenses related to real estate rentals." Advance rent counts in the year you receive it, whatever period it covers.

UnitDocs is not accounting software and files nothing for you. What it does is keep the evidence behind those numbers in one place per unit. How to track rental expenses and income covers the habit, and which rental documents to keep covers what to hold on to once the tenancy is running.

The part no guide can answer for you

Everything federal here travels: lead disclosure, fair housing, the FCRA, the IRS. Almost everything else is written by your state and your city, and the two states above disagree on the most basic question of all. Notice periods, deposit limits, entry rules, licensing and eviction all change at the state line. Read your own statute, or ask a local lawyer, before you rely on any of it.

Sources

• Fannie Mae Selling Guide B2-1.1-01, Occupancy Types
• NAIC, Renting Out Your Home? You Need Insurance Coverage
• Seattle Rental Registration and Inspection Ordinance (Seattle Dept. of Construction and Inspections)
• EPA, Lead-Based Paint Disclosure Rule for real estate
• Fair Housing Act, 42 U.S.C. 3601 et seq. (US Department of Justice)
• FTC, Using Consumer Reports: What Landlords Need to Know
• California Civil Code section 1950.5
• Texas Property Code chapter 92, with the Texas State Law Library guide to security deposits
• IRS Topic no. 414, Rental income and expenses